Assessment records and court summons: section 138 limits administrative disclosure, not a civil court's power to compel production.

Section 138 of the Income-tax Act, 1961 is confined to the Commissioner's administrative disclosure power on application and does not limit a civil court's authority to summon relevant assessment records in pending litigation, subject to any privilege claim. Confidentiality attached to assessment records prepared under the earlier regime survived repeal for protected periods: records governed by the 1922 Act remained subject to section 54, and records made before 1 April 1964 under the 1961 Act continued to enjoy section 137 protection. Records prepared after that date were not absolutely immune from production. A notification under section 138(2) applied only to its specified class of assessees and did not bar production of the summoned record.

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Issues: (i) Whether section 138 of the Income-tax Act, 1961 authorises the civil court to compel production of assessment records or whether it governs only disclosure by the Commissioner on an application by a person; (ii) whether the repeal of section 137 of the Income-tax Act, 1961 affects the confidentiality of assessment records prepared before 1 April 1964 and the continued application of section 54 of the Indian Income-tax Act, 1922 to earlier assessments; (iii) whether the notification issued under section 138(2) applied to the records of the assessee summoned in the present case.

Issue (i): Whether section 138 of the Income-tax Act, 1961 authorises the civil court to compel production of assessment records or whether it governs only disclosure by the Commissioner on an application by a person.

Analysis: The statutory scheme distinguishes between the Commissioner's power to furnish information on an application made to him in public interest and the court's power to summon relevant evidence in pending litigation. Section 138(1)(b) confers an administrative discretion on the Commissioner to disclose information to an applicant, subject to satisfaction of public interest, and makes his decision final. That provision does not confer on the Commissioner any authority to control a court's judicial power to summon relevant records. Where a dispute is pending before a court, relevance of the assessment record is for the court to decide after hearing the parties, and the assessee retains the ordinary right to object. If the court ultimately directs production, the income-tax department must comply, subject to any privilege claim under the Evidence Act.

Conclusion: Section 138 does not restrict the civil court's power to summon relevant assessment records, and the Commissioner cannot override a judicial order for production.

Issue (ii): Whether the repeal of section 137 of the Income-tax Act, 1961 affects the confidentiality of assessment records prepared before 1 April 1964 and the continued application of section 54 of the Indian Income-tax Act, 1922 to earlier assessments.

Analysis: The earlier law treated assessment particulars as confidential and barred court production except in limited situations. That confidentiality was carried into section 137 of the 1961 Act and remained operative until its deletion with effect from 1 April 1964. The repeal did not destroy the obligation attached to records already prepared, and assessments governed by the 1922 Act continued to remain subject to section 54 by reason of the saving and transitional scheme. Likewise, assessments completed under the 1961 Act before 1 April 1964 remained protected by section 137 notwithstanding its omission. By contrast, assessment records prepared after 1 April 1964 under the 1961 Act were not immune from production in court, subject to any specific statutory protection or privilege.

Conclusion: The confidentiality attached to pre-1 April 1964 assessment records survived repeal, but records prepared after that date under the 1961 Act were not absolutely protected.

Issue (iii): Whether the notification issued under section 138(2) applied to the records of the assessee summoned in the present case.

Analysis: The notification relied upon by the lower court was confined to banking companies. The summoned record related to a different assessee and, on the clarification given before the Full Bench, to the assessment year 1965-66. Such a record did not fall within the class protected by the 1965 notification. Therefore, the notification furnished no bar to production of the record in the present proceeding.

Conclusion: The notification did not apply to the summoned assessment record and could not justify refusal of production.

Final Conclusion: The revision succeeded, the order refusing production was set aside, and the matter was sent back for fresh orders on the application for production in accordance with the stated legal principles.

Ratio Decidendi: Section 138 of the Income-tax Act, 1961 regulates administrative disclosure by the Commissioner and does not curtail the civil court's judicial power to summon relevant assessment records; confidentiality attached to assessment records made under the earlier regime survives repeal for the protected periods, but a notification under section 138(2) operates only within its specified class of assessees.

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