1973 (12) TMI 4 - HC - Income Tax

Court rules on confidentiality of pre-1964 tax documents, admissibility of certified copies

The court held that prior to 1964, documents filed before April 1, 1962, in income tax proceedings were confidential and courts were prohibited from ... Confidentiality of income-tax assessment records - privilege against production of income-tax records - survival of rights and obligations on repeal (General Clauses Act, s.6(c)) - effect of omission of statutory prohibition and discretionary disclosure under section 138 - finality of Commissioner's decision under section 138(1)(b)Confidentiality of income-tax assessment records - privilege against production of income-tax records - survival of rights and obligations on repeal (General Clauses Act, s.6(c)) - Whether the declaration of confidentiality and the prohibition on production/disclosure in section 54 of the Indian Income-tax Act, 1922 (and corresponding section 137 of the Income-tax Act, 1961), continued to subsist in respect of records filed before 1 April 1962 (and records filed thereafter in proceedings governed by the earlier Act or by section 137) despite repeal/omission and subsequent amendments. - HELD THAT: - The Full Bench held that the declaration of confidentiality and the prohibition against production or disclosure contained in section 54(1) and (2) of the 1922 Act (and the corresponding provisions of section 137 of the 1961 Act) created concrete rights in assessees/third parties to resist production and concomitant obligations on income tax authorities as soon as the documents were filed. By reason of section 6(c) of the General Clauses Act, 1897, those rights and obligations, having been acquired, accrued or incurred while the earlier provisions were in force, continued to subsist notwithstanding (a) repeal of the 1922 Act and re enactment in the 1961 Act, and (b) omission of section 137 and amendments to section 138 effected by the Finance Act, 1964 and later amendments, because no contrary legislative intention appeared. The Bench reviewed and distinguished authorities that treated the provisions as merely abstract or procedural, concluded the provisions were substantive in character, and held that the subsequent enactments did not manifest an intention to destroy the privileges and obligations already accrued.Rights to confidentiality and the prohibition on production/disclosure created by section 54 (and mirrored in section 137) in respect of documents filed before 1 April 1962, or filed thereafter in proceedings governed by those provisions, remained unaffected by repeal/omission and continued to subsist.Effect of omission of statutory prohibition and discretionary disclosure under section 138 - finality of Commissioner's decision under section 138(1)(b) - Legal position where documents are filed after 1 April 1964 (i.e., after omission of section 137): whether a civil court may summon income tax records and what role the Commissioner (or Board/authority) under section 138 has upon receipt of such summons. - HELD THAT: - The Bench held that once section 137 was omitted the statutory declaration of confidentiality and the absolute ban on courts and public servants were removed for documents filed after 1 April 1964. A civil court retains its general power to summon documents, but that power is subject to the specially conferred statutory discretion: on receiving a summons the Commissioner (and, after the 1967 amendment, the Board or other income tax authority as specified) may consider whether furnishing the requested information is in the public interest under section 138. Where the Commissioner (or authorised authority) decides it is not in the public interest to furnish the information, that decision is final and not open to challenge in the court which issued the summons. Both powers therefore coexist and must be reconciled: the court may requisition, but the tax authority may lawfully refuse in exercise of the statutory discretion whose result is final.For documents filed after 1 April 1964 the court may summon records, but the Commissioner (or authorised income tax authority) may, under section 138, decide whether production would be in the public interest and, if he is satisfied it would not, his decision is final and not reviewable by the court.Admissibility of certified copies of income tax records - proof and nature of document - Admissibility and effect of certified copies of income tax assessment records. - HELD THAT: - The Bench declined to express any general opinion on the effect or admissibility of certified copies. It observed that the question must be answered with reference to particular documents and the facts when and under which Act the documents were filed; admissibility would depend on the character of the document (e.g., return, statement recorded, etc.) and on applicable evidentiary rules. Accordingly, no general ruling was given under the reference on certified copies.No opinion expressed; the question of the effect and admissibility of certified copies is left undecided as it requires consideration of particular documents and facts.Final Conclusion: The Full Bench answered the reference by holding that (i) confidentiality and the prohibition on production/disclosure under section 54 (and corresponding section 137) survived repeal/omission for records in respect of which those rights and obligations had accrued (notably records filed before 1 April 1962 or in proceedings governed by those provisions), (ii) for records filed after 1 April 1964 a court may summon records but the Commissioner/authorised income tax authority may refuse production if, in his statutory discretion under section 138, furnishing would not be in the public interest and that decision is final, and (iii) no general view was expressed on the admissibility/effect of certified copies, which must be decided by reference to particular documents and circumstances. Issues Involved:1. Position of law relating to privilege prior to 1964.2. Position of law relating to privilege after 1964.3. Effect of the production of certified copies relating to income-tax assessment records and their admissibility in evidence.Detailed Analysis:1. Position of Law Relating to Privilege Prior to 1964:Issue 1(a): Where documents, records, etc., were filed by an assessee or a third party before April 1, 1962, in respect of assessment years up to and including the assessment year 1961-62 in proceedings under the Indian Income-tax Act, 1922.The court held that section 54 of the Indian Income-tax Act, 1922, declared such documents as confidential and prohibited courts from requiring their production or evidence thereof. This prohibition was absolute, as emphasized by the Supreme Court in *Charu Chandra Kundu v. Gurupada Ghosh* and *Commissioner of Income-tax v. Laxmichand Narayandas*. The confidential nature and prohibition continued even after the repeal of the 1922 Act by the 1961 Act due to section 6(c) of the General Clauses Act, 1897, which protects rights, privileges, obligations, or liabilities acquired under the repealed enactment unless a different intention appears in the new enactment. The court found no such contrary intention in the 1961 Act, as sections 137 and 138 of the new Act were almost identical to sections 54 and 59B of the old Act.Issue 1(b): Where documents, records, etc., were filed by an assessee or a third party after April 1, 1962, but before April 1, 1964, in respect of assessment years up to and including the assessment year 1961-62 in proceedings under the Indian Income-tax Act, 1922.The court held that sections 54 and 59B of the Indian Income-tax Act, 1922, continued to apply as the documents were filed in assessment proceedings taking place under the 1922 Act, despite the new Act coming into force.Issue 1(c): Where documents, records, etc., were filed by an assessee or a third party after April 1, 1962, but before April 1, 1964, in respect of assessment years up to and including the assessment year 1961-62 in proceedings under the Income-tax Act, 1961.The court held that the provisions of sections 137 and 138 of the 1961 Act applied. The declaration of confidentiality and prohibition against court production continued under section 137(1) and (2) of the 1961 Act, similar to section 54 of the 1922 Act.Issue 1(d): Where documents, records, etc., were filed by an assessee or a third party after April 1, 1962, but before April 1, 1964, in respect of the assessment years 1962-63 and 1963-64 in proceedings under the Income-tax Act, 1961.The court held that the provisions of sections 137 and 138 of the 1961 Act applied, similar to the answer for issue 1(c).2. Position of Law Relating to Privilege After 1964:Issue 2(a): Where documents, records, etc., were filed by an assessee or a third party after April 1, 1964, in respect of assessment years up to and including the assessment year 1961-62 in proceedings under the Indian Income-tax Act, 1922.The court held that sections 54 and 59B of the Indian Income-tax Act, 1922, continued to apply, and the position in law remained the same as stated in issues 1(a) and 1(b).Issue 2(b): Where documents, records, etc., were filed by an assessee or a third party after April 1, 1964, in respect of assessment years up to and including the assessment year 1961-62 in proceedings under the Income-tax Act, 1961.The court held that section 138(1) and (2) as substituted by the Finance Act, 1964, or section 138(1)(a) and (b) and (2) as substituted by the Finance Act, 1967, applied. There was no longer any declaration of confidentiality or prohibition against courts or public servants. The court could summon documents, but the Commissioner of Income-tax could decide if their production was in the public interest, and his decision was final.Issue 2(c): Where documents, records, etc., were filed by an assessee or a third party after April 1, 1964, in respect of assessment years 1962-63 and 1963-64 in proceedings under the Income-tax Act, 1961.The court held that the answer was the same as for issue 2(b).Issue 2(d): Where documents, records, etc., were filed by an assessee or a third party after April 1, 1964, in respect of assessment years 1964-65 onwards.The court held that the answer was the same as for issue 2(b).3. Effect of the Production of Certified Copies Relating to Income-tax Assessment Records and Their Admissibility in Evidence:The court did not provide a general answer to this issue, stating that the admissibility and effect of certified copies must be considered with respect to particular documents. The arguments regarding the subsistence of privilege and the admissibility of certified copies as public documents depend on the specific facts of each document, such as when it was filed, to which assessment year it relates, and under which Act the assessment proceeding was taking place. The court refrained from expressing an opinion on this issue without reference to specific documents.