TaxTMI 
TaxTMI 
1992 (2) TMI 1
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....partment for the production of the documents relating to assessment of an assessee summoned by the civil court. The following three questions were referred to and considered by the Full Bench (see [1974] 95 ITR 34, 40) "1. What is the position of law relating to privilege prior to 1964 ? 2. What is the position of law relating to privilege after 1964 ? and 3. What is the effect of the production of certified copies relating to income-tax assessment records, and how far certified copies can be admitted in evidence ?" The circumstances under which these questions arose, briefly put, are as follows : The plaintiff, Trilok Chand Jain, instituted a suit for recovery of Rs. 1,39,722.86 against the defendants, Dagi Ram Pindi Lall and Smt. Budh Wanti Gulati, W/o. Shri Pindi Lall Gulati, the appellants herein. During the course of proceedings in the suit, when evidence was being recorded, the plaintiff obtained summons from the court requiring the Income-tax Department to produce in the court records relating to the income-tax assessment of the defendants, Dagi Ram Pindi Lall, for the assessment years 1964-65 to 1971-72. The Income-tax Officer to whom the summons was issued sent the re....
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....and (d) where the 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 1962-63 and 1963-64 in proceedings for the said assessment years taking place under the Income-tax Act, 1961 ; " and sustained the claim of privilege by the Income-tax Department in each one of the situations. The Full Bench, while considering the second question, dealt with the following situations (at pp. 67, 68) : "(a) where the documents, records, etc., in respect of which privilege is claimed 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 for the said assessment years taking place under the Indian Income-tax Act, 1922 ; (b) where the 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 for the said assessment years taking place under the Income-tax Act, 1961 ; (c) where the documents, records, etc., were filed by an assessee or a third party after April 1, 1964, in respec....
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.... section 137 of the 1961 Act by Act V of 1964, there is no longer any impediment left in the way of a civil court to summon the production of documents filed by an assessee during the assessment proceedings before an Income-tax Officer after April 1, 1964, in respect of the assessment years 1964-65 onwards, and that the finality attached to an order of the Commissioner with regard to the claim of privilege under section 138(1)(b) has no relation to the power of the court to summon that record. For a proper appreciation of the question debated before us, it would be desirable to refer to the relevant provisions of the 1922 Act and the 1961 Act, as amended from time to time, and notice the changes brought about in the matter of claim of privilege by the Income-tax Department. Section 54 (1) and (2) of the 1922 Act provided as follows : "54. Disclosure of information by public servant.-(1) All particulars contained in any statement made, return furnished or accounts or documents produced under the provisions of this Act, or in any evidence given, or affidavit or deposition made, in the course of any proceedings under this Act other than proceedings under this Chapter, or in any rec....
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....e April 1, 1960, and authorised the Commissioner to furnish or cause to be furnished the information sought for, if he was satisfied that there were no circumstances justifying its refusal. This legal position continued to prevail till April 1, 1960, when the 1922 Act, was repealed by the 1961 Act. In the 1961 Act, provisions were made corresponding to sections 54 and 59B of the 1922 Act in sections 137 and 138. The relevant portions of sections 137 and 138 of the Act provided as follows : "137. Disclosure of information prohibited.-(1) All particulars contained in any statement made, return furnished or accounts or documents produced under the provisions of this Act, or in any evidence given, or affidavit or deposition made in the course of any proceedings under this Act, other than proceedings under Chapter XXII, or in any record of any assessment proceeding, or any proceeding relating to recovery of demand, prepared for the purposes of this Act, shall be treated as confidential, and notwithstanding anything contained in the Indian Evidence Act, 1872 (1 of 1872), no court shall, save as provided in this Act, be entitled to require any public servant to produce before it any such....
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....nt factors, by order notified in the Official Gazette, direct that no information or document shall be furnished or produced by a public servant in respect of such matters relating to such class of assessees or except to such authorities as may be specified in the order." The scope of section 138 of the 1961 Act was, as can be seen, enlarged by the substituted provisions of section 138. Under the original section 138, a person could make an application for information only as to the amount of tax determined, as payable by an assessee ; under sub-section (1) of the substituted section 138, a person could make an application for any information relating to an assessment. Again, under the original section 138, before the necessary information could be furnished or caused to be furnished to an applicant, the Commissioner was to be satisfied that there were no circumstances justifying refusal to furnish the information asked for ; under sub-section (1) of the substituted section 138, the Commissioner was required to be satisfied that it was in the public interest to furnish the information asked for and "his decision in this behalf shall be final and shall not be called in question in ....
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.... by it by a general or special order in that behalf to furnish or cause to be furnished, information relating to any assessee, to such officer, authority or body as is mentioned in the provision to enable him or it to perform its functions under the Act. Vide clause (b) of the substituted sub-section (1) of section 138, finality has also been attached to an order of the Commissioner, made on an application filed by any person seeking information relating to an assessee in respect of any assessment. The Commissioner has to make an order after being satisfied that it is in the public interest so to do, to furnish or cause to be furnished such information and that decision of the Commissioner is immune from challenge in any court of law. The controversy, as already noticed, before us is limited to the jurisdiction or lack of it of a civil court to seek production of documents relating to assessments filed after April 1, 1964, in the assessment proceedings for 1964-65 onwards, after the omission of section 137 of the Act. The Full Bench, in the impugned judgment, came to the conclusion that the omission of section 137 did not make any difference and that the ban on the courts as cont....
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....ant to the case pending before the court, even from the income-tax authorities, revived. Neither section 54 of the 1922 Act nor section 137 of the 1961 Act had taken away for all times the jurisdiction of courts to call for the record from the income-tax authorities. Those provisions, as already noticed, had only put the exercise of that jurisdiction under a cloud and those fetters were coterminous with the life of section 54 of the 1922 Act or section 137 of the 1961 Act. The finality which has been attached to the order of the Commissioner under section 138(1)(b) of the Act is applicable only in cases where application is made to the Commissioner by a party or any other person for receiving documents or information. It has nothing to do with the powers of the courts to summon the production of assessment records of an assessee, filed after April 1, 1964. The privilege as to secrecy which the assessee had acquired under section 54 of the 1922 Act remained unimpaired by the repeal of that Act or even by the omission of section 137 of the 1961 Act in respect of records filed prior to April 1, 1964 and relating to the assessments prior to that date. That privilege did not extend, af....
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....rts was misplaced. Dealing with the scope of section 138 (1) (b) of the Act, the High Court held that the said provisions attached a finality to an order of the Incometax Commissioner and applied to the cases where the record was summoned even by a court of law. The High Court opined (at pp. 70, 71): "The complete omission of the declaration of the confidential nature of the documents, records, etc., and the removal of the ban on courts and public servants no doubt, suggests that the power of a court under the general law to summon such documents, records, etc., relevant to the case before it has been restored. But, at the same time, the Legislature which empowered the Commissioner of Income-tax to furnish the information if he is satisfied that it is in the public interest so to do made the decision of the Commissioner final and unquestionable in a court of law. When two powers are thus vested in two legal authorities, neither of them can be ignored, and both of them have to be reconciled and given effect to. In the case of the two powers under consideration, it has to be noted that the power to summon which vests in a court is under the general law, while the power of the Commi....
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....record to the court concerned. Indeed, it is open to the Commissioner of Income-tax to claim privilege, in respect of any document or record so summoned by a court of law, under sections 123 and 124 of the Indian Evidence Act, 1872, and even then it is for the court to decide whether or not to grant that privilege. Had the Legislature intended that no document from the assessment record of an assessee should be produced in a court on being summoned by it, without the approval of the Commissioner of Income-tax, it would have said so in section 138 of the Act itself. The repeal of section 137 of the Act clearly discloses the legislative intent that it was felt by the Legislature that it was no more necessary to keep the records of assessment by the Income-tax Department relating to an assessee as confidential from the courts and the bar with regard to the production of any part of the record was removed in so far as courts are concerned. The finality which has been attached to the order of the Commissioner under section 138(1)(b) of the Act is, thus, restricted to the cases where the information, etc., as contemplated by the section is called for by any person, other than a court of ....