1984 (5) TMI 23 - HC - Income Tax

Summary

Issues:
1. Whether the privilege claimed by the Income-tax Department under section 138(2) of the Income Tax Act, 1961, was rightly upheld by the court.
2. Whether the court was adequately informed about the specific order of the Central Government under which the privilege was claimed.

Analysis:
The judgment involves a dispute between two contending parties, Smt. Viran Wali and Kesar Singh, regarding the production of tax assessment files related to M/s. Sabrose Financial Corporation in a reference under section 30 of the Land Acquisition Act, 1894. Smt. Viran Wali sought the production of these files for her case, which was opposed by Kesar Singh, claiming to be the sole proprietor of the corporation. The court allowed the applications for the files but the Income-tax Officer (ITO) claimed privilege under section 138(2) of the Income Tax Act, 1961, stating that the information could not be disclosed.

The main issue addressed in the judgment is whether the privilege claimed by the ITO was rightly upheld by the court. Section 138(2) of the Income Tax Act allows the Central Government to direct that no information or document shall be furnished by a public servant in certain cases. The court emphasized that the Central Government is the authority to regulate the provision of privilege by issuing orders in the Official Gazette. The judgment highlighted that the ITO must justify the privilege claim by disclosing the specific order of the Central Government under which it is claimed. Since such information was not provided to the court, the matter was remitted back to the lower court for further consideration in accordance with the law.

Another crucial issue raised in the judgment is whether the court was adequately informed about the specific order of the Central Government under which the privilege was claimed. The judgment noted that the court and the parties' counsel were not provided with the necessary information regarding the order justifying the privilege claimed by the ITO. As a result, the court directed the lower court to communicate with the ITO to obtain details of the specific order from the Central Government. Once this information is received, the lower court is required to reconsider the matter afresh in light of the legal provisions.

In conclusion, the revision petition was allowed, the impugned order was set aside, and the matter was remitted back to the Additional District judge for further proceedings in accordance with the law. The parties were directed to appear before the court on a specified date for further actions based on the judgment.