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Interpretation of a notification under section 138(2) of the Income Tax Act, 1961 regarding disclosure of information by the Income Tax authorities in insolvency proceedings. Analysis: The judgment delivered by the High Court of Bombay involved a challenge to an ex parte order directing the Insolvency Registrar to issue letters of request to the Income Tax authorities for disclosure of information in an insolvency case. The appellant claimed a higher amount than what was disclosed by the respondents to the official assignee. The appellant based the challenge on a notification under section 138(2) of the Income Tax Act, 1961, which restricts the disclosure of information by public servants. The notification prohibits the disclosure of information from assessment records of the claimant. The court analyzed the notification and concluded that it applies only to banking companies, based on the language and context of the notification. The court discussed the provisions of section 137 of the Income Tax Act, which were repealed in 1964, and the subsequent enactment of section 138(2) empowering the Central Government to restrict the disclosure of information by public servants. The court emphasized that the notification under section 138(2) must be interpreted in light of its specific language and context. The notification referred to practices among banking companies, indicating its limited application to a specific class of assessees. The court meticulously analyzed the language of the notification, highlighting that it pertains to information related to banking companies specifically. The court rejected the appellant's argument to broaden the scope of the notification beyond banking companies. Referring to a decision of the Orissa High Court, the court emphasized that the notification applies only to banking companies within the meaning of the Banking Companies Act, 1949. The court concluded that since the notification was intended for banking companies, the impugned order directing disclosure of information by the Income Tax authorities was valid in this case. In the final ruling, the court dismissed the appeal, upholding the validity of the order for disclosure of information by the Income Tax authorities. The court also rejected the application for leave to appeal to the Supreme Court, affirming its interpretation of the notification's limited scope. The appellant's request to stay the order was granted for three weeks to allow for a potential appeal to the Supreme Court.
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