1961 (6) TMI 27 - HC - Income Tax

Summary

Issues Involved:
1. Jurisdiction of the Income-tax Officer to make a requisition under Order XIII, Rule 10 of the Civil Procedure Code.
2. Validity of the requisition made by the Income-tax Officer.
3. Whether the Chief Presidency Magistrate had the authority to scrutinize the requisition.
4. The impact of a prior settlement on the requisition.
5. The nature of the proceedings before the Chief Presidency Magistrate.
6. Compliance with Section 37(3) of the Income-tax Act regarding the retention of documents.

Issue-wise Detailed Analysis:

1. Jurisdiction of the Income-tax Officer to make a requisition under Order XIII, Rule 10 of the Civil Procedure Code:
The Income-tax Officer has the power of a civil court concerning the discovery and inspection of documents and compelling the production of books of account and other documents under Section 37(1) of the Income-tax Act. The court held that the Income-tax Officer, in his capacity as a civil court, is entitled to issue a letter of request under Order XIII, Rule 10 of the Civil Procedure Code. The court referenced the decision in Ganpatrai Rawatmull v. Collector, Land Customs, Calcutta, which supported this view.

2. Validity of the requisition made by the Income-tax Officer:
The requisition was challenged on the grounds that no assessment proceedings were pending at the relevant time. However, it was found that although the assessment for 1959-60 was completed, the assessment proceedings for 1960-61 were pending. The court noted that proceedings commence with the issuance of a specific notice under Section 22(2) of the Income-tax Act, which was issued before the letter of request. Therefore, the requisition was valid.

3. Whether the Chief Presidency Magistrate had the authority to scrutinize the requisition:
The court held that when a requisition under Order XIII, Rule 10 is made by one court to another, the latter has no discretion but to comply with the requisition. The Chief Presidency Magistrate was wrong in scrutinizing the validity and legality of the requisition. The court emphasized that the requisitioning court's authority should not be questioned by the court on which the requisition is made.

4. The impact of a prior settlement on the requisition:
Mr. Dutta argued that a settlement made on January 27, 1959, precluded the Income-tax Department from reopening assessments for the years 1940-41 to 1958-59. The court held that objections regarding admissibility or other legal grounds should be raised before the income-tax authority or the Appellate Tribunal, not the court on which the requisition is made. Thus, the prior settlement did not affect the validity of the requisition.

5. The nature of the proceedings before the Chief Presidency Magistrate:
The court clarified that the issuance of a search warrant is a judicial act, and the proceedings in connection with the issuance of a search warrant must be considered judicial proceedings. Even if considered non-judicial, such proceedings fall within the scope of Order XIII, Rule 10 of the Civil Procedure Code. Therefore, the requisition was valid regardless of the nature of the proceedings before the Chief Presidency Magistrate.

6. Compliance with Section 37(3) of the Income-tax Act regarding the retention of documents:
The court acknowledged that the Income-tax Officer must comply with Section 37(3) of the Income-tax Act, which limits the retention period of documents. The court directed that the documents be returned to the party as expeditiously as possible, adhering to the provisions of Section 37(3).

Conclusion:
The court set aside the order of the Chief Presidency Magistrate dated April 26, 1961, and directed that the documents be made over to the Income-tax Officer. The Income-tax Officer was instructed to return the documents as soon as possible, in compliance with Section 37(3) of the Income-tax Act. The petition was allowed.