1975 (7) TMI 61 - HC - Income Tax

Summary

Issues Involved:
1. Claim of privilege under Section 123 of the Indian Evidence Act.
2. Proper authority to claim privilege.
3. Validity of the affidavit supporting the claim for privilege.
4. Impact of Section 138 of the Income-tax Act on the disclosure of information.
5. Petitioner's right to challenge the basis of the search warrant under Section 132 of the Income-tax Act.

Issue-wise Detailed Analysis:

1. Claim of Privilege under Section 123 of the Indian Evidence Act
The respondents claimed privilege over certain files, arguing that their disclosure would be injurious to public interest. The affidavit filed by Respondent No. 1 stated that the files contained unpublished official records and that their disclosure would harm public interest and the efficient functioning of public service. Additionally, it was argued that revealing the information would expose departmental officials and deter them from reporting against tax evaders, thus harming public revenue.

2. Proper Authority to Claim Privilege
The petitioner argued that the Commissioner of Income-tax was not the head of the department within the meaning of Section 123 of the Evidence Act. The court referred to the Central Board of Revenue Office Manual and other relevant documents, concluding that although the Commissioner had certain administrative powers, this did not make him the head of the department for the purposes of Section 123. The court cited the Supreme Court's decision in State of Punjab v. Sodhi Sukhdev Singh, which emphasized that the privilege should generally be claimed by the Minister-in-charge or the Secretary of the department, not by junior officers like the Commissioner of Income-tax.

3. Validity of the Affidavit Supporting the Claim for Privilege
The court found that the affidavit filed by the Commissioner was not in proper form. It did not show that each document had been carefully read and considered, nor did it indicate the reasons why their disclosure would lead to public injury. The affidavit was deemed insufficient to support the claim for privilege under Section 123 and Section 124 of the Indian Evidence Act.

4. Impact of Section 138 of the Income-tax Act on the Disclosure of Information
The respondents also relied on Section 138 of the Income-tax Act, which precludes outsiders from obtaining information about an assessee's records. However, the court held that this section should not be used to withhold information from an assessee about their own case, especially when the cases of multiple assessees had been clubbed together.

5. Petitioner's Right to Challenge the Basis of the Search Warrant under Section 132 of the Income-tax Act
The petitioner argued that under Section 132(12) of the Income-tax Act, an aggrieved assessee has the right to challenge the basis of a search warrant. The court acknowledged that withholding the relevant material on which the search warrant was issued would impair the assessee's right to challenge it. However, since the claim for privilege was already negatived, the court did not find it necessary to give a final decision on this point.

Conclusion
The court concluded that the claim for privilege put forth by the respondents was not justified. The Commissioner of Income-tax was not the head of the department within the meaning of Section 123 of the Evidence Act, and the affidavit filed was not in proper form. The court also found that the documents in question did not warrant a valid claim for privilege, as they did not contain the names of secret informants and were tampered with. Consequently, the claim for privilege was disallowed.