1974 (3) TMI 19 - HC - Income Tax

Issues Involved:
1. Whether documents produced in income-tax proceedings prior to the omission of Section 137 of the Income-tax Act, 1961, can be summoned by the court.
2. Whether the omission of Section 137 from the Income-tax Act, 1961, affects the confidentiality privilege of documents produced under the Act of 1922 or the Act of 1961.
3. The applicability of Section 6(c) of the General Clauses Act, 1897, in the context of repealed provisions and accrued rights.

Issue-wise Detailed Analysis:

Issue 1: Summoning Documents Produced in Income-tax Proceedings
The court addressed whether the documents produced in income-tax proceedings prior to the omission of Section 137 of the Income-tax Act, 1961, can be summoned. The trial court had ordered the production of these documents, relying on the decision of the Madras High Court in Sivagami Achi v. Ramanathan Chettiar. The petitioner argued that Section 138 of the Income-tax Act, 1961, prohibits the production of such documents, even after the omission of Section 137. The court examined the relevant provisions of the Indian Income-tax Act, 1922, and the Income-tax Act, 1961, noting that both Acts treated assessment records as confidential and prohibited their disclosure. The court concluded that documents produced before the omission of Section 137 are protected and cannot be summoned by the court, while documents produced after the omission are not protected and can be summoned.

Issue 2: Effect of Omission of Section 137 on Confidentiality Privilege
The court examined whether the omission of Section 137 from the Income-tax Act, 1961, affects the confidentiality privilege of documents produced under the Act of 1922 or the Act of 1961. The petitioner argued that the omission of Section 137 did not remove the confidentiality privilege for documents produced before its omission. The court referred to Section 6(c) of the General Clauses Act, 1897, which states that the repeal of an enactment does not affect any right, privilege, obligation, or liability acquired, accrued, or incurred under the repealed enactment unless a different intention appears. The court concluded that the confidentiality privilege continues to apply to documents produced before the omission of Section 137, as there was no clear legislative intention to destroy this privilege.

Issue 3: Applicability of Section 6(c) of the General Clauses Act, 1897
The court analyzed the applicability of Section 6(c) of the General Clauses Act, 1897, in the context of repealed provisions and accrued rights. The court referred to several judicial decisions, including the Supreme Court's rulings in State of Punjab v. Mohar Singh and State of Kerala v. N. Sami Iyer, which established that the repeal of an enactment followed by fresh legislation does not destroy accrued rights unless the new legislation clearly indicates such an intention. The court found that the confidentiality privilege under Section 54 of the Act of 1922 and Section 137 of the Act of 1961 created a right or privilege for the assessee, which continues to exist despite the repeal of these provisions. The court concluded that Section 6(c) of the General Clauses Act, 1897, applies, and the confidentiality privilege remains intact for documents produced before the omission of Section 137.

Conclusion:
The court held that documents produced before the omission of Section 137 of the Income-tax Act, 1961, are protected and cannot be summoned by the court. Documents produced after the omission are not protected and can be summoned. The court directed the trial court to determine whether the documents in question were produced before or after the omission of Section 137 and to decide accordingly. The revision petition was partly allowed, and each party was ordered to bear its own costs. The trial court was directed to expedite the hearing of the suit.

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