1992 (2) TMI 1 - SC - Income Tax

After the repeal of section 137 of the Act there is no longer any impediment left in the way of a court to summon the production of documents filed by an assessee before the income-tax authorities after April 1 1964 relating to assessment proceedings for 1964-65 onwards and that the finality attached to an order of the Commissioner under section 138(1)(b) has no relevance to the exercise of powers by a court to summon the production of documents in a case pending before the court

Summary

Issues Involved:
1. Position of law relating to privilege prior to 1964.
2. Position of law relating to privilege after 1964.
3. Effect of the production of certified copies relating to income-tax assessment records and their admissibility in evidence.

Issue-Wise Analysis:

1. Position of Law Relating to Privilege Prior to 1964:
The Full Bench of the Delhi High Court examined four situations to address the position of law relating to privilege before 1964:
- (a) Documents filed by an assessee or third party before April 1, 1962, under the Indian Income-tax Act, 1922.
- (b) Documents filed after April 1, 1962, but before April 1, 1964, under the 1922 Act for assessment years up to 1961-62.
- (c) Documents filed after April 1, 1962, but before April 1, 1964, under the Income-tax Act, 1961, for assessment years up to 1961-62.
- (d) Documents filed after April 1, 1962, but before April 1, 1964, under the 1961 Act for assessment years 1962-63 and 1963-64.

In all these situations, the Full Bench sustained the claim of privilege by the Income-tax Department, maintaining that the documents were confidential and protected under the respective Acts.

2. Position of Law Relating to Privilege After 1964:
The Full Bench considered the following situations for the period after 1964:
- (a) Documents filed after April 1, 1964, under the 1922 Act for assessment years up to 1961-62.
- (b) Documents filed after April 1, 1964, under the 1961 Act for assessment years up to 1961-62.
- (c) Documents filed after April 1, 1964, under the 1961 Act for assessment years 1962-63 and 1963-64.
- (d) Documents filed after April 1, 1964, under the 1961 Act for assessment years 1964-65 onwards.

The Full Bench sustained the claim of privilege in all these situations, interpreting that the omission of section 137 and the substitution of section 138 did not remove the confidentiality and privilege associated with the documents.

3. Effect of Production of Certified Copies Relating to Income-Tax Assessment Records:
The Full Bench held that when a party applies for summoning documents from the income-tax authorities, the court may summon the documents. However, the Commissioner of Income-tax has the authority to decide whether it is in the public interest to produce the documents, and his decision is final and cannot be questioned by the court. The Full Bench did not express any opinion on the third question regarding the admissibility of certified copies in evidence.

Supreme Court's Analysis:
The Supreme Court addressed the controversy limited to the jurisdiction of civil courts to summon documents filed after April 1, 1964, for assessment years 1964-65 onwards. The Court noted that the High Court erred in concluding that the omission of section 137 did not affect the ban on courts summoning documents. The legislative intent behind omitting section 137 was to restore the court's power to summon documents, and the finality attached to the Commissioner's decision under section 138(1)(b) does not apply to judicial orders from courts.

The Supreme Court clarified that the Commissioner of Income-tax cannot refuse to send the record when summoned by a court of law. The privilege under sections 123 and 124 of the Indian Evidence Act, 1872, can be claimed, but it is for the court to decide whether to grant that privilege. The repeal of section 137 indicated that the Legislature no longer deemed it necessary to keep assessment records confidential from courts.

Conclusion:
The Supreme Court set aside the Full Bench's answer to situation (d) of the second question, holding that after the repeal of section 137, there is no impediment for courts to summon documents filed by an assessee after April 1, 1964, for assessment years 1964-65 onwards. The finality attached to the Commissioner's order under section 138(1)(b) does not affect the court's power to summon documents. The appeal was allowed to this extent, without costs.