1971 (1) TMI 2 - SC - Income Tax

Assessment orders produced in a Court by the assessee will be admissible evidence - S. 54(1) does not bar the production of assessment orders by the assessee - Assessee s appeal dismissed

Summary

Issues:
Admissibility of assessment orders in evidence for determining partnership liability based on pronotes.

Analysis:
The Supreme Court heard appeals from the Orissa High Court regarding five suits filed on different pronotes. The main issue was the admissibility of assessment orders to establish the contesting defendants' partnership in a firm. The trial judge decreed all suits, finding the transactions genuine and the defendants liable as partners. The High Court considered the admissibility of assessment orders crucial in determining the partnership. The court examined Section 54 of the Income-tax Act, 1922, which prohibited disclosure of certain documents by income tax officials. The High Court concluded that if an assessee waived privilege and produced a copy of the assessment order, it could be admissible in evidence.

The interpretation of Section 54 was central to the case. It created a bar on officials from producing specific documents and mandated confidentiality. The question arose whether assessment orders, though confidential, could be tendered as evidence if produced by the assessee or their representative-in-interest. Various High Courts had differing views on this matter. The Madras High Court held that income tax returns could not be used in court, while the Calcutta High Court found it problematic for joint assessees to use confidential assessment orders against each other. However, the Madras High Court's Full Bench allowed an assessee to use a return as evidence if desired.

The Supreme Court, relying on precedents like Emperor v. Osman Chotani, affirmed the admissibility of assessment orders produced by the assessee or their representative-in-interest. They emphasized the importance of the assessee's right to produce such documents for evidentiary purposes. The court rejected the argument that Section 54's confidentiality provisions precluded such admissibility. Referring to the Charu Chandra Kundu case, the court clarified that the prohibition under Section 54 did not prevent an assessee from presenting assessment orders as evidence.

In conclusion, the Supreme Court dismissed the appeals, upholding the High Court's decision on the admissibility of assessment orders. The court affirmed the right of an assessee or their representative-in-interest to produce such documents as evidence in legal proceedings, even if they were otherwise confidential.