1967 (2) TMI 26 - HC - Income Tax

Claim by the ITO to have privilege in respect of the production of the documents u/s 54 of 1922 Act - Whether privilege u/s 54 of the Act of 1922 against disclosure continues after repeal of Act and after repeal of section 137 of 1961 Act - Held,yes

Issues Involved:
1. Claim of privilege by the Sales Tax Officer under section 25 of the Bengal Finance (Sales Tax) Act, 1941.
2. Claim of privilege by the Income-tax Officer under section 54 of the Indian Income-tax Act, 1922.

Issue-wise Detailed Analysis:

1. Claim of privilege by the Sales Tax Officer:
The petitioners applied for summoning the clerk of the office of the Commissioner of Sales-tax, Delhi, with the file of Rama Machinery Stores Company and Golden Machinery Stores Company, particularly keen on the production of application forms S. T. I. relating to the registration of the firms. The Sales Tax Officer claimed privilege under section 25 of the Bengal Finance (Sales Tax) Act, 1941, as extended to Delhi.

Sub-section (1) of section 25 states: "All particulars contained in any statement made, return furnished or accounts or documents produced in accordance with this Act, or in any record of evidence given in the course of any proceedings under this Act, other than proceedings before a Criminal Court, shall, save as provided in sub-section (3), be treated as confidential, and notwithstanding anything contained in the Indian Evidence Act, 1872 (I of 1872), no court shall, save as aforesaid, be entitled to require any servant of the Government to produce before it any such statement, return, account, document or record or any part thereof, or to give evidence before it in respect thereof."

The court concluded that the language of the section is comprehensive and prevents the production of all kinds of documents and returns filed with the sales tax authorities. The documents sought by the petitioners from the Sales Tax Office were covered by the above section, justifying the Sales Tax Officer's claim of privilege.

2. Claim of privilege by the Income-tax Officer:
The petitioners requested the summoning of the clerk of the Income-tax Officer with balance-sheet and profit and loss accounts for the years 1950 to 1954 of Rama Machinery Stores Company. The Income-tax Officer claimed privilege under section 54 of the Indian Income-tax Act, 1922, which was in force when the documents were filed.

Sub-section (1) of section 54 reads: "All particulars contained in any statement made, return furnished or accounts or documents produced under the provisions of this Act, or in any evidence given, or affidavit or deposition made, in the course of any proceedings under this Act other than proceedings under this Chapter, or in any record of any assessment proceeding, or any proceeding relating to the recovery of a demand, prepared for the purposes of this Act, shall be treated as confidential, and notwithstanding anything contained in the Indian Evidence Act, 1872 (I of 1872), no court shall, save as provided in this Act, be entitled to require any public servant to produce before it any such return, accounts, documents or record or any part of any such record, or to give evidence before it in respect thereof."

Although the Indian Income-tax Act of 1922 was repealed on 1st April 1962, and section 137 of the Income-tax Act of 1961 was omitted by the Finance Act, 1964, the privilege claimed under section 54 of the 1922 Act persisted. Section 6(c) of the General Clauses Act, 1897, states: "6. Where this Act, or any Central Act or Regulation made after the commencement of this Act, repeals any enactment hitherto made or hereafter to be made, then, unless a different intention appears, the repeal shall not.....(c) affect any right, privilege, obligation or liability acquired, accrued or incurred under any enactment so repealed."

The court held that the privilege against the production of documents, which existed when the documents were filed, could not be affected by the repeal of section 54 of the 1922 Act. The prohibition created by section 54 was comprehensive and absolute, covering all types of documents summoned in this case. The court referenced the Supreme Court's decision in Charu Chandra Kundu v. Gurupada Ghosh, which emphasized that the prohibition against the court requiring the production of documents under section 54 is absolute and not subject to waiver by the assessee.

The court found that the subsequent legislation did not manifest an intention to destroy the privilege accrued under section 54 of the 1922 Act. The privilege continued under section 137 of the 1961 Act and, even after its repeal, under section 138, which empowered the Commissioner of Income-tax to decide on the disclosure of information.

Conclusion:
The court dismissed the petition, upholding the claims of privilege by both the Sales Tax Officer and the Income-tax Officer, and left the parties to bear their own costs of the revision.

← Previous Next →