1968 (7) TMI 13 - HC - Income Tax

Writ petition against the order of the Munsif - production of the statement - neither the repeal of the Income-tax Act of 1922 nor the enactment of the Income-tax Act of 1961 nor indeed the omission of section 137 from the Act of 1961 had obliterated the obligation imposed by section 54. The income-tax authorities as also the petitioner were justified in their stand that the statement in question could not be produced in court and the learned Munsif was not right in insisting upon its production

Issues Involved:
1. Ownership of the property in dispute.
2. Admissibility of income-tax assessment records as evidence.
3. Applicability of Section 54 of the Income-tax Act, 1922.
4. Applicability of Section 137 of the Income-tax Act, 1961.
5. Impact of the repeal of Section 137 by the Finance Act of 1964.
6. Preservation of rights, privileges, and obligations under Section 54 post-repeal.

Detailed Analysis:

1. Ownership of the Property in Dispute:
The petitioner, a tenant, was involved in litigation with the landlords over arrears of rent and eviction from a shop. The landlords, opposite parties Nos. 3 and 2, claimed ownership of the property, while the petitioner contended that he was the actual landlord. The landlords argued that the petitioner was merely a "benamidar" (nominal owner) and sought to prove this by summoning the petitioner's income-tax assessment records.

2. Admissibility of Income-tax Assessment Records as Evidence:
The landlords applied to summon the income-tax assessment records to prove a statement allegedly made by the petitioner, indicating he was a "benamidar." The petitioner resisted, citing the confidentiality provisions of the Income-tax Act. The Munsif overruled this objection, directing the records to be summoned in a sealed cover, disclosing only the part relevant to the ownership of the shop. The petitioner challenged this order through a writ petition.

3. Applicability of Section 54 of the Income-tax Act, 1922:
Section 54 of the old Act provided absolute protection against the disclosure of information contained in income-tax records. The court noted that Section 54 was in force when the statement in question was made, thus affording complete protection to the statement. This protection was absolute, preventing courts from compelling the disclosure of such information (Charu Chandra Kundu v. Gurupada Ghosh).

4. Applicability of Section 137 of the Income-tax Act, 1961:
Section 137 of the new Act, which replaced Section 54, similarly protected the confidentiality of income-tax records, with certain exceptions. However, the court concluded that Section 137 did not apply to statements made under the old Act, as the statement in question was recorded before the new Act came into force.

5. Impact of the Repeal of Section 137 by the Finance Act of 1964:
Section 137 was repealed by the Finance Act of 1964, and Section 138 was amended to allow the Central Government to restrict the disclosure of information. The court found no indication that the repeal of Section 137 was intended to destroy the rights and obligations created under Section 54 of the old Act. The omission of Section 137 did not imply an intention to obliterate the effect of Section 54.

6. Preservation of Rights, Privileges, and Obligations under Section 54 Post-repeal:
The court held that Section 54 created a right or privilege for assessees, ensuring the confidentiality of their income-tax records. This right or privilege was preserved by Section 6(c) of the General Clauses Act, which maintains rights, privileges, obligations, or liabilities accrued under a repealed enactment unless a contrary intention appears. The court concluded that the obligation of confidentiality imposed by Section 54 remained intact despite the repeal of the old Act and the omission of Section 137.

Conclusion:
The court allowed the writ petition, quashing the Munsif's orders dated 19th and 28th August 1963, and directed the Munsif to proceed with the suit in accordance with the law and the observations made. The court emphasized the continued protection of the petitioner's statement under Section 54 of the old Act, preserving the confidentiality of income-tax records.

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