1971 (2) TMI 29 - HC - Income Tax

Effect of repeal of section 137 - all assessments which had been completed prior to the repeal of section 137 of the Act of 1961 would be protected in so far as they fall within the purview of section 54 of the Act of 1922 and section 137 of the Act of 1961 but there will be no prohibition against the summoning of such documents in respect of assessments which were completed after 1st April 1964 when section 137 of the Act of 1961 was repealed - revision is consequently accepted to this extent that all the documents which related to the period after 1st April 1964 can be summoned but not those documents which related to the assessments which had been completed prior to the said date

Summary

Issues: Suit for rendition of accounts of a partnership, Disclosure of income tax information, Repeal of section 137 of the Income-tax Act of 1961, Protection of assessment records, Summoning of documents pre and post-repeal

In a suit for rendition of accounts of a partnership, the issue arose regarding the disclosure of income tax information. Initially, objections were raised citing section 54 of the Income-tax Act, 1922, which prohibited the disclosure of such information. However, it was noted that section 137 of the Income-tax Act of 1961, which replaced section 54, was repealed effective from 1st April, 1964. Following the repeal, the Central Government was empowered under section 138 of the Act of 1961 to enforce prohibitions on disclosing information regarding specified types of assessees, with exceptions as provided. Notably, the Central Government could direct that no information or document be furnished by a public servant in certain cases, as specified. This change allowed courts to summon officers with documents related to an assessee and seek information based on those documents.

Regarding the protection of assessment records, a notification issued by the Central Government on 23rd June, 1965, specified exceptions for banking companies regarding the disclosure of information. The absence of a general prohibition post-repeal of section 137 indicated a shift in the disclosure regime. However, a contention was raised that assessments completed before the repeal of section 137 would still be covered by the earlier prohibitions under section 54 of the Act of 1922 and section 137 of the Act of 1961. Citing a Division Bench judgment, it was argued that assessments completed before 1st April, 1962, would be protected from disclosure under the old provisions.

In light of the above, it was clarified that assessments completed before the repeal of section 137 would be protected under the previous provisions. However, there would be no prohibition against summoning documents related to assessments completed after 1st April, 1964, when section 137 was repealed. Consequently, the revision was accepted to the extent that documents related to the period post-April 1964 could be summoned, while those related to assessments completed before that date were not subject to disclosure. No costs were awarded in this matter.