http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 15  

PETITIONER: DAGI RAM PINDI LAL AND ANR

       Vs.

RESPONDENT: TRILOK CHAND JAIN AND ORS.

DATE OF JUDGMENT04/02/1992

BENCH: ANAND, A.S. (J) BENCH: ANAND, A.S. (J) KULDIP SINGH (J)

CITATION:  1992 AIR  990            1992 SCR  (1) 545  1992 SCC  (2)  13        JT 1992 (1)   526  1992 SCALE  (1)249

ACT:     Income  Tax Act, 1922-Section 54 and Section 137 of  the Income  Tax  Act, 1961-Repeal of 1922 Act  and  omission  of Section  137-Jurisdiction of Courts to call for the  record- Scope of.     Income   Tax  Act,  1961-Section   138(1)(b)-Scope   and application  of-Jurisdiction and powers of  Commissioner  of Income  Tax under-Scope of-Court’s order for  Production  of Record-Commissioner  cannot refuse-Omission of Section  137- Legislative intention.     Income Tax Act, 1961-Sections 138(1)(b), 137  read  with section  6,  General Clauses Act-Repeal  of  any  Enactment- Effect-Omission of Section 137-Court’s order for  production of record-Ban on Court’s jurisdiction whether continues.     Income  Tax Act, 1961-Sections 137, 138(1)(b)-Repeal  of Section 137-Documents relating to assessment proceedings for 1964-65 onwards-Filed before the authority after 1.4.1964 by assessee-Whether  Court can summon.

HEADNOTE:     The Plaintiff-respondent instituted a suit for  recovery of Rs.1,39,722.86 against the defendants-appellants.     When   evidence   was  being  recorded   in   the   suit proceedings,  the plaintiff obtained summons from the  court requiring the Income Tax Department to produce in the  court records  relating  to  the  income  tax  assessment  of  the defendants for the assessment years 1964-65 to 1971-72.     The  Income Tax Officer produced the record in a  sealed cover.     The plaintiff also obtained summons requiring the Income Tax Officer to produce the income tax record relating to two other  assessees,  which was produced in the Court  by   the Department  in  a  sealed cover with a  submission  that  no disclosure of information regarding income tax                                                        546 pertaining  to  an income tax  assessee could be  made.  The plaintiffs in the meanwhile filed in the court  a  number of certified  copies of the accounts of the  defendants,  which he  had obtained from the Income-Tax authorities and  sought permission  of the Court to tender the certified  copies  in evidence.

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 15  

   Before a Single Judge of the High Court on the  question of  privilege  as  claimed by  the  Income  Tax  Department, arguments were addressed by the parties.     The  following three questions were referred to the Full Bench     (i)   What is the position of law relating to  privilege prior to 1964?     (ii)  What is the position of law relating to  privilege after 1964? and     (iii) What is the effect of the production of  certified copies  relating to income-tax assessment records,  and  how far certified copies can be admitted in evidence?     The  Full Bench answered the first and second  questions sustaining  the  claim of the privilege by  the  Income  Tax Department and the Full Bench did not express any opinion on the third question.     Against  the  judgment  of the Full Bench  of  the  High Court,  appeal was filed by special leave.  The  controversy before  this Court was confined to the finding of  the  High Court relating to the claim of privilege for the  production of  documents which were filed after the repeal  of  Section 137,  with  effect from 1.4.1964 in  respect  of  assessment years 1964-65 onwards.     The  appellants  (defendants) contended that  after  the repeal  of  Section 137 of the Income-Tax Act, 1961  by  the Finance Act, 1964 there was no longer any impediment left in the  way  of  a  civil court to  summon  the  production  of documents  filed  by  an  assessee  during  the   assessment proceedings  before an Income-Tax Officer after 1.4.1964  in respect  of assessment years 1964-65 onwards, and  that  the finality  attached  to  an order of  the  Commissioner  with regard to claim of privilege under Section 138(1)(b) had  no relationship  to  the  power of the  court  to  summon  that record.     Allowing  the appeal of the defendants-appellants,  this Court,                                                        547     HELD:1.01.  Section 54 of  the Income Tax Act, 1922  and after  its repeal, Section 137 of the Income Tax  Act,  1961 had only placed fetters on the exercise of the jurisdiction, in  respect  of  the specified  documents,  by  the  courts, notwithstanding anything contained in any other law for  the time  being  in force. The exercise of the  jurisdiction  to seek  production  of documents had, only been  put  under  a cloud  in so far as the record of assessment  is  concerned. [560E]     1.02.  With the repeal of the 1922 Act and  omission  of Section 137 of the 1961 Act, the fetters on the exercise  of the  jurisdiction  were  removed with the  result  that  the exercise  of  jurisdiction  to call for  the  production  of documents  relevant  to the case pending before  the  court, even from the income-tax authorities, revived. [560E-F]     1.03. Neither Section 54 of the 1922 Act nor Section 137 of   the  1961  Act  had  taken  away  for  all  times   the jurisdiction  of the courts to call for the record from  the Income-Tax authorities. Those  provisions had only  put  the exercise  of  that  jurisdiction under  a  cloud  and  those fetters  were  coterminous with the life of  Section  54  of the 1922 Act or Section 137 of the 1961 Act. [560F-G]     2.01.  Clause (b) of Sub-Section (1) of Section  138  is limited  in its scope and application. Under it, any  person can  make  an  application  to  the  Commissioner  for   any information  relating  to  an assessee  in  respect  of  any assessment made either under the 1922 Act or under the  1961 Act  on or after the 1st April 1960 and the Commissioner  of

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 15  

Income  Tax  has  the authority to furnish or  cause  to  be furnished  the  information  asked for  on  being  satisfied that it is in the public interest so to do and such an order of  the  Commissioner  is  final and  cannot  be  called  in question in any court of law. The Commissioner of Income Tax under this clause performs only an administrative  function, on his  subjective satisfaction as to whether  it is in  the public  interest  to furnish the information or not  to  any person  seeking  such information and his decision  in  that behalf is final and the aggrieved person cannot question  it in  a  court  of  law.  By  enacting  this  provision,   the legislature  could  not be said to have  intended  that  the Commissioner  of Income Tax would have the authority to  sit in  judgment over the requisition   (Judicial order) made by a  court  of  law  requiring the  production  of  record  of assessment  relating  to  an  assessee  in  a  case  pending before the court. [562H-563D]                                                        548     2.02. When a court of law, in any matter pending  before it,  desires  the  production  of  record  relating  to  any assessment after applying its judicial mind and hearing  the parties  and on being prima facie satisfied that the  record required to be  summoned is relevant for the decision of the controversy before it - it passes a judicial order summoning the  production  of  that  record  from  the  Party   having possession  of  the record. The Commissioner of  Income  Tax cannot,  therefore,  refuse  to  send  the  record,  as   he certainly  is  not authorised to set at  naught  a  judicial order of a court law. He must obey the order of the court by sending the record to the court concerned. [563D-F]      2.03.  It is open to the Commissioner of Income Tax  to claim  privilege,  in respect of any document or  record  so summoned  by a court of law, under Sections 123 and  124  of the  Indian Evidence Act, 1872 and even then it is  for  the court to decide whether or not to grant that privilege.  Had the   legislature  intended  that  no  document   from   the assessment  record  of an assessee should be produced  in  a court  on being summoned by it, without the approval of  the Commissioner of Income Tax, it would have said so in Section 138 of the Act itself. [563F-G]      2.04.   The  repeal of Section 137 of the  Act  clearly discloses  the  legislative intent that it was felt  by  the legislature  that  it  was no more  necessary  to  keep  the records of assessment by the Income Tax Department  relating to  an assessee as confidential from the courts and  the  bar with regard to the production of any part of the record  was removed in so far as the courts are concerned.  The finality which  has  been attached to the order of  the  Commissioner under  Section  138(1)(b) of the Act is  restricted  to  the cases  where  the information etc. as  contemplated  by  the section  is called for by any person, other than a court  of law by  a judicial order. [563G-564A]      2.05  The finality which has been attached to the order of  the Commissioner under Section 138(1)(b) of the  Act  is applicable  only in cases where application is made  to  the Commissioner  by a party or any other person  for  receiving documents  or  information.  It has nothing to do  with  the powers of the courts to summon the production of  assessment record of an assessee, filed after 1.4.1964.  The  privilege as to secrecy, which the assessee had acquired under Section 54 of the 1922 Act remained unimpaired by the repeal of that Act or even by the omission of Section                                                   549 137  of  the 1961 Act in respect of record  filed  prior  to 1.4.1964 and relating to the assessments prior to that date.

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 15  

That privilege did not extend, after April 1,1964. to record filed before the income-tax authorities, for the  assessment years 1964-65 onwards.  [560H-561B]      2.06.  Section 138(1)(b) does not effect the powers  of the  courts to require the production of assessment  records or  the disclosure of any information therefrom to it, in  a case pending before the court when the court, by a  judicial order,  requires  the production of the  record,  considered relevant  by  it for decision of a case pending  before  it. [564B-C]      2.07.   The  High  Court,  therefore,  fell  in   error in holding that the assessment records of an assessee  filed before the income-tax authorities, even after April  1,1964, are immune from production in a court of law on summons  for their  production  being issued by the court  and  that  the disclosure  of any information from the record even  to  the courts is subject to the veto powers of the Commissioner  of Income Tax. [564B]      3.01.  Section 6 of the General Clauses Act as well  as Section 138 (1)(b) of the 1961 Act cannot extend the ban  on the exercise of the jurisdiction by the courts to summon the production  of  documents from  the  income-tax  authorities after  April 1,1964 relating to assessment year  1964-65  in respect of the record filed after April 1,1964. [561B-C]      3.02.  Section  6 of the General Clauses  Act  provides that  the  repeal  of  any  enactment,  unless  a  different intention  appears, shall not affect any  right,  privilege, obligation or liability acquired, accrued or incurred  under the repealed enactment. [561F]      3.03  The general principle is that an enactment  which is  repealed,  is to be treated, except as  to  transactions past  and closed, as if it had never existed.  The  assessee had  acquired no right or privilege under the repealed  Act, since the provision is only a procedural restriction and did not create any substantive right in the assessee, in respect of assessments for the period after the omission of  Section 137  of  the  1961  Act.   Thus,  reliance  placed  on   the provisions  of Section 6 of the General Clauses Act to  hold the continuation of the ban on the exercise of  jurisdiction by the courts was misplaced. [561H-562B]      3.04.  In  respect  of the documents  filed  after  the omission of Section                                                   550 137  of  the  1961  Act , with  effect  from  April  1,1964, relating  to assessments for the period 1964-65 onwards,  no right,  privilege,  obligation or liability can be  said  to have been acquired accrued or incurred prior to the omission of Section 137 of the Act. [561F-G]      3.05  The ban contained in Section 137 of the 1961  Act on  the exercise of the powers of a civil court to call  for production  of  documents  etc. could not be  said  to  have continued  to  exist, in matters arising subsequent  to  the omission of that Section with effect from April 1, 1964  and that ban came to an end in respect of the period after April 1, 1964. [561G]      4. 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. [564D-E]

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 5 of 15  

JUDGMENT:      CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1360  of 1974.      From  the  judgment and Order dated 14.12.1973  of  the Delhi High Court in suit No. 64 of 1969.      Ms.   Suruchi  Agarwal  and  T.V.S.N.  Chari  for   the Appellants.      H.K. Puri and Mrs. Urmila Sirur for the Respondents.      The Judgment of the Court was delivered by      DR.  A.S.ANAND,J.   This appeal, by special  leave,  is directed against the judgment of the Full Bench of the Delhi High  Court, dated  14.12.1973 in Suit No. 64/69,  delivered in  a reference made by  a learned Single Judge for  opinion of  the Full Bench.  The questions referred by  the  learned Single Judge to the Full Bench revolved around the scope and effect  of  the  provisions of Sections 54 and  59B  of  the Indian  Income Tax Act 1922 (hereinafter referred to as  the ’1922  Act’) and Sections 137 and 138 of the Income Tax  Act 1961 (hereinafter referred to as the ’1961 Act’) as  amended from  time  to time in 1964 and 1967 in the context  of  the claim  of  privilege by the Income Tax  Department  for  the production of the                                                        551 documents relating to assessment of an assessee summoned  by the  Civil  Court.   The  following  three  questions   were referred to and considered by the Full Bench:           "1.  What  is  the position  of  law  relating  to           privilege prior to 1964?           2.   What  is  the position  of  law  relating  to           privilege after 1964 ?; and           3.   What  is  the effect  of  the  production  of           certified copies relating to income-tax  assessment           records,  and  how  far  certified  copies  can  be           admitted in evidence ?"      The  circumstances under which these  questions  arose, briefly put, are as follows:      2. The plaintiff, Trilok Chand Jain, instituted a  suit for recovery of Rs. 1,39,722.86 against the defendants, M/s. Dagi  Ram  Pindi Lal and Smt. Budh Wanti  Gulati,  w/o  Shri Pindi Lal Gulati, the appellants herein.  During the  course of  proceedings  in  the  suit,  when  evidence  was   being recorded,  the  plaintiff obtained summons  from  the  court requiring the Income Tax Department to produce in the  court records  relating  to  the  Income  Tax  Assessment  of  the defendants,  M/s.  Dagi Ram Pindi Lal,  for  the  assessment years  1964-65 to 1971-72.  The Income tax officer to   whom the  summons were issued, sent the record in a sealed  cover through  an  Inspector along with a letter,  dated  November 1,1972,  claiming that the said record was privileged  under Section 137 of the 1961 Act.  The plaintiff also applied for and  obtained  summons requiring the Income tax  Officer  to produce  the  Income  tax record relating  to  M/s  Borizeon Industrial Products (P) Ltd. and Bishamber Nath Kaul.   That record  was also sent by the Income Tax Officer in a  sealed cover  alongwith a letter in which it was submitted that  no disclosure of information regarding income tax pertaining to an  income tax assessee could be made.  The  plaintiffs,  it appears,  in  the meanwhile filed in the court a  number  of certified copies of the accounts of the defendants, which he had been able to obtain from the income-tax authorities  and sought  permission  of  the Court to  tender  the  certified copies in evidence.  Arguments were addressed by the parties before the learned Single Judge on the question of privilege

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 6 of 15  

as claimed by the Income Tax officer.  Being of the  opinion that the question of privilege, as claimed by the Income Tax officer, was important and likely to arise in                                                       552 the course of trial of suits in future also, a reference was made  by  the learned Single Judge to the  Full  Bench.   In dealing with the three questions (supra) referred to it, the Full  Bench considered different situations.  It  considered the first question in the following four situations:           "(a) Where the documents, records, etc. in respect          of  which  privilege is claimed were  filed  by  an          assessee or a third party before April 1,1962, with          effect  from which date the Indian Income Tax  Act,          1922  was repealed, in respect of assessment  years          up  to  and including assessment  year  1961-62  in          proceedings  for the said assessment  years  taking          place under the Indian Income-tax Act,1922;           (b) Where the documents, records, etc. were  filed          by an assessee or a third party after April 1,1962,          but  before April 1,1964 in respect  of  assessment          years  up to and including assessment year  1961-62          in proceedings for the said assessment years taking          place under the Indian Income_tax Act,1922;           (c)  Where the document, records, etc. were  filed          by an assessee or a third party after April 1,1962,          but  before April 1,1964, in respect of  assessment          years  up to and including assessment year  1961-62          in proceedings for the said assessment years taking          place under the Income-tax Act, 1961;and           (d) Where the documents, records, etc. were  filed          by an assessee or a third party after April 1,1962,          but before April 1,1964, in respect of   assessment          years  1962-63 and 1963-64 in proceedings  for  the          said  assessment  years  taking  place  under   the          Income-tax Act, 1961."      and sustained  the claim of privilege by the Income Tax Department in each one of the situations.       The     Full  Bench  while  considering   the   second question, dealt with the following situations:           (a) Where the documents, records, etc. in  respect          of   which  privilege is claimed were filed  by  an          assessee  or a third party after April 1, 1964,  in          respect  of  assessment years up to  and  including          assessment year 1961-62 in proceedings for the said                                                        553           assessment  years  taking place under  the  Indian          Income-tax Act, 1922;           (b)  Where the documents, records etc. were  filed          by  an  assessee or a third party  after  April  1,          1964,  in  respect of assessment years  up  to  and          including year 1961-62 in proceedings for the  said          assessment  years  taking place  under  the  Indian          Income-tax Act, 1961;           (c) Where the documents, records, etc. were  filed          by  an  assessee or a third party  after  April  1,          1964,  in respect of assessment years  1962-63  and          1963-64  in  proceedings for the  said  assessments          years taking place under the Income-tax Act,  1961;          and           (d) Where the documents, records, etc. were  filed          by  an  assessee or a third party  after  April  1,          1964,  in  respect  of  assessment  years   1964-65          onwards."      The  claim  of  privilege was sustained  in  all  above situations also.

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 7 of 15  

3.  Dealing with the effect of omission of Section  137  and substitution of section 138 (1) (a) and (b), the High  Court opined;           ".....that when a party to a proceeding in a Court          applies  for summoning any documents, records  etc.          from  the  income-tax authorities,  the  Court  may          summon  the  said documents, records, etc.  But  on          receipt of summons, it is open  to the Commissioner          of  Income-tax to consider the matter  as  provided          under  section 138 (1) (b), and decide  whether  it          would be (sic) in the public interest to produce or          furnish the documents, records, etc. summoned  for,          and  submit his view to the Court in answer to  the          summons.   In  case,  he  is  satisfied  that   the          production   etc.  would  not  be  in  the   public          interest,  his decision is final and the  Court  to          which  the  said decision  is  communicated  cannot          question the same."                                         [EMPHASIS SUPPLIED]    The  Full Bench, however, did not express any opinion  on the third question.      4. Learned counsel for the appellant has not questioned the findings of the Full Bench in so far  as they relate  to the claim of privilege in respect                                                   554 of  documents filed prior to the repeal of the 1922 Act   or before  the omission of Section 137 from the 1961 Act.   She has  questioned  the  findings of the  Full  Bench  only  as regards  the power and jurisdiction of the Court  to  summon the  documents,  after the repeal of the 1922 Act  and after the deletion of Section 137 from the 1961 Act by the Finance Act, 1964 as also the interpretation placed by the Bench  on Section  138 (1) (b) of the Act.  The controversy before  us has been confined to the finding of the High Court  relating to  the claim of privilege for the production  of  documents which  were  filed  after the repeal of  Section  137,  with effect from 1.4.1964 in respect of assessment years  1964-65 onwards.   Thus, it is the finding on situation (d)  of  the second  question as rendered by the Full Bench  Which  alone has been questioned and debated before us.      The  precise  argument of the learned counsel  for  the appellant  is  that after the repeal of Section 137  of  the 1961 Act by Act V of 1964, there is no longer any impediment left in the way of a civil court to summon the production of documents  filed  by  an  assessee  during  the   assessment proceedings before an Income-tax Officer after  1.4.1964  in respect  of assessment years 1964-65 onwards, and  that  the finality  attached  to  an order of  the  Commissioner  with regard  to claim of privilege under Section 138 (1) (b)  has no  relationship  to the power of the court to  summon  that record.      5.  For a  proper appreciation of the question  debated before  us, it would be desirable to refer to  the  relevant provisions  of  the 1922 Act and 1961 Act, as  amended  from time  to time, and notice the changes brought about  in  the matter of claim of privilege by the Income Tax Department.           Section 54 (1) and (2) of the 1922 Act provided as          follows:             "54.  Disclosure  of  information  by  a  public          servant           (1)  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

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 8 of 15  

        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 purpose of this  Act,  shall  be          treated as confidential, and notwithstanding                                                        555           anything  contained  in the Indian  Evidence  Act,          1872(1 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.           (2) If a public servant discloses any  particulars          contained   in   any   such   statement,    return,          accounts,documents, evidence, affidavit  deposition          or record, he shall be punishable with imprisonment          which  may extend to six months, and shall also  be          liable to fine."      6.  By Section  9 of the Taxation Laws (Amendment)  Act of  1960,  Section 59-B was inserted in the  1922  Act  with effect from April 1, 1960.  It provided as under:-           "59-B  Disclosure  of  information  regarding  tax          payable-           Where  a  person  makes  an  application  to   the          Commissioner  in   the prescribed  form  and  after          payment of the prescribed fee for information as to          the  amount  of tax determined as  payable  by  any          assessee  in respect of any assessment made  on  or          after the 1st day of April, 1960, the  Commissioner          may, notwithstanding anything contained in  section          54,   if  he  is  satisfied  that  there   are   no          circumstances  justifying its refusal,  furnish  or          cause to be furnished the information asked for."      Both   the   aforesaid  provisions   dealt   with   the confidential  nature  of  the documents  filed,  before  the Income  Tax  authorities  and  the  claim  of  privilege  to disclose  the  same  to anyone, including a  court  of  law. Section 54 (1) declared that the various documents  referred to therein shall be treated as confidential and prohibited a court from requiring any public servant to produce before it any  such document or to give evidence before it in  respect thereof,  notwithstanding anything contained in  the  Indian Evidence  Act,  1872.  Sub-Section (2) of  Section  54  made punishable,  the  disclosure  by a public  servant,  of  any information  contained  in those documents.  the  effect  of introduction  of Section 59-B by Taxation  Laws  (Amendment) Act  1960  was  that  it  entitled  a  person  to  make   an application  to  the  Commissioner  to  obtain   information thereafter as to the amount of tax determined, as payable by an assessee in respect of any assessment made                                                   556 on or before April 1, 1960, and authorised the  Commissioner to   furnish  or  cause  to be   furnished  the  sought  for information,  if  he  was  satisfied  that  there  were   no circumstances  justifying its refusal.  This legal  position continued  to prevail till April 1, 1960, when the 1922  Act was  repealed by the 1961 Act. In the 1961 Act ,  provisions were made corresponding to sections 54 and 59-B of the  1922 Act  in  Sections  137 and 138.  The  relevant  portions  of Sections 137 and 138 of the Act provided as follows:           "137. Disclosure of information prohibited-           (1)  All  particulars contained in  any  statement          made,  return  furnished or accounts  or  documents          produced  under the provisions of this Act,  or  in

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 9 of 15  

        any evidence given or affidavit or deposition  made          in  the course of any proceedings under  this  Act,          other  than proceedings under Chapter XXII,  or  in          any  record of any assessment proceedings,  or  any          proceedings  relating  to  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, 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.           (2)   No   public  servant  shall   disclose   any          particulars   contained  in  any  such   statement,          return,  accounts, documents, evidence,  affidavit,          deposition or record.           (3) .......           (4) .......           (5) .......           "138.  Disclosure  of information  respecting  tax          payable-           WHERE  A  person  makes  an  application  to   the          Commissioner  in the prescribed form and  pays  the          prescribed fee for information as to the amount  of          tax determined as payable by an assessee in respect          of any assessment made either under this Act or the          Indian-income  tax Act, 1922.  On or after the  1st          day                                                        557           of    April,   1960,   the    Commissioner    may,          notwithstanding anything contained in Section  137,          if he is satisfied that there are no  circumstances          justifying  its  refusal, furnish or  cause  to  be          furnished the information asked for."      7.  The  provisions of Section 137(1) of the  1961  Act were, as is seen, almost identical to the provisions of sub- section  (1) of Section 54 of the 1922 Act and  Section  137 (2)   prohibited  a  public  servant  from  disclosing   the particulars  contained in any of the documents mentioned  in Section 137 (1).  The provisions of Section 138 of the  1961 Act were almost identical to the provisions of Section  59-B of the 1922 Act.      8.  With effect from April 1, 1964, Section 137 of  the 1961 Act was omitted from the Statute vide Section 32 of the Finance  Act No. V of 1964, and Section 138 was  substituted by a new Section vide Section 33 of the Finance Act No. V of 1964.  The substituted Section 138 reads as under:-           "138.   Disclosure   of   information   respecting          assessees:-           (1)  Where  a person makes an application  to  the          Commissioner   in  the  prescribed  form  for   any          information relating to any assessee in respect  of          any  assessment made either under this Act  or  the          Indian  Income-tax Act, 1922, on or after  the  1st          day of April, 1960, the Commissioner may,  if he is          satisfied  that it is in the public interest so  to          do,   furnish   or  cause  to  be   furnished   the          information asked for in respect of that assessment          only and his decision in this behalf shall be final          and shall not be called in question in any Court of          law.           (2)  Notwithstanding  anything contained  in  sub-          section (1) or  any other law for the time being in          force, the Central Government may, having regard to

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 10 of 15  

        the  practices  and usages customary or  any  other          relevant factors, by order notified in the Official          Gazette,  direct  that no information  or  document          shall be furnished or produced by a public  servant          in  respect of such matters relating to such  class          of  assessees or except to such authorities as  may          be specified in the order."      9.  The scope of Section 138, of the 1961 Act  was,  as can  be  seen,  enlarged by the  substituted  provisions  of Section 138.  Under the original                                                   558 Section   138  a  person  could  make  an  application   for information  only  as to the amount of  tax  determined,  as payable  by  an  assessee,  under  sub-section  (1)  of  the substituted Section 138, a person could make an  application for any information relating to an assessment.  Again, under the  original Section 138, before the necessary  information could be furnished or cause to be furnished to an applicant, the  Commissioner  was to be satisfied that  there  were  no circumstances justifying refusal to furnish the  information asked for; under sub-Section (1) of the substituted  Section 138,  the Commissioner was required to be satisfied that  it was in the public interest to furnish the information  asked for  and  "his decision in this behalf shall  be  final  and shall not be called in question in any court of law."   Vide sub-Section (2) of the substituted Section 138, the  Central Government  was  also  empowered  to  direct,  by  an  order notified  in  the Official Gazette, that no  information  or document shall be furnished or produced by a public  servant in  respect  of  such  matters relating  to  such  class  of assessees or except to such authorities as may be  specified in the order.      10, The substituted Section 138 was once again  amended and  substituted  vide Section 28 of the Finance  Act,  1967 with effect from April 1, 1967.  The new sub-section (1)  of section 138 reads as follows:           "(1)(a)   The  Board  or  any   other   income-tax          authority  specified by it by a general or  special          order  in  this behalf may furnish or cause  to  be          furnished to-           (i) any officer, authority or body performing  any          functions under any law relating to the  imposition          of any tax, duty of cess, or to dealings in foreign          exchange as defined in section 2(d) of the  Foreign          Exchange Regulation Act, 1947; or           (ii)such  officer,  authority or  body  performing          functions  under  any  other  law  as  the  Central          Government  may, if in its opinion it is  necessary          so  to  do  in  the  public  interest,  specify  by          notification  in  the  Official  Gazette  in   this          behalf,  any  such  information  relating  to   any          assessee  in respect of any assessment  made  under          this Act or the Indian income-tax Act, 1922 as may,          in  the  opinion of the Board or  other  Income-tax          authority, be necessary for the purpose of enabling          the  officer, authority or body to perform  his  or          its functions under that law.                                                        559           (b)  Where  a person makes an application  to  the          Commissioner   in  the  prescribed  form  for   any          information relating to any assessee in respect  of          any  assessment made under this Act or  the  Indian          Income-tax  Act  1922, on or after the 1st  day  of          April,   1960  the  Commissioner  may,  if  he   is          satisfied  that it is in the public interest so  to

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 11 of 15  

        do,   furnish   or  cause  to  be   furnished   the          information asked for in respect of that assessment          only and his decision in this behalf shall be final          and shall not be called in question in any court of          law."      The  provisions  of sub-Section (1) of Section  138  as they originally stood were incorporated in clause (b) of the substituted   sub -Section  (1)  and  a  new  provision   was incorporated   in  clause  (a)  of  sub-Section  (1)   which empowered  the  Board  or  any  other  income-tax  authority specified by it by a general or special order in that behalf to furnish or cause to be furnished, information relating to any   assessee  to  such officer, authority or  body  as  is mentioned  in the provision to enable him or it  to  perform its  functions  under  the  Act.   Vide  clause  (b)of   the substituted  sub-Section  (1) of Section 138,  finality  has also been attached to an order of the Commissioner, made  on an  application   filed by any  person  seeking  information relating  to an assessee in respect of any assessment.   The Commissioner,  has to make an order, after  being  satisfied that  it is in the public interest so to do, to  furnish  or cause to be furnished such information and that decision  of the  Commissioner is immune from challenge  in any court  of law.      11.  The controversy as already noticed, before  us  is limited  to the jurisdiction or lack of it of a civil  court to  seek  production of documents relating  to   assessments filed after April 1, 1964 in assessment proceedings  1964-65 onwards, after the omission of Section 137 of the Act.      12.  The Full Bench, in the impugned judgment, came  to the  conclusion   that the omission of Section 137  did  not make  any  difference and  that the ban  on  the  courts  as contained in the repealed Section 137 continued to remain in force  by  virtue of the provisions of Section 138  (1)  and after 1967 by Section 138 (1)(b) of the Act even in  respect of  the documents filed in the assessment  proceeding  after April 1, 1964 for assessments relating to the period 1964-65 onwards.    The  Full  Bench  also  pressed  into  aid   the provisions of Section 6 of the General Clauses Act to                                                   560 hold  that the repeal of Section 137 did not remove the  ban on  the courts to  summon any documents from the  income-tax authorities,  even  in respect of documents which  had  been filed before the Income-tax authorities after the repeal  of Section 137 after April 1, 1964.      13.  In  our opinion the High Court fell  in  error  in coming  to  that  conclusion.   It  not  only  ignored   the legislative  intent manifest in the omission of Section  137 of the 1961 Act, after the repeal of the 1922 Act, but  also ignored  the  powers of a court under the  general  law,  to summon such documents, record etc. as is found relevant to a case  pending  before  the  court, in  the  absence  of  any specific  prohibition, under any law for the time  being  in force.   The  High Court assumed that by Section 54  of  the 1922 ACt and Section 137   of the 1961 Act, the jurisdiction of  the  courts to call for documents  from  the  income-tax authorities  had  been  taken away for all  times  to  come, notwithstanding  the repeal of the 1922 Act or the  omission of  Section  137 specifically from the 1961 Act.   The  High Court appears to have lost sight of the position that  under the  Code of Civil Procedure, the courts of law have  always possessed  the  jurisdiction to call for the  production  of documents relevant to the case before the court from anybody having  custody of those documents.  Section 54 of the  1922 Act  and  after its repeal Section 137 of the 1961  Act  had

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 12 of 15  

only  placed fetters  on the exercise of that  jurisdiction, in  respect  of  the specified  documents,  by  the  courts, notwithstanding anything contained in any other law for  the time  being in force.  The exercise of the  jurisdiction  to seek production of documents had, thus only been put under a cloud  in so far as the record of assessment  is  concerned. With the repeal of the 1922 Act and omission of Section  137 of  the  1961  Act,  the fetters on  the  exercise  of  that jurisdiction were removed with the result that the  exercise of the jurisdiction to call for the production of  documents relevant to the case pending before the court, even from the income-tax authorities, revived.  Neither Section 54 of  the 1922 Act nor Section 137 of the 1961 Act had taken away  for all  times  the jurisdiction of the courts to call  for  the record  from the income-tax authorities.  Those  provisions, as  already  noticed  had, only put  the  exercise  of  that jurisdiction   under   a  cloud  and  those   fetters   were coterminous  with the life of Section 54 of the 1922 Act  or Section 137 of the 1961 Act.      14.  The finality which has been attached to the  order if the Commissioner under Section 138 (1) (b) of the Act  is applicable  only in cases where application is made  to  the Commissioner by a party or any other person                                                   561 for  receiving documents or information.  It has nothing  to do with the powers of the courts to summon the production of assessment record of an assessee, filed after 1.4.1964.  The Privilege  as  to secrecy, which the assessee  had  acquired under Section 54 of the 1922 Act remained unimpaired by  the repeal  of that Act or even by  the omission of Section  137 of the 1951 Act in respect of record filed prior to 1.4.1964 and  relating to the assessments prior to that  date.   That privilege  did  not extend, after April 1, 1964,  to  record filed before the income-tax authorities, for the  assessment years 1964-65 onwards.  Section 6 of the General Clauses Act as well as Section 138 (1) (b) of the 1961 Act cannot extend the ban on the exercise of the jurisdiction by the courts to summon  the  production  of documents  from  the  income-tax authorities after April 1, 1964 relating to assessment  year 1964-65 in respect of the record filed after April 1, 1964.      15.  Section 6 (C) of the General Clauses Act, 1897  on which reliance was placed by the HIgh Court reads as under:-           "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 or incurred under any  enactment          so repealed."      A plain reading of the Section shows that the repeal of any  enactment unless a different intention  appears,  shall not  affect  any right, privilege, obligation  or  liability acquired, accrued or incurred under the repealed  enactment. In  respect  of  the documents filed  after  the  repeal  of Section 137 of the 1961 Act, with effect from April 1, 1964, relating  to assessments for the period 1964-65 onwards,  no right,  privilege,  obligation or liability can be  said  to have  been  acquired,  accrued  or  incurred  prior  to  the omission  of section 137  of the Act.   Therefore,  the  ban contained in Section 137 of the 1961 Act on the exercise  of the  powers  of  a civil court to  call  for  production  of documents  etc.  could  not be said to  have   continued  to exist, in matters arising subsequent to the omission of that Section with effect from April 1, 1964 and that ban came  to

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 13 of 15  

an  end in respect of the period after April 1,  1964.   The general principle is that an enactment which is repealed, is to  be  treated, except as to transactions past and  closed, as  if it had never existed.  The assessee had  acquired  no right or                                                   562 privilege  under  the repealed Act, since the  provision  is only  a  procedural  restriction  and  did  not  create  any substantive right on the assessee, in respect of assessments for the period after the omission of Section 137 of the 1961 Act.   Thus, reliance placed on the provisions of Section  6 of  the General Clauses Act to hold the continuation of  the ban  on  the  exercise of jurisdiction  by  the  courts  was misplaced.      16.  Dealing with the scope of Section 138 (1)  (b)  of the  Act,  the  High Court held  that  the  said  provisions attached   a  finality  to  an  order  of  the  Income   Tax Commissioner  and applied to the cases where the record  was summoned even by a court of law.  The High Court opined:           "The  complete omission of the declaration of  the          confidential nature of the documents, records, etc.          and  the  removal of the ban on courts  and  public          servants  no  doubt, suggests that the power  of  a          court   under  the  general  law  to  summon   such          documents, records,etc. relevant to the case before          it  has been restored.  But at the same  time,  the          legislature  which  empowered the  Commissioner  of          Income-tax  to  furnish the information  if  he  is          satisfied  that it is in the public interest so  to          do made  the decision of the Commissioner final and          un-questionable in a Court of law.  When two powers          are  thus vested in two legal authorities,  neither          of them can be ignored, and both of them have to be          reconciled  and given effect to .  In the  case  of          the  two powers under consideration, it has  to  be          noted  that  the power to summon which vests  in  a          court is under the general law, while the power  of          the  Commissioner has been conferred upon him by  a          special law and has, therefore, to prevail over the          former.   In  view of the same, it has to  be  held          that  while  it is open to a court  to  summon  the          documents,   records  etc.  from   the   Income-tax          Commissioner,   it   is   equally   open   to   the          Commissioner  on receiving the summons to  consider          whether the production/furnishing of the documents,          records  etc. would be in the public interest,  and          submit  the  same  to the court in  answer  to  the          summons."           We are unable to subscribe to the above view.      17.  Clause  (b) of sub-Section (1) of Section  138  is limited in its scope and application.  Under it, any  person can make an application to the                                                   563 Commissioner for any information relating to an assessee  in respect of any assessment made either under the 1922 Act  or under  the 1961 Act on or after the 1st April 1960  and  the Commissioner  of Income Tax has the authority to furnish  or cause  to  be furnished the information asked for  on  being satisfied  that  it is in the public interest so to  do  and such  an  order of the Commissioner is final and  cannot  be called in question in any court of law.  The Commissioner of Income Tax under this clause performs only an administrative function, on his subjective satisfaction as to whether it is in the public interest to furnish the information or not  to any person seeking such information and his decision in that

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 14 of 15  

behalf is final and the aggrieved person cannot question  it in  a  court  of  law.   By  enacting  this  provision,  the legislature  could  not be said to have  intended  that  the Commissioner  of Income Tax would have the authority to  sit in  judgment  over the requisition made by a  court  of  law requiring the production of record of assessment relating to an  assessee  in a case pending before the  court.   When  a court  of law, in any matter pending before it  desires  the production  of  record  relating  to  any  assessment  after applying  its judicial mind and hearing the parties  and  on being  prima facie satisfied that the record required to  be summoned  is  relevant for the decision of  the  controversy before  it  -  it  passes a  judicial  order  summoning  the production  of that record from the party having  possession  of the   record.   The  Commissioner  of  Income  Tax   cannot, therefore, refuse to send the record, as he certainly is not authorised  to set at naught a judicial order of a court  of law.   He  must obey the order of the court by  sending  the record  to  the  court concerned indeed it is  open  to  the Commissioner of Income Tax to claim privilege, in respect of any document or record so summoned by a court of law,  under Sections  123  and 124 of the Indian Evidence Act  1872  and even  then it is for the court to decide whether or  not  to grant that privilege.  Had the legislature intended that  no document from the assessment record of an assessee should be produced  in  a court on being summoned by it,  without  the approval  of the Commissioner of Income Tax, it  would  have said  so  in Section 138 of the Act itself.  The  repeal  of Section  137  of the Act clearly discloses  the  legislative intent  that it was felt by the legislature that it  was  no more  necessary  to keep the records of  assessment  by  the Income   Tax   Department  relating  to   an   assessee   as confidential from the courts and the bar with regard to  the production  of any part of the record was removed in so  far as the courts are concerned.  The finality which has                                                      564 been attached to the order of the Commissioner under Section 138(1)(b) of the Act is, thus, restricted to the cases where the  information  etc.  as contemplated by  the  Section  is called  for  by any person, other than a court of law  by  a judicial order.  The High Court, therefore, fell in error in holding  that  the assessment records of an  assessee  filed before the income-tax authorities, even after April 1, 1964, are immune from production in a court of law on summons  for their  production  being issued by the court  and  that  the disclosure  of any information from the record even  to  the courts is subject to the veto powers of the Commissioner  of Income Tax.  Section 138(1)(b) does not affect the powers of the  courts to require the production of assessment  records or  the disclosure of any information therefrom to it, in  a case pending before the court when the court, by a  judicial order,  requires  the production of the  record,  considered relevant by it for decision of a case pending before it.      18. As a result of the above discussion, we, therefore, find  that  the answer given by the Full Bench of  the  High Court  in  the impugned judgment, to situation  (d)  of  the second  question (supra) as formulated by it,  is  erroneous and  we set it aside.  Consequently, we hold that 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

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 15 of 15  

by  a court to summon the production of documents in a  case pending  before the Court.  Since, the challenge  before  us had  been confined to the answer given by the High Court  to situation (d) of the second question as formulated by it and no  other finding of the High Court was called in  question, we  have refrained from expressing any opinion on the  other findings  recorded by the Full Bench of the High Court.  The appeal  consequently succeeds to the extent indicated  above and is allowed.  We, however, make no order as to costs. V.P.R.                                       Appeal allowed.                                                        565