JUDGMENT
R.L. Gulati, J.
1. This petition under Article 226 of the Constitution is an offshoot of a litigation between a landlord and his tenants. The petitioner is the tenant and was one of the defendants in a suit filed by the landlords for arrears of rent and eviction of the tenants. Sri Debi Sahai
Gupta, the opposite party No. 3, is the landlord and Sri Gopal Swamp, the opposite party No. 2, is his minor son.
2. Sri Debi Sahai and his son, Gopal Swarup, filed a suit which is now pending in the court of the 1st Additional Munsif, Bulandshahr. As stated above, the suit was for the recovery of arrears of rent and for the ejectment of the tenants including the petitioner from a shop of which the opposite parties Nos. 3 and 2 claim to be the owners. The petitioner as well as the remaining two defendants resisted the suit on the ground that the petitioner, and not the opposite parties Nos. 3 and 2, was the landlord.
3. It appears that the petitioner is the ostensible owner of the property in dispute but the landlords contend that he is merely a ” benamidar ” and to prove that contention, they made an application before the Munsif to summon the income-tax assessment records of the petitioner to prove a statement alleged to have been made by him during the course of the proceedings for his assessment, to the effect that he was merely a ” benamidar ” of the property in dispute and that the real owners were the opposite parties Nos. 3 and 2. This application was resisted by the petitioner on the ground that income-tax proceedings were confidential proceedings and they could not be summoned or looked into by the court by reason of certain provisions of the Income-tax Act forbidding the disclosure of any information contained in the income-tax records. This objection was overruled by the Munsif who, by his order dated the 19th August, 1963, directed the assessment records to be summoned leaving the question of the admissibility to be decided when the records were produced in the court. This order of the Munsif was later on slightly modified by another order dated the 28th August, 1963, under which he directed the assessment records to be brought in sealed cover and to disclose only that part of the statement of the petitioner which related to the ownership of the shop. The petitioner feels aggrieved and has filed the instant writ petition to challenge the order of the learned Munsif.
4. Admittedly, some statement was made by the petitioner before the Income-tax Officer on 13th January, 1960, which the opposite parties wanted to be produced in court. Section 54 of the Income-tax Act of 1922 undoubtedly affords protection against disclosure of any information contained in the income-tax records of an assessee. The Income-tax Act of 1922, however, has Been repealed and has been replaced by the Income-tax Act of 1961, with effect from 1st April, 1962. The Act of 1961 also had a provision in Section 137 similar to the one contained in Section 54 of the repealed Act. Under Section 137 also a similar protection is provided against the disclosure of any information contained in the income-tax records. But Section 137 has also been repealed by Section 32 of the Finance Act of 1964. The position now is that there is no provision in the Income-tax
Act providing secrecy and protection to the documents filed or statements made during the assessment proceedings. So that if. a question like the one involved in the present writ petition were to be answered with reference to the provisions of the Income-tax Act, as they stand to-day, there would be no difficulty whatsoever as there does not exist any provision in the Income-tax Act which forbids the production of the assessment records in a court.
15. But the position in the instant case is fairly complex inasmuch as at the time when the statement in question was made, the Income-tax Act of 1922 (hereinafter called ” the old Act “) was in force while at the time the learned Munsif passed the impugned order, the old Act had been replaced by the Income-tax Act of 1961 (hereinafter called ” the new Act”). As already stated above, Section 54 of the Act and Section 137 of the new Act provided for the secrecy and protection of the income-tax records. The question arises as to which of these two sections would apply. Before answering this question, it would be pertinent to examine the scope of the two sections so far as it is material for the present case.
Section 137 of the new Act consists of five sub-sections of which subsections (1), (2) and (3) are material. Sub-section (1) declares all the particulars contained in the assessment record of a person to be confidential and forbids any court to require the production of such records. Subsection (2) similarly contains a prohibition against the disclosure of such particulars by a public servant. Sub-section (3) enumerates certain exceptions which are not material for tjie purpose of the present case except the exception, contained in the last Clause (xxi), which reads as follows: ” (3) Nothing in this section shall apply to the disclosure–…. (xxi) of so much of such particulars to any person as is evidence of the fact that any property does not belong to the assessee but belongs to such person :
Provided that the assessee had, prior to such disclosure, been examined by the Income-tax Officer in respect of his right to such property. ”
16. This Sub-clause (xxi) takes out of the fold of secrecy any statement or other documents mentioned in Section 137(1) relating to the ownership of property. The statement dated the 13th January, 1960, is alleged to be a statement of that nature and would be covered by Clause (xxi) quoted above. In other words, the statement in question would not be entitled to any protection and the court would be entitled to have such statement summoned. But the question is does section, 137 of the new Act at all apply. In my opinion, it does not. Section 137(1) by reason of the language in which it is couched is restricted to the particulars of statements made, returns furnished or documents produced, etc., in proceedings under the new Act and Sub-sections (2) and (3) of Section 137 in turn refer to documents
mentioned in Section 137(1). The statement in question not having been records in the proceedings under the new Act, Section 137(3)(xxi) does not apply.
17. We are now left with Section 54 of the old Act. That section is in pari materia with Section 137 of the new Act except that there was no provision in that section corresponding to Clause (xxi) of Sub-section (3) of Section 137. The other exceptions contained in Section 54 are not material. The result would be that Section 54 would afford complete protection to the statement in question. It is now well settled that the prohibition in Section 54 is absolute so far as it goes (see Charu Chandra Kundu v. Gurupada Ghosh, [1961] 43 I.T.R. 83 (S.C.)., Commissioner of Income-tax v. Laxmichand Narayandas, [1962] 44 I.T.R. 548(S.C.). and Income-tax Officer, Banda Circle, Kanpur v. Munsif, Hamirpur, [1964] 52 I.T.R. 143.
). If Section 54 is applicable, then the petitioner as well as the income-tax department were certainly right in claiming privilege in respect of the statement in question.
18. But the question is does Section 54 really apply even after the repeal of the Income-tax Act of 1922 of which it was a part. According to the learned counsel for the petitioner the effect of Section 54 has been preserved after its repeal by Section 6(c) of the General Clauses Act of 1897. That provision is in the following terms:
” 6. Where this Act, or any Central Act or regulation made after the commencement of this Act, repeals any enactment hitherto made or here after 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. ”
19. This again raises two questions : (1) did Section 54 create any right, privilege or obligation; and (2) is there anything in the repealing Act or in the subsequent enactments indicating any intention to destroy the rights, privileges or obligations created by Section 54 which would otherwise be preserved by Section 6(c) of the General Clauses Act after the repeal of Section 54.
20. Taking the second question first, it would be seen that the old Act was repealed by the new Act itself. By Sub-section (1) of Section 297 of the new Act, the old Act was repealed but there were various saving clauses of which Clauses (a) and (c) may be reproduced:
” (a) where a return of income has been filed before the commencement of this Act by any person for any assessment year, proceedings for the assessment of that person for that year may be taken and continued as if this Act had not been passed ….
(c) any proceeding pending on the commencement of this Act before any income-tax authority, Appellate Tribunal or any court, by way of appeal, reference or revision, shall be continued and disposed of as if this Act had not been passed. ”
21. The repealing Act obviously does not disclose any intention of the legislature to destroy the effect of Section 54 of the old Act. In fact by enacting Section 137 in the new Act, the legislature’s clear intention was to preserve intact the object of Section 54 of the old Act. In 1964, however, Section 137 was omitted from the new Act by Section 32 of the Finance Act of 1964. By Section 33 of that Finance Act, Section 138 was substituted by a new Section 138, which contains two sub-sections. The first sub-section is practically the same as the old Section 138. Sub-section (2), however, entrusts the Central Government with the power to direct by a notified order 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. Admittedly, no notification under Section 138 has so far been issued.
22. The question then arises does the omission of Section 137 indicate an intention on the part of the legislature to destroy the rights, privileges, obligations or liabilities accrued or incurred under Section 54 of the old Act. I am of the opinion that no such intention can be inferred. The mere omission of a section does not necessarily lead to the conclusion that it was the intention of the legislature to do away with the rights and obligations created under or by the omitted section. Section 138 also, in my opinion, is not incompatible or inconsistent with the effect of Section 137 being continued notwithstanding its omission. Whether or not the omission of Section 137 obliterated its effect is, however, not material for the decision of the question involved in the present case which concerns only with the effect of Section 54 of the old Act. Assuming that the omission of Section 137 was intended to destroy the rights, privileges and obligations created under that section a similar intention cannot be inferred in respect of the effect of Section 54 of the old Act because the operation of Section 137, as already pointed out above, is restricted to the proceedings under the new Act. Had it been the intention of the legislature to bring about a similar result with regard to Section 54 of the old Act also, there was nothing to prevent the legislature from saying so. A perusal of section 137 of the new Act would show clearly that the legislature had not used the words ” this Act ” in Section 137 loosely or carelessly as it was mindful of the distinction between the old and the new Act as is evident from the underlined portion of Section 138 which immediately follows Section 137 and is in the following words :
” 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 any assessee in respect of any assessment made either under this Act or the Indian Income-tax Act, 1922 (XI of 1922), on or after the first day 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. ”
23. It is, therefore, clear that the legislature did not indicate its intention to destroy the effect of Section 54 of the old Act by deleting Section 137 from or by amending Section 138 of the new Act. This view of mine finds support in a recent case decided by a learned single judge of the Madras High Court in Ramakrishna Mudaliar v. Mrs. Rajabu Fathima Bukari, [1965] 58 I.T.R. 288. and approved by a Division Bench of the same court in Ve. V. Sivagami Achi v. Vr. Ve. Vr. Ramanathan Chettiar, [1967] 64 I.T.R. 36. ,
. A contrary view was taken by another learned judge of the Madras High Court in Income-tax Officer v. Ramaratnam, [1965] 58 I.T.R. 297.
, but, with respect, I do not agree with that view.
24. This now brings me to the next question as to whether Section 54 created any right, privilege or obligation as would be prescribed by Section 6(c) of the General Clauses Act. I am of the opinion that it clearly did so.
25. The object behind the enactment of Section 54 clearly was to induce the assessee to make a true and full disclosure before the income-tax authorities of facts relating to their income by affording them a protection against the disclosure of such facts to anybody else including a court. Under the cover of protection granted by Section 54 people felt free to state facts involving confidential matters relating to their business and property without fear of such information being used against them in any other proceedings or inquiry. This undoubtedly created a right or a privilege in favour of assessees and other people concerned and in order to make that right or privilege effective, the legislature, in its wisdom, imposed an absolute ban on the income-tax authorities not to disclose any document filed or statement made before them during the course of such assessment and went further to impose a restriction on the powers of the courts to compel the disclosure of any information contained in the income-tax records. Another thing that should be kept in mind while deciding this question is that the proceedings under the Income-tax Act have been declared confidential in the sense that no one except the assessee or his authorised representative can take part in those proceedings or even be present when such proceedings are under way. In the case of a personal
assessment of an assessee who happens to be a partner in a firm, the Income-tax Officer would not be justified in allowing even the assessee’s partner to be present at and to take part in the assessment proceedings (Dinshaw Darabshaw Shroff v. Commissioner of Income-tax, [1943J 11 I.T.R. 172.). This ban is clearly intended for the benefit of the assessees and confers a right upon them to insist that no unauthorised person would be allowed to be present at the time when their assessments take place and a similar right extends to them to insist that nothing which is brought on their assessment record by way of statement, returns, documents and evidence, would be revealed to anybody including a court. In this background, it is not possible to say that Section 54 merely imposes an obligation upon the income-tax authorities without creating any corresponding right in favour of any particular person. This view of mine is supported completely by a recent decision of a Division Bench of the Punjab High Court in 0. P. Aggarwal, Income-lax Officer, C-Ward, Jullundur v. State, [1966] 59 I.T.R. 158. and of the Madras High Court in P. Kandaiah Thevar v. Third Income-tax Officer, Tirunelveli, [1963] 49 I.T.R 665.
. The Madras High Court in the case of Ve. V. Sivagami Achi has, however, taken a contrary view on this point. The learned judges have expressed the opinion that Section 54 of the old Act as also Section 137 of the new Act did not create any right, privilege or obligation contemplated by Section 6(c) of the General Clauses Act. For the reasons already indicated above and with great respect to the learned judges of the Madras High Court, I am unable to accept their view. I am of the firm opinion that the two sections in the old and the new Acts, viz., sections 54 and 137, respectively, were intended to create a right and a privilege in favour of the assessee and other persons concerned and it was for the preservation of that right or privilege that an absolute obligation was imposed upon the income-tax authorities never to divulge to anybody including a court any information from the assessment records.
26. This question can be looked at from another point of view. Section 6(c) of the General Clauses Act preserves an obligation as much as a right or a privilege. Whether Section 54 created any right or privilege or not, it certainly did create an obligation of an absolute nature which could not be waived even by an assessee (see Charu Chandra Kundu v. Gurupada Ghosh). The obligation was to the effect that the income-tax authorities would not disclose any information contained in the assessment records and the courts would not compel the disclosure of any such information. The obligation so cast by Section 54 is in respect of all particulars contained in any statement made, return furnished, or accounts or documents produced or in any evidence given or affidavit or deposition made in the
course of any proceedings under the Income-tax Act. In other words, the obligation extends to each document referred to in Section 54(1).
27. The statement in question was made at a time when Section 54 was in operation and the obligation on the part of the income-tax authorities to treat the same as confidential accrued the moment the statement was recorded. Even if the petitioner, whose statement it was, acquired no right or privilege in respect of that statement as opined by the Madras High Court, the obligation of the income-tax authorities was very much there. So long as the income-tax authorities are not absolved from this obligation they cannot be permitted to disclose the same, The same is true about the interdict against the court requiring the production of the statement. I have already shown that 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 wore 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.
28. The result is that this writ petition must succeed and the same is allowed, A writ of certiorari shall issue quashing the two orders of the Munsif, dated 19th and 28th August, 1963 (annexures ” A ” and ” B “). He is directed to proceed with the suit in accordance with the law and in the light of the observations made above. In the circumstances of the case, there will bo no order as to costs.
