INCOME TAX OFFICER Vs. RAMARATHNAM P

JUDGEMENT

(1.) PETITION by the Incometax Officer, Central Circle I, Madras, to revise the order of the Fifth Presidency Magistrate overruling his objections and directing him to produce the documents summoned by the court. The documents were summoned at the instance of the accused in the case who actually produced them. The accused are prosecuted for offences of criminal breach of trust, criminal conspiracy, etc. They were employees under Dinathanthi and their case is that on account of their producing the documents and giving information to the income -tax authorities the present criminal case has been filed against them. Thus the accused in the case rely on the documents to prove the motive for the prosecution being launched against them Section 137 of the Income -tax Act, 1961, as it stood would have been an obstacle in the way of the court issuing summons for the production of the documents. But the said section has been omitted under the Finance Act of 1964, which has, however, amended section 138. The learned advocate for the petitioner, however, relied on section 6 of the General Clauses Act, 1897, in support of his contention that as the documents were produced before April 1, 1964, his right and privilege not to produce the documents by virtue of section 137 of the Income -tax Act of 1961, before amendment by the Finance Act of 1964, would not be affected by virtue of the repeal of section 137 of the Income -tax Act of 1961, by the Finance Act of 1964 Before proceeding to consider the said contention, it is necessary to consider whether even section 137 of the Income -tax Act, 1961, as it originally stood, would enable the petitioner to refuse to produce the documents. The learned advocate for the petitioner mistakenly stated at the commencement that the documents were required for the purpose of prosecution but if it were so, the case could have been disposed of on the short ground that section 137(3)(i) would apply and the court was entitled to summon the documents. But the learned advocate for the respondents accused brought to my notice that the documents were not required for the prosecution, but, as stated already, required only to prove the motive put forward by the defence as to why the prosecution was launched against them. There is, therefore, no scope for invoking the exception in section 137(3)(i) of the Income -tax Act of 1961, as it then stoodThe learned advocate for the respondents relied on section 137, clause (5), of the Income -tax Act of 1961, prior to the repeal. Clause (5) of section 137 runs as follows

(2.) THE documents in this case were all produced by the respondents, and they are, therefore, entitled to rely on this clause. The learned advocate for the petitioner relied on the decision in Charu Chandra Kundu v. Gurupada Ghosh where it was held that having regard to section 54 of the Income -tax Act (XI of 1922) the court has no power to direct the income -tax authorities to discover documents and statements in assessment proceedings. It was argued by the advocate for the appellant in that case that section 54 of the Income -tax Act of 1922 was enacted only for the protection of the assessee, and if the assessee waives the privilege enacted for his protection, the prohibition contained therein will be inoperative. But this contention was repelled in that case on the ground that there is no such exception, express or implied, in the language of section 54 of the Income -tax Act of 1922, and that the prohibition imposed against the court by the said section is absolute. But as pointed out at page 712 of the Law and Practice of Income -tax by Kanga and Palkhivala, Fifth edition, the above decision must now be read subject to the provisions of sub -section (5) which permits the voluntary disclosure of any particulars referred to in sub -section (1) by the person by whom the statement, affidavit or deposition was made, the evidence given, the return furnished or the accounts or documents produced, as the case may be. It is pointed out in that book that there was no provision in section 54 of the 1922 Act corresponding to sub -section (5) of section 137 of the Income -tax Act of 1961. It should be noted that even the assessees have no objection to the production of the documents by the petitionerI shall proceed to consider the contention raised by the learned advocate for the petitioner on the strength of section 6 of the General Clauses Act. The Bench decision in P. Kandiah Thevar v. Third Income -tax Officer relied on by both sides is a decision clearly against the petitioner. It was held in that decision that the protection regarding rights accrued under an old Act given by section 6 of the General Clauses Act is not unqualified as the said section 6 states that the repeal of an Act shall not affect any right or privilege accrued or acquired under an enactment so repealed unless a different intention appears. 3. The Bench had to decide the amendment by which section 137(3)(xxi) was introduced and it held that such contrary intention is apparent in the enactment of section 137(3)(xxi) and so notwithstanding that the statement was made in proceedings under the old Act, its disclosure is permitted under the new Act. Though section 137 of the Income -tax Act of 1961 is repealed by the Finance Act of 1964, there is modified restriction by virtue of section 138, clause (2), introduced by the same Act For the foregoing reasons, the order of the Fifth Presidency Magistrate directing the petitioner to produce the documents is correct and there is no ground to interfere in revision. The criminal revision case is therefore dismissed.