OFFICIAL ASSIGNEE OF BOMBAY Vs. MUSTAFA MURTAZA

JUDGEMENT

(1.) ACCORDING to the evidence given by this witness, there are certain books which have come into his possession, as the Income-tax Officer, he having received them from the Anti-Corruption Branch, C. I. D. , Bombay, as against his receipt dated 10th September 1949. Four books being items NOS. 2, 9, 14 and 15 in that receipt are sought to be called for from him as being relevant for the purpose of the inquiry before me. They are rough cash books of defendant 1, for several periods beginning with 5th November 1945, and ending with 17th July 1949. It is alleged by the plaintiff that there are in these books entries with regard to the receipt of rents of the Foras Road property crediting the same to defendant 1 himself even though according to the case as put forward here, the Foras Road property was gold by defendant 1 to defendant 3 by the document dated 15th May 1945. There is no doubt about the relevancy of the entries in these books. The only question that arises foe my consideration is whether the witness, who is the Income-tax Officer concerned in the assessment of defendant 1 and who is in possession, power or custody of these books, can be called upon to produce these books in Court by reason of the provisions of Section 54, Income-tax Act, 1922.

(2.) A real controversy has ranged round this question. Mr. Peerbhoy for defendant 1 was 1950 B/34 & 35 frank enough to concede that so far as his client was concerned, he would, so far as it lay within his power, call upon the income-tax authorities to make these books available for the purpose of giving inspection of the relevant entries therefrom to the other side, under proper safeguards adopted in that behalf by the income-tax authorities. He had no objection to the disclosure of the relevant entries therefrom to the other side and inspection thereof by them. If, however, the matter was pressed to the production of these books in Court notwithstanding the provisions of Section 54, Income-tax Act, he urged that having regard to the two cases, one of our High Court reported in Emperor v. Osman Chotani, I. L. R. (1942) Bom. 767: (A. I. R. (29) 1942 Bom 289 : 44 Cr. L. J. 7), and the other of the Madras High Court reported in M. Rangaswami Naicker v. M. Raju Naicker, (1941) 9. I. T. R. 693 : (A. I. R. (29) 1942 Mad. 276), the witness, as the Income-tax Officer concerned with this assessment, could not be called upon to produce the same in Court. He particularly relied upon the judgment of Gentle J. in the Madras case above referred to where the books of account of the partnership had been lodged with the Income-tax Officer and a partner of the partnership required the production of these books for the purpose of taking inspection thereof. Normally, each partner would be entitled to claim the partnership books as his own, and he would be entitled as owner thereof to inspection of all the entries therein. The question, however, which arose before the Madras High Court was whether under the provisions of Section 54, Income-tax Act, the Income-tax Officer could be called upon to produce these books even for the purpose of inspection thereof being taken by a partner of the partnership. Gentle J. , before whom the matter came up in the High Court, observed that the terms of Section 54, Income-tax Act were mandatory in character and once the books of account were as such produced by the partnership before the Income-tax Officer, they came within the ban of Section 54, being accounts or documents produced before the Income-tax Officer under the provisions of the Act, and being such accounts or documents the Income-tax Officer was entitled to say that he was not bound to produce the same. Mr. M. V. Desai, for the plaintiff, on the other hand, urged before me relying upon the observations of Sir John Beaumont C. J. , at p. 772 in Osman Chotani's case: (I. L. R. (1942) Bom. 767: A. I. R. (29) 1942 Bom. 289: 44 Cr. L. J. 7), that the object of the enactment of Section 54, Income-tax Act was to save confidential communications which the assessee may make to the Income-tax Officer in the course of the investigation and therefore not all documents possibly produced by the assessee before the Income-tax Officer were thus saved but only those communications which were produced before the Income-tax Officer and were communicated or brought to his notice in the course of the investigation were to be treated as confidential and would come within the ban of Section 54, Income-tax Act. No doubt, in the ordinary way, the Income-tax Officer not knowing what particular entries or accounts would be relevant for the purpose of the investigation before him in the books of account which he calls the assesses to produce before him would ask the assesses to produce all the books of account and relevant documents, papers and vouchers in support of the statement made before him. Merely because this omnibus demand was made by the Income-tax Officer upon the assessee, that would not make all the books of account, documents, papers and vouchers produced before him by the assessee confidential communications made by the assessee to the Income-tax Officer as a whole. It would be only those accounts or those entries in the books of account which would be really communicated by the assessee to the Income-tax Officer that would come within the ban of Section 54, Income-tax Act. In the observations of Sir John Beaumont C. J. , which were relied upon, the learned Chief Justice had made it abundantly clear that all that the section means is that the income-tax authorities are to regard communications made to them for the purpose of the Income-tax Act as being confidential, the object, no doubt, being to enable people to feel that they can freely state the facts relating to their income, facts which may often involve confidential matters relating to their business, without fear of the matters being disclosed. If this is the object of the enactment of the provision of the Section 54, Income-tax Act, the argument is that not all accounts or entries in the books of account produced by the assessee before the Income-tax Officer come within the ban of Section 54 of the Act, but is only those accounts and entries there in which are relevant for the purpose of assessment and which would be communicated by the assessee to the Income-tax Officer in the course of the investigation which would be made by him that, would really come within the ban. To the extent that the decision of Gentle. J, in the Madras case went beyond the ratio which was thus propounded it was urged by Mr. M. V. Desai that that decision was not binding on me.

(3.) THAT being the position in law according to me. I do order that unless and until the witness before me who is an Income-tax Officer investigating the case of defendant 1's firm before him says that any entries from these four books of account being items Nos. 4, 9, 14 and 15 of the list Ex. A before me were produced by the assessee before him under the provisions of the Act and for the purpose of the investigation before him, he would be bound to produce the same. If on the other hand, be comes to the conclusion on perusing the record before him, which is his exclusive pre serve and the Court does not want to pry into it in any manner whatever, that any entries in the books of account were disclosed before him by the assessee in the course of the investigation before him, be would be entitled to fold or pin them and exclude them from the ken of the outsiders including the Court for the purpose of satisfying the provisions of Section 54 Income-tax Act. But barring the exclusion of those particular entries from those four books he would be bound to produce the same, and I direct that the witness do produce those books of account before me. He shall carry out those directions at the next hearing before me. .