Ram Chandra Vs. Laxman Das and ors. - Court Judgment

L.N. Chhangani, J.

1. These two revision petitions have been preferred by the petitioner Ramchandra against the identical orders passed by the Civil Judge, Jodhpur, on 17th October, 1959, in two Civil Original Cases Nos. 77 of 1958 and 78 of 1958 pending between the parties. They raise common questions of law and shall be disposed of by one judgment.

2. The facts which have given rise to these revision petitions may be briefly stated as follows :-

3. It is not in dispute that a partnership was created between Ramchandra, the petitioner, and Laxmandas, Pamandas and Dharamdas, the non-petitioners, on 8th November, 1953, and the partnership business was started in the name of Messrs Arjun Das Laxmandas. The petitioner Ramchandra filed a suit against Laxmandas, Pamandas and Dharamdas in the Court of the Civil Judge, Jodhpur, on 17th July, 1958, for the dissolution of the partnership and for rendition of accounts. This is Civil Suit No. 77 of 1958. One of the defences which is relevant for the purpose of this revision is that the partnership firm was dissolved on 17/18th July, 1955, and accounts were settled. Amongst other issues, a specific issue was struck as to whether firm Arjundas Laxmandas was dissolved on 17/18th July, 1955, and that the firm's accounts up to 17th July, 1955, were also finally settled. In support of their plea of an earlier dissolution of the firm, the defendants produced certified copies of two applications alleged to . have been made by the plaintiff Ramchandra on behalf of the partnership firm before the Sales Tax Officer, Jodhpur City. A prayer was also made for summoning an official of the Sales Tax Department to produce the original applications. The plaintiff objected to the production of the certified copies and to the summoning of an official of the Sales Tax Department to produce the original applications and the Civil Judge vide his order dated 17th October, 1959, overruled the plaintiff's objections and held that the documents are admissible in evidence. In the proceedings of the same date, he further issued a direction to the Sales Tax Officer to send the original applications in a sealed cover and I am informed that the Sales Tax Officer has duly sent the original applications in a sealed cover. The plaintiff Ramchandra has filed a revision against the order dated 17th October, 1959, of the Civil Judge, Jodhpur, and has also challenged the directions recorded in the proceedings requiring the Sales Tax Officer to send the applications in original to the Court. This revision is No. 464 of 1959.

4. In connection with the business of the same partnership, the non-petitioners Laxmandas and Pamandas filed another suit against the petitioner and one Dharamdas in the Court of the Civil Judge, Jodhpur, for the rocovery of Rs. 2,913-11-6 on an allegation that the partnership having been dissolved on 17th July, 1955, and accounts having been examined, the defendant Ramchandra was found liable to pay to the plaintiffs an amount of Rs. 2,748-11-6, to which an amount of Rs. 165 on account of interest has also accrued. In this suit, the defendant Ramchandra's defence is that the partnership was neither dissolved on 17th July, 1955, nor accounts were settled. A similar issue having been raised in this suit also, the plaintiffs Laxmandas and Pamandas, produced similar certified copies of the applications produced by Ramchandra on behalf of the partnership firm before the Sales Tax Officer, Jodhpur, and a similar prayer for summoning an official of the Sales Tax Department was made. The petitioner, Ramchandra, who was defendant in this case, raised a similar objection in this case also and vide an identical order of even date as in suit No. 77/58, the Civil Judge, Jodhpur, overruled Ramchandra's objection and held the documents as admissible in evidence. The second revision No. 463/1959 has been filed against this order dated 17th October, 1959, passed by the Civil Judge, Jodhpur, in Civil Original Suit No. 78 of 1958.

5. I have heard Mr. Manakmal for the petitioner and Mr. Roshanlal for the non-petitioners.

6. The main contention very strenuously urged by Mr. Manakmal is that the certified copies of the applications are not admissible in evidence and the trial Court has acted illegally and with material irregularity in admitting them in evidence. In any case, the lower Court has acted illegally in disregarding the direction for treating the particulars confidential and requiring the Sales Tax Officer to disclose the particulars by sending the original applications for disclosure and use in the Court. He referred to Section 25 of the Rajasthan Sales Tax Act, No. XXIX of 1954 (hereinafter referred to as the Sales Tax Act). Section 25(1) reads as follows:-

Returns, etc. to be confidential.-(1) All particulars contained in any statement made, returns furnished or accounts or documents produced under the provisions of the Act or of the rules made thereunder, or in any evidence given or affidavit or deposition made, in the course of any proceedings under this Act, or the rules made thereunder, or in any record of any proceedings relating to the recovery of a demand, prepared for the purpose of the Act or the rules made thereunder, shall be treated as confidential.

7. It directs that certain documents specified in the sub-section shall be treated as confidential. Sub-section (2) specifies six exceptional cases where the disclosure of the particulars contained in documents referred to in Sub-section (1) can be made. The argument developed in this connection is that the legislature having directed that the documents mentioned in Sub-section (1) should be treated as confidential and having further specified cases where disclosure can be permitted in exceptional circumstances, it must be deemed to have impliedly prohibited the Courts from admitting such documents in evidence and parties from producing them in Courts. He cited a number of cases which have interpreted Section 54 of the Indian Income-tax Act, 1922 (hereinafter to be referred to as the Income-tax Act), which coutains inter alia, a direction for treating particulars in certain documents as confidential.

8. It is necessary at this stage to refer to the provisions and the scheme of Section 54 of the Income-tax Act and to bring forth the important points of difference in the scheme and provisions of Section 54 of the Income-tax Act and Section 25 of the Sales Tax Act for appreciating correctly and accurately the relevance and applicability of the decisions on the interpretation of Section 54 of the Income-tax Act.

9. Sub-section (1) of Section 54 may be divided in two parts. The first part directs that all particulars contained in certain specified documents shall be treated as confidential. This is similar to the provisions of Section 25 of the Sales Tax Act except that the Income-tax Act includes, in addition, particulars in any record of any assessment proceeding. This difference, however, is not relevant for our present purposes. The second part which is very important provides that notwithstanding anything contained in the Indian Evidence Act, 1872 (Act No. 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. Sub-section (2) makes a public servant disclosing the particulars referred to therein, punishable with imprisonment which may extend to six months and also liable to fine. There are no provisions in Section 25 of the Sales Tax Act similar to the second part of Sub-section (1) of Section 54 and Sub-section (2) of Section 54 of the Income-tax Act. Sub-section (3) enumerates the exceptional circumstances where disclosure can be made and corresponds with Sub-section (2) of Section 25 of the Sales Tax Act. Sub-sections (4) and (5) of Section 54 are not relevant for our purposes.

10. A proper analysis of the above provisions clearly denotes three things. The earlier part of Section 54 (1) by merely directing that certain particulars specified in the section shall be treated as confidential, docs no more than prohibit the voluntary disclosure of those particulars by the Officials of the Income-tax Department. There is no express provision that they are rendered irrelevant or inadmissible nor is there any reference to the Evidence Act. On a proper construction of the relevant provisions, it is indeed difficult to accept that the legislature while enacting provisions under the Income-tax Act should be deemed to have modified or amended the provisions of the Evidence Act without making any express or implied reference. It follows that a view propounded that the documents containing the particulars referred to in the sub-section are not admissible is not supported on a plain reading of the relevant provisions. It will be shown a little later that a further support for the above conclusion is to be found in the later part of Section 54(1).

11. The second thing denoted is contained in the later part of Section 54(1). It is directed against compelled production and prohibits courts from requiring any public servant to produce the documents specified in the earlier part. In connection with this part, an expression, 'notwithstanding anything contained in the Indian Evidence Act No. 1 of 1872' has been introduced. The omission of any similar expression in the earlier part is consequently very significant and material and one has reason to infer that the earlier part was not intended to, in any way, affect the provisions of the Evidence Act. In my opinion, it will not be unsafe to infer that the legislature was conscious of the fact that a mere direction in the earlier part to treat particulars in certain specified documents as confidential would not make those documents inadmissible and irrelevant and that there could be the possibility of the courts compelling their production, and it was presumably on these considerations that the legislature provided a prohibition against the courts for compelling the production of the documents and specifically rendered the provisions of the Evidence Act in this connection ineffective. A proper understanding of the implications of this later part thus lends a clear support to the view that the earlier part of Section 54(1) by itself does no more than prohibit voluntary disclosure.

12. The third thing to be mentioned is that the disclosure of the particulars referred to above has been made punishable with imprisonment which may extend to six months and also fine under Sub-section (2).

13. Now, the Sales Tax Act, Section 25, borrows only the earlier part of Section 54(1) of the Income-tax Act and that too with this difference that particulars contained in any record of any assessment proceedings falling within the ambit of Section 54 of the Income-tax Act are excluded in Section 25 of the Sales Tax Act. The later part of Sub-section (1) providing for prohibition against courts and Sub-section (2) of Section 54 making disclosure punishable have not been borrowed by the Sales Tax Act. These omissions are quite meaningful and cannot be brushed aside. Indeed, they go to provide a basis for an inference that the Legislature in the Sales Tax Act intended to prohibit only voluntary disclosure of the particulars. There was no intention to, in any way, affect the provisions of the Evidence Act and to limit the powers of the courts. The reasons for the difference under the two laws are not far to seek and can easily be conceived.

14. The object of Section 54 of the Income-tax Act, in the words of Kapur, J., in Income-tax Officer, Jullundur v. The State [1950] 18 I.T.R. 688, 'is the secrecy of the financial affairs of the assessees as disclosed in the assessment proceedings and the reason for having a provision of this kind in the Income-tax Act is that assessees may not be reluctant to disclose the details of their business, and it is quite possible that they may not disclose their affairs without any kind of reserve unless they had an assurance that the information contained in these returns, accounts, statements and so forth furnished by them would not be divulged to any one. This is really to- encourage the assessee to make a full and true disclosure of all relevant facts within his knowledge knowing that any statement made by him will not subsequently be used against him, and it appears to me that it was for this express purpose that Section 54 was worded in the way that it has been done so as to give the assurance which was thought necessary for the income-tax purposes.'

15. It can easily be assumed that the reasons stated with reference to the disclosure of the total income of assessees cannot be available in any substantial or appreciable degree in connection with the disclosure of the relevant business for the purpose of assessment of the sales tax and this may have influenced the Legislature to incorporate in the Sales Tax Act only the provisions of the Income-tax Act directed, against voluntary disclosure.

16. On the above analysis of the provisions and on the basis of the comparison prima facie, there is a good basis for the conclusion that under Section 25 of the Sales Tax Act, the courts are not prohibited from compelling the production of the documents specified in the section and that the documents are not rendered irrelevant and inadmissible. It remains, however, to be considered whether the examination of the case-law under the Income-tax Act warrants or justifies a departure from the conclusion stated above. It must be borne in mind that in view of the obvious differences in the provisions of the two sections, the decisions under the Income-tax Act should be invoked for interpreting the provisions of the Sales Tax Act with a good deal of caution and that only those decisions under the Income-tax law, which base their conclusion on the mere language of the earlier part of Section 54(1) uninfluenced by the considerations of the later part of Section 54(1) or Sub-section (2) of Section 54, can be adopted as safe guide and decisions basing conclusions on a consideration of the combined effect of the above three-fold provisions of Section 54 of the Income-tax Act cannot be of great relevance and assistance.

17. Shri Manakmal relies upon a few cases under the Income-tax law and contends that those decisions were based merely upon a consideration of the earlier part of Section 54(1) and are relevant and support a view that a direction for treating the documents as confidential necessarily implies an inference of their being irrelevant and inadmissible. The first case relied upon by him is Anwar Ali v. Tafozal Ahmed A.I.R. 1925 Rang. 84. In this case, a single Judge of the Rangoon Chief Court held that the certified copies obtained by private persons of income-tax returns are inadmissible. Two reasons were given for this conclusion: (1) private persons having no right to inspect documents are not entitled to obtain copies and, therefore, certified copies in their hands having been unlawfully issued are inadmissible; (2) Section 54 of the Income-tax Act makes the issue of such copies unlawful and makes the disclosure of any particulars contained in the returns an offence punishable with six months' imprisonment.

18. Another case relied upon in this connection is Devidatt Ramni-ranjandas v. Shriram Narayandas A.I.R. 1932 Bom. 291, where it was held that in view of the strong language of Section 54(1), Income-tax Act, and the penalty imposed by Section 54(2), neither the assessee nor any one else is entitled to obtain certified copies of the assessment returns under Section 76 of the Evidence Act and it is only certified copies so obtained which are made admissible under Section 76. It also thus gives the same two reasons relied upon in the Rangoon case1.

19. The third case relied upon is a single Judge decision of the Calcutta High Court reported in Promatha Nath Paramanick v. Nirode Chandra Ghose [1939] 7 I.T.R. 570, where Panckridge, J., made the following observations:-

It may be that in the case of a sole assessee, there is no objection to his using the copy so obtained as evidence in legal proceedings, if there are no other objections to its admissibility. It may reasonably be said that the provision that an assessment order shall be treated as confidential is a privilege which an assessee may waive if he thinks fit to do so. However, it would be a startling thing if a joint assessee were to be permitted to use the copy of such an order to the detriment of his co-assessce in contentious proceedings between them. If a person who has been assessed to income-tax can object to the materials in the possession of the Income-tax department being disclosed it is surely a matter of indifference whether the person who desires to make them public is a co-assessee or a stranger.

20. He refers to the Rangoon and Bombay cases and observes that it is not necessary to hold comprehensively that in all cases where an original document is confidential, a certified copy is inadmissible, but it is sufficient to say that, in my opinion, in the circumstances of the present case the documents do not fall within the sections of the Evidence Act which deal with certified copies. The last-mentioned case of course does not fully support Mr. Manakmal on the question of general inadmissibility.

21. Now of the two reasons relied in the above rulings, one is mainly based upon a consideration of the Evidence Act and depends upon a consideration of the right of a party to inspect and assumes that certified copies are not issuable under the Income-tax Act under any condition. This has little to do with the interpretation of Section 54(1) earlier part of the Income-tax Act. Further, in subsequent decisions, it has been observed that this ground relied upon in these cases has no adequate basis.

22. In a Full Bench decision of the Madras High Court in Rama Rao v. Chitluri Venkataramayya [1940] 8 I.T.R. 450. Leach, C.J., referred to para 85 of the notes and instructions compiled by the Income-tax department for the guidance of its officers stating that the following persons shall, in practice, be allowed to inspect or to receive copies : (1) In any case the person who actually made the return; (2) any partner (known to be such) in a firm registered or unregistered to whose income the return relates; and (3) the manager of a Hindu undivided family to whose income the return relates, or any other adult member of the family who has been treated as representing it.

23. The assumption that nobody could obtain certified copies in the cases relied upon by Mr. Manakmal vitiates the conclusion reached in those cases and cannot be the basis of generalisation that certified copies of Income-tax returns are inadmissible.

24. So far as the second ground is concerned, it is mainly based upon the later part of Section 54(1) and Sub-section (2) of Section 54 and has very little to do with the consideration of the earlier part of Section 54(1). This ground therefore, cannot be of much help in interpreting Section 25 of the Sales Tax Act. It is, however, necessary to point out that the view taken in these cases has been dissented from in several cases. The Madras Full Bench decision already referred to above in connection with ground no. 1 refers to the Rangoon and the Bombay cases and Leach, C.J., records the following conclusion :-

I have said sufficient to indicate that in my opinion there is nothing in Section 54 which prohibits a party from putting in evidence a certified copy of an income-tax return if that return is a public document and that the learned Judges misunderstood the effect of that section.

25. In Emperor v. Osman Chotani and Ors. [1942] 10 I.T.R. 429, Beaumont, C.J., relying upon the Full Bench Madras decision held that 'there is nothing in Section 54, Income-tax Act, to justify the extreme view taken by the learned Chief Presidency Magistrate that all the documents referred to in that section are made inadmissible in evidence .... I think the

26. Legislature only mean that they are to be treated by the Income-tax authorities as confidential. Sir Jamshedji Kanga has argued that the section means that the documents are confidential in whatsoever's hands they may be. I do not think that can be the meaning.'

27. The same view has been taken in Suraj Narain v. Seth Jhabhu Lal and Ors. [1945] 13 I.T.R. 13, Sm. Buchibai v. Nagpur University A.I.R. 1946 Nag. 377 and Naim Singh v. Tikamsingh and Ors. A.I.R. 1955 All. 388. However, in a recent Patna case in Smt. Banarsi Devi v. Sm. Janki Devi A.I.R. 1959 Pat. 172, the Rangoon view has been endorsed and the Allahabad and Nagpur views have been doubted. However, in that case, the question of admissiblity was considered on a finding that the person producing was not competent to obtain it and the position with regard to a partner's right to obtain copy and produce it having been left undetermined, it cannot be relied upon for a general proposition contended for interpreting the earlier part of Section 54( 1) to render certified copies inadmissible.

28. During the course of arguments, Mr. Manakmal had also referred to a few cases more, viz., Ma Hla Mra Khine v. Ma Hla Kra Pru A.I.R. 1938 Rang. 276, Asghar AH Shah v. Achhru Mafi A.I.R. 1935 Lah. 272 and Shamrao v. Motiram and Ors. A.I.R. 1934 Nag. 1. They directly deal with other matters and, at any rate, do not contain any additional reasons and I do not propose to discuss them at length.

29. Mr. Manakmal in the end laid an emphasis upon Income-tax Officer, Jullundur v. The State [1950] 18 I.T.R. 688 a Full Bench decision of the Punjab High Court, where Emperor v. Osman Chotani [1942] 10 I.T.R. 429 was dissented from. Weston, C.J., with whom the three other Judges agreed expressed no opinion on the question whether the earlier part of Section 54(1) renders all documents specified inadmissible. He only held that a Magistrate being debarred from requiring an Income-tax Officer to produce before him the documents cannot do so through an agent, i.e., by authorising a police officer under a warrant even though the warrant may be issued on the request of a police officer investigating a case and merely to facilitate investigation. Kapur, J., however, in his concurring judgment, after referring to some English decisions interpreting Section 17 of the Agricultural Marketing Act of 1931 observed that in the English case, a prohibition against production in Court was implied from the fact that the disclosure was made a criminal offence. I do not see why a similar prohibition should not be implied against the powers of the police from taking possession of the documents mentioned in Sub-section (1). Mr. Manakmal cannot derive any support from the majority judgment. The minority judgment, in my opinion, turns upon the consideration of the prohibition against Courts contained in the later part of Section 54(1) and Section 54(2) creating disclosure a crime and therefore, does not lend any further support to the view contended for.

30. A review of the case law under the income-tax law reveals that there is no complete unanimity in the judicial opinion and the decisions of courts are conflicting. The preponderance of judicial opinion, can, however, be safely predicated for the view favouring the admissibility of certified copies at least in some cases, exceptions as mentioned in Sub-section (3) apart. The cases which have taken a contrary view do not merely rely upon the language of the earlier part of Section 54, but emphasize the prohibition against courts against compelling production of documents and the creation of disclosure an offence under Sub-section (2). It is a common sense principle that provisions relied upon for the exclusion of relevant materials from the considerations of courts should be strictly construed and consequently, I feel no hesitation for indicating my preference for the view favouring admissibility although it is not necessary for the purpose of the present case to express a firm and conclusive opinion under the income-tax law. I must, however, hold that the case-law does not warrant a modification of the conclusion reached on an analysis of Section 54 of the Income-tax Act and a comparison of that with Section 25 of the Sales Tax Act which has been stated in an earlier part of the judgment. I have no doubt that Section 25 of the Sales Tax Act is directed only against voluntary disclosure and neither renders the documents specified therein inadmissible or irrelevant nor prohibits the courts from compelling their production. The contention on behalf of the petitioner has accordingly no force and must be rejected.

31. Although these revisions must fail on the opinion recorded above, yet it will be proper to deal with an alternative submission made by Mr. Roshanlal for supporting the decisions of the lower Courts so far as it relstes to the admissibility of the certified copies. It was contended that even if Section 25 is interpreted to contain something more than a mere prohibition against voluntary disclosure and to create a privilege in respect of documents specified therein against their production in courts, the privilege can, in the nature of things, be intended only for the assessee and not for other persons and that an assessee has a right to waive it. Elaborating his argument, he added that for the purposes of sales tax assessment of a firm, the term 'assessee' must include every partner of the firm and the documents produced on behalf of the firm must be considered as produced on behalf of every partner and every partner has therefore a right to inspect the record on a liberal interpretation of the expression 'to inspect' and to obtain certified copies of the documents and to waive the privilege and to produce them. This submission also appears to be correct and is supported by observations made in a number of cases under the income-tax law. It is not in dispute that the respondents were partners carrying on business in the name and style of Messrs Arjundas Laxmandas and the applications whose certified copies are produced were submitted on behalf of the partnership firm in connection with the sales tax assessments. The non-petitioners as partners could get certified copies. There is nothing to show that under the practice prevailing in the Sales Tax Department, the partners have no right to inspect the records or to obtain the copies. On these considerations also, there cannot be any valid objection to the admissibility of these documents. In this connection, it was further suggested by Shri Roshanlal that on a view that the documents are admissible, a party acquires a right to compel the production of original documents in connection with the proof of the certified copies validly produced in spite of the later part of Section 54(1). I am, however, not prepared to go to that extent.

32. In Additional Income-tax Officer, Anantapur v. Golla Narayanamma and Ors. [1958] 34 I.T.R. 212, Subba Rao, C.J., had occasion to consider this question and the learned Chief Justice observed that the prohibition against the Courts is mandatory. Dealing with the argument that in case of a public document in regard to which a certified copy can be obtained by the assessee and, therefore, the original return can also be directed to be produced in Court, the learned Chief Justice observed that, 'there is an essential distinction between the production of the original return in Court and the obtaining of a certified copy of that return by a person entitled to obtain the same in law.' In support of his conclusion, reliance was placed upon the Full Bench Madras case, [1940] 8 I.T.R. 450, where the distinction between the two aspects was indicated in the following terms:-

While Section 54 prohibits the disclosure, except on specified occasions, of matters connected with an assessment to income-tax and prohibits a Court from requiring a public servant to produce the documents mentioned in the section or to give evidence in respect of them, it does not follow that the Court may not admit in evidence a document which falls within Section 54(1).

33. However, in the present case, in the absence of provisions in the Sales Tax Act similar to the later part of Section 54( 1) and Sub-section (2), the direction of the lower court requiring the Sales Tax Officer to send the original applications cannot be successfully challenged.

34. Mr. Roshanlal had also taken a preliminary objection to the competence of the revision petitions on a ground that the orders being of an interlocutory nature and being challengable in appeal against final adjudication, are not revisable. As I have considered the revision petitions on merits and decided to reject them, it is not necessary to record any decision on the preliminary objection.

35. The result is that the revision applications fail and are hereby dismissed, but in the circumstances of the case, without costs.