S. 54 of the Income-tax Act, 1922, prohibits the production of documents in court, including those produced by third parties, which form part of the record of an assessment proceeding.

Headnote:
INCOME TAX ACT - S. 54 - CONFIDENTIALITY OF DOCUMENTS - PRODUCTION OF DOCUMENTS IN COURT - PROHIBITION - SCOPE - DOCUMENTS PRODUCED BY THIRD PARTIES - POWER OF CRIMINAL COURT UNDER S. 94 OF THE CODE OF CRIMINAL PROCEDURE - WHETHER OVERRIDDEN.
Fact of the Case:

The appellant, the Commissioner of Income-tax, challenged the order of the High Court of Judicature at Bombay, which rejected his revision petition against the order of the Presidency Magistrate, 19th Court, Bombay, directing him to produce certain documents admitted to be in his possession.
Finding of the Court:

The court held that S. 54 of the Income-tax Act, 1922, prohibits a public servant from disclosing any particulars contained in any document forming part of the record of an assessment proceeding, and that this prohibition applies to all documents, including those produced by third parties.
Issues: Whether S. 54 of the Income-tax Act, 1922, prohibits the production of documents in court, including those produced by third parties.
Ratio Decidendi: The court interpreted S. 54 of the Income-tax Act, 1922, to mean that all particulars contained in any document forming part of the record of an assessment proceeding are confidential and cannot be required to be produced in court by any public servant, save as provided in the Act. The court held that this prohibition applies to all documents, including those produced by third parties, and that it is not overridden by the power given to a criminal court under S. 94 of the Code of Criminal Procedure.
Final Decision: The court allowed the appeal, set aside the orders of the High Court and the Presidency Magistrate, and dismissed the application filed by the first respondent for the production of the original of the letters from the Income-tax Department.

Judgment

SUBBA RAO, J. : . This appeal by special leave is against the order of the High Court of Judicature at Bombay, rejecting in limine the criminal revision filed by the appellant against the order of the Presidency Magistrate, 19th Court, Bombay, directing the appellant to produce the documents which he admitted to be in his possession by his letter dated March 27, 1958.

2. The facts are not in dispute and may be briefly stated. The first respondent filed a complaint against the second respondent his clerk, in the court of the Presidency Magistrate, Bombay, alleging that the latter had committed offences under Ss.381and 385 of the Indian Penal Code. In due course the Magistrate framed charges against the second respondent under the said sections. Pending the trial, the first respondent applied to the Magistrate to summon the Income-tax authorities to produce certain letters alleged to have been written by the second respondent to the said authorities making baseless allegations against the first respondent.

On March 27, 1958, the Commissioner of Income-tax wrote a letter to the Magistrate admitting that some letters written by the second respondent were with the Income-tax Department, but pleaded that they could not be produced in view of the provisions of S. 54 of the Indian Income- tax Act, 1922. The Presidency Magistrate, by his order dated May 16, 1958, overruled his objections and directed the Commissioner of Income-tax to produce the documents admitted to be in his possession or in the possession of officers subordinate to him. The Commissioner of Income-tax preferred an appeal against that order to the High Court of Judicature at Bombay, but the same was rejected. Hence the present appeal.

3. Learned counsel for the Commissioner of Income-tax contends that under S. 54 (1) of the Indian Income-tax Act, 1922, no Court shall be entitled to require the appellant to produce before it the said documents as they formed part of the record of an assessment proceeding taken before the relevant Income-tax authority.

4. Learned counsel for the respondents argues that the said prohibition in S. 54 of the Income- tax Act applies only to returns furnished or accounts or documents produced by an assessee before an Income-tax authority and not to documents produced by third parties, and that, in any view, the said prohibition does not override the power given to a criminal court under S. 94 of the Code of Criminal Procedure.

5. The relevant part of S. 54 of the Indian Income-tax Act reads:

(1) All particulars contained.......in any record of any assessment proceeding........shall be treated as confidential, and notwithstanding 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.,.,,. 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... record, he shall be punishable with imprisonment which may extend to six months and shall also be liable to fine.

The section is in two parts: the first part declares that all particulars contained in the documents described therein shall be treated as confidential, and the second part save as provided in the Act, debars the court from requiring any public servant to produce in court the said documents. Sub-section (2) makes the disclosure of the contents of the said documents by a public servant an offence. Sub-sections (1) and (2) in effect prohibit a public servant from disclosing any particulars contained in any such document in court.

6. The Presidency Magistrate held that the documents in question formed part of the record of the assessment proceeding; and nothing has been placed before us to displace the said finding. We shall, therefore, proceed on the basis that the condition laid down in the first part of S.54 of the Income-tax Act has been complied with. On the

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Judicial Analysis