S.K.SEN, J. -
(1.) THIS revisional application is directed against an order of the Chief Presidency Magistrate, Calcutta, revising an order passed by his predecessor in office allowing an application under O. XIII, r. 10, of the CPC for sending certain documents to the ITO (Central) Circle No. VII, and directing the ITO in question to indicate specifically what documents he wants for the purpose of income-tax assessment, so that the question of relevency thereof for the purpose of an assessment may be examined in the presence of all the interested parties.
(2.) THE facts of the case are briefly as follows : On 15th Sept., 1959, certain books of account, documents and correspondence were seized from the firm of opposite party No. 2, Sohan Lal Sethia, on the authority of a search warrant issued by the Chief Presidency Magistrate, Calcutta, under s. 19(3) of the Foreign Exchange Regulation Act, 1947. THEre was, however, no case in Court started under the provisions of the Foreign Exchange Regulation Act against Sohan Lal Sethia or against Sohanlal Sethia and Sons (P) Ltd. by the Enforcement Officer attached to the Ministry of Finance, Department of Economic Affairs, Government of India, but an adjudication proceding was started and as a result of the adjudicantion the claims of the Government of India against Sohan Lal Sethia and his company were settled. On 6th May, 1960, the ITO (Central) Circle No. VII, Calcutta, made an application to the Chief Presidency Magistrate, Calcutta, for getting custody of all the documents seized in execution of the search warrant issued by the Chief Presidency Magistrate on 15th Sept., 1959, stating that the documents were required for reference in an assessment proceeding pending before the ITO against Sohan Lal Sethia and his company. A letter of request under O. XIII, r. 10 of the CPC containing a list of the documents was annexed to the application. On 11th May, 1960, the then Chief Presidency Magistrate passed an order that the investigating officer should make over the seized documents to the ITO; but the Foreign Exchange Enforcement Directorate then moved the Chief Presidency Magistrate for being permitted to retain the documents until the completion of the adjudication processdings against Sohan Lal Sethia and his company and the learned Chief Presidency Magistrate then passed a revised order that the ITO would get the documents after the adjudication proceedings were concluded. THE adjudication proceedings were concluded by 9th March, 1961, and then the ITO (Central) Circle No. VII, Calcutta, renewed his prayer for the documents in accordance with the letter of request under O. XIII, r. 10, of the CPC already sent to the Chief Presidency Magistrate. On 18th March, 1961, the learned Chief Presidency Magistrate directed that the application be put up on 3rd June, 1961. In the meantime, on 15th April, 1961, opposite party No. 2, Sohan Lal Sethia, filed an application before the Chief Presidency Magistrate for the return of all the documents seized on 15th Sept., 1959, at the instance of the Foreign Exchange Enforcement Directorate. THE learned Chief Presidency Magistrate after hearing both parties passed the impugned order on 26th Apri, 1961. He observed that the IT Department could not as of right claim to have the custody of all the seized documents without mentioning the particulars of the documents which they wanted to have and without showing that they were entitled to get these documents in view of the provisions of s. 22 r/w s. 2(11) of the IT Act. Accordingly, the ITO was directed to inspect the documents which were directed to be produced by the Enforcement Directorate on 3rd May, 1961, and then to inform the Court which documents in particular the ITO wanted for the purpose of income-tax assessment.
It is against this order that the ITO and the Union of India represented by the CIT (Central) have moved this revisional application. Mr. E. Meyer appearing for the petitioners has urged that the ITO has the powers of a civil court in respect of discovery and inspection of documents and compelling the production of books of account and other documents [vide s. 37(1) of the IT Act] and that the ITO in exercise of his power as a civil court is entitled to issue a letter of request under O. XIII, r. 10, of the CPC, and that the Court to which such a letter of request is issued is not entitled to examine the validity of the requisition but is bound to comply with it. In this connection Mr. E. Meyer has referred to the decision, Ganpatrai Rawatmull vs. Collector, Land Customs (1961) 42 ITR 107 (Cal) : TC60R.119, where it was held that the documents seized in execution of a search warrant issued by a magistrate under s. 172 of the Sea Customs Act, on requisition by the land customs authorities, could be made over by the magistrate to the IT authorities on receiving a requisition under O. XIII, r. 10 of the CPC and that the ITO in his capacity as a civil court was entitled to issue such a requision under O. XIII, r. 10 of the CPC. Mr. E. Meyer has also referred to an old decision of this Court, viz., Golap Coomary Dosee vs. Rajah Soondur Narain Deo (1879) 4 Cal LR 36, that when a requisition under O. XIII, r. 10, of the CPC is made by one civil Court on another Court, e.g., the Court of the Judicial CIT, the latter has no discretion in the matter but is bound to comply with the requisition. The terms of O. XIII, r. 10, of the CPC if scrutinized lead to the same conclusion. It is clear on reading the rule as a whole that when there is an application by a party to make such a requisition from another Court, the Court may direct the party to satisfy him as to the relevancy of the documents of the record to be requisitioned from another Court but when the requisition is made by another Court suo motu, it does not appear from the terms of the rule that the Court requested has any discretion in the matter. In the circumstances, it appears prima facie that the learned Chief Presidency Magistrate was wrong in seeking by his order dt. 26th April, 1961, to scrutinize the validity and legality of the requisition made by the ITO for the documents and papers which had been seized from the firm of Sohan Lal Sethia in execution of a search warrant issued under the provisions of the Foreign Exchange Regulation Act.
Mr. Ajit Kumar Dutta appearing for Sohan Lal Sethia had urged two objections against the validity of the requisition and has sought to support the order of the learned Chief Presidency Magistrate dt. 26th April, 1961. The first point urged by Mr. Dutta is that at the relevant time, viz., 6th May, 1960, no proceedings for assessment of the company belonging to Sohan Lal Sethia was pending before the ITO (Central) Circle No. VII, and that, therefore, the requisition was without jurisdiction. As to this point, however, it appears from the affidavit in reply by the petitioners that although assessment for the asst. yr. 1959-60 had been completed in respect of Sohan Lal Sethia and Sons (P) Ltd. and Sohan Lal Sethia, the assessment proceedings for the asst. yr. 1960-61 in respect of the firm Sohan Lal Sethia and Sons (P) Ltd., was pending on 6th May, 1960. According to Mr. E. Meyer the general notice under s. 22(1) of the IT Act had been issued before 6th May, 1960, and a specific notice on the party in question under s. 22(2) of the IT Act was also issued on 6th May, 1960, before the letter of request under O. XIII, r. 10 of the CPC was issued on the Chief Presidency Magistrate. This statement made in the affidavit in reply was not controverted, and it must, therefore, be held that proceedings for assessment were pending before the ITO in question and, therefore, he had jurisdiction to make a letter of request for the documents under O. XIII, r. 10, of the CPC. There can be no doubt that proceedings commenced with the issue of the specific notice under s. 22, Sub-s. (2), of the IT Act. Mr. E. Meyer has urged that with the issue of general notice under s. 22(1) of the IT Act proceedings may be said to commence; but on this point we need make no decision, as specific notice under s. 22, sub-s. (2), was issued before the letter of request was issued on the Chief Presidency Magistrate.
(3.) MR. Dutta has next urged that a settlement had been made regarding the assessment of the various concerns of Sohan Lal Sethia, between him and the CIT on 27th Jan., 1959, under which Sohan Lal Sethia on behalf of the concerns agreed to assessment on a previously undisclosed income of fifty lakhs of rupees made by the concerns during the asst. yrs. 1940-41 to 1958-59; and that in view of this settlement it is not open to the IT Department to reopen the assessment of the years 1940-41 to 1958- 59 on the basis of the old documents which were seized by the Foreign Exchange Enforcement Directorate. MR. Dutta has also referred to s. 22(4), proviso, of the IT Act, which provides that the ITO shall not require the production of any accounts relating to a period more than three years prior to the previous year as defined in the IT Act. MR. Dutta has urged that the ITO could not circumvent that statutory provision by purporting to act under O. XIII, r. 10, of the CPC and get hold of the account papers of a much earlier period.
We do not, however, think that when a valid letter of request under O. XIII, r. 10, of the CPC has been issued by the ITO acting as a civil court on another Court the latter Court is entitled to go into the question whether the document could be otherwise legally obtained by the requisitioning Court or authority. Reference has already been made to the terms of O. XIII, r. 10 of the CPC, and to the old decision, Golap Coomary Dosee vs. Rajah Soondur Narain Deo (supra). O. XIII, r. 10, sub-r. (3), provides that nothing in this rule should be deemed to enable a Court which makes the requisition to use in evidence any document which under the law of evidence would be inadmissible in the suit. It appears to us that not only the objection on this score of inadmissibility but the objection on other legal grounds may be pressed by the party affected, that is, Sohan Lal Sethia, before the IT authority or the Appellate Tribunal or the High Court, but it is not the function of the Court on which requisition has been made to enter into the question of admissibility or other legal questions which may be raised by the party concerned. It is not for the Chief Presidency Magistrate or for us to decide at this stage whether in view of the settlement made between the parties on 27th Jan., 1959, the IT authority could legally re open the assessment for the years 1940-41 to 1958-59.;