TMI Blog1970 (3) TMI 23X X X X Extracts X X X X X X X X Extracts X X X X ..... ct, corresponding to section 143(2) of the present Act, dated the 12th November, 1962, was served on the petitioner for compliance on the 3rd December, 1962. At the request of the petitioner time for compliance was extended periodically and in the meantime the petitioner's file was transferred to the Income-tax Officer, Companies District III, and a notice under section 23(2) of the old Act read with section 143(2) of the present Act dated the 11th August, 1965, for compliance on the 23rd August, 1965, was served on the petitioner by the last mentioned Income-tax Officer. Thereafter, the petitioner's case was again transferred to the Income-tax Officer, Central Circle XV, Calcutta, the present respondent to this application. In the meantime the authorised representative of the petitioner appeared before the respondent-Income-tax Officer and his predecessors in compliance with the notice under section 143(2) and discussions took place between the said authorised representative and the respective Income-tax Officers. By a letter dated 6/9th December, 1965, the Income-tax Officer forwarded two notices under sections 143(2) and 142(1) to the petitioner for compliance on the 13th Decemb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for specific information and the petitioner was trying on various pretexts to avoid complying with the requisitions made by the Income-tax Officer. There can be no doubt that the petitioner's case is wholly without any merit but that would not affect its contention that no penalty proceedings could be initiated in respect of notices which were not proper notices under section 142(1). By a summons under section 131 of the 1961 Act, dated the 17th February, 1966, the respondent-Income-tax Officer required the petitioner, inter alia, to produce its books of accounts or documents for the financial years ending on 3 1st March, 1949, 31st March, 1950, 31st March, 1951, and 31st March, 1952, respectively, on the 22nd February, 1966. This is the summons which is impugned in the second part of the application. Before I deal with the respective contentions of the learned counsel for the parties it would be necessary to set out the provisions of the relevant sections of the Income-tax Act, 1961, with reference to the corresponding sections in the repealed Act of 1922. Section 131 (old section 37) endows certain income-tax authorities such as the Income-tax Officer, Appellate Assistant Com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 143(2) requires the assessee to produce such evidence as he might wish to rely in support of the return filed by him while the notice under section 142(1) is a notice requiring the assessee to produce such evidence or furnish such information as the Income-tax Officer might require. One of the consequences of the failure of the assessee to comply with the aforesaid notices is provided in section 144 (old section 23(4)) which enacts that if any person either fails to make a return in response to a notice under section 139 or fails to comply with all the terms of a notice issued under section 142(1) or having made a return fails to comply with all the terms of a notice issued under section 143(2) the Income-tax Officer shall make the assessment of the total income or loss to the best of his judgment. A further penalty is provided for in section 271 (old section 28) which enables an Income-tax Officer if satisfied that any person has without reasonable cause failed to comply with a notice either under section 142(1) or under section 143(2) to direct that such person shall pay certain amounts as penalty as provided for in that section. Section 274 lays down the procedure for in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... written by the Income-tax Officer. Strangely enough in his subsequent letter dated the 11/14th February, 1966, the respondent-Income-tax Officer himself points out that the informations asked for in his earlier letter were under section 143(3). The contention of the petitioner must be accepted so far as the impugned penalty notice under section 271/274 of the Income-tax Act, 1961, is concerned and the said notice dated the 11/14th February, 1966, must be struck down. But the summons under section 131 is quite a different matter. Dr. Pal, the learned counsel for the petitioner, contended that section 131 in so far as it authorised the respondent-Income-tax Officer to compel the assessee to produce its books of account and other documents covered the same field as section 142(1) and as proviso (b) to the last-mentioned section prohibited the Income-tax Officer from calling for the books of the assessee beyond the period of three years from the accounting year corresponding to the assessment year, the application of section 131 would be oppressive and discriminatory and must to that extent be struck down. He relied on the decision of the Supreme Court in Suraj Mall Mohta and in Shre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cs and similar properties, the common characteristics being that they are persons who have not truly disclosed their income and have evaded payment of taxation on income. It is clear that if persons dealt with by the impugned Act are deprived of the substantial and valuable privileges which they would otherwise have if they were dealt with under the Indian Income-tax Act, in that situation it is no defence to say that the discriminatory procedure also advances the course of justice. The matter has to be judged from the point of view of the ordinary reasonable man and not from the point of view of the Government. The ordinary reasonable man would say, when the stakes are heavy and serious charges of evasion of income-tax are made against him, why one person similarly placed should have the advantage substantially of the procedure prescribed by the Indian Income-tax Act, while another person similarly situated be deprived of it. It is from this aspect that the application of article 14 to the facts of this case has to be considered. " On a comparison of the relative sections of the impugned Act and the Indian Income-tax Act, their Lordships held that the provisions of the impugned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct, that is to say, not only making an assessment but for any other purpose. The section confers the same powers as that of a court, inter alia, on the Income-tax Officer for compelling the attendance of witnesses and production of documents and other evidence. The penalty for noncompliance with a summons under that section is also provided in the section itself. He referred me to a decision of a Full Bench of the Madras High Court, where the distinction between the powers exercised by the Income-tax Officer under section 22(4) and section 37 of the old Act were clearly enunciated. In T. M. M. Sankaralinga Nadar Bros. v. Commissioner of Income-tax the court observed as follows : " Reading these sections together we think that the proviso to sub-section (4), section 22, when read with section 23, sub-section (4), only limits the power to call for accounts for more than three years prior to the previous year, when the Income-tax Officer has to make the assessment to the best of his judgment where the conditions mentioned in section 23(4) exist. Where, however, during the course of an inquiry the Income-tax Officer is not going to make the assessment to the best of his judgment ow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers on the Income-tax Officer only and not on the several other officers upon whom power has been conferred by section 131 of the Act as mentioned above. " And again : " To say that although this section has conferred upon the Income-tax Officer the power of a civil court, he cannot exercise such powers except subject to the limitations under the proviso to section 142, would have the inevitable consequence of depriving the Income-tax Officer of the power to call for books of accounts of an assessee which the legislature expressly conferred upon him. " Then, after citing with approval the passage from the judgment of the Full Bench of the Madras High Court I have already quoted above, his Lordship finally observed as follows: " It seems to me that the power conferred upon the Income-tax Officer to call for the account books under section 131 of the Act cannot be taken away or whittled down because of the limitations imposed by the proviso to section 142 of the Act. " Naturally, in none of these two decisions the contention raised by Dr. Pal before me, namely, that section 131 was bad in so far as it gave to the Income-tax Officer power to call for books of accounts fro ..... X X X X Extracts X X X X X X X X Extracts X X X X
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