TMI Blog2019 (6) TMI 52X X X X Extracts X X X X X X X X Extracts X X X X ..... footing than a summons u/s 131(1) with penalty in default of compliance therewith. Such, however, is not the case here. Similarly, we are in agreement with the argument of the learned counsel for the petitioner that provisions of Section 131(1) could be invoked only if some proceedings were pending. In the instant case there was only a survey operation and no proceedings were pending at that point of time. But the income-tax authority exercised the powers of a court in the absence of any pending proceedings. This issue was determined by a Division Bench of Patna High Court in Rina Sen v. Commissioner of Income-Tax and others [ 1998 (8) TMI 76 - PATNA HIGH COURT] To our minds the income-tax authority violated the procedure completely. Nowhere was any satisfaction recorded either of noncooperation of the petitioner or a suspicion that income has been concealed by the petitioner warranting resort to the process of search and seizure. No hesitation to conclude that the present petition deserves to succeed. The impugned action of the respondents is quashed. - CWP No. 8261 of 2017 - - - Dated:- 22-5-2019 - MR MAHESH GROVER AND MR LALIT BATRA, JJ. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther action against the petitioner. Besides, the summons was absolutely silent as to what information was required from the petitioner during the survey operation. The respondents, on the other hand, justify the action taken by them. Annexure P-3 is the summons issued to the petitioner under Section 131 of the Act, which indicates that the premises of the petitioner were converted into a camp office and advised to attend the office and give evidence or produce books of accounts, failing which a penalty of ₹ 10,000/- for each default would be imposed upon him. Towards the bottom of the summons it is written Books of accounts/documents specified . This, according to our mind, is totally vague as the summons is absolutely silent as to what information was required of him during the survey operation. Even in the reply filed to the petition it has not been stated so. Thus, there is complete ambiguity in the language of the summons which failed to apprise the petitioner of what is required of him at the time of attending the office. Be that as it may, there is a specific assertion made by the petitioner that he had cooperated with the respondent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and inspection enforcing attendance of any person, compelling production of books of accounts and other documents and issuing commissions. Section 131(1) is extracted here-below :- 131.(1) The Assessing Officer, Deputy Commissioner (Appeals), Joint Commissioner ,Commissioner (Appeals), Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner and the Dispute Resolution Panel referred to in clause (a) of sub-section (15) of section 144C shall, for the purposes of this Act, have the same powers as are vested in a court under the Code of Civil Procedure, 1908 (5 of 1908), when trying a suit in respect of the following matters, namely:- ( a) discovery and inspection; ( b) enforcing the attendance of any person, including any officer of a banking company and examining him on oath; ( c) compelling the production of books of account and other documents; and ( d) issuing commissions. The respondents have relied upon Section 131(1-A) which is extracted herebelow :- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er valuable article or thing and it is only upon the non-cooperation or refusal by the person under search that powers under Section 131(1) can be resorted to. Section 133A (4) (6) are extracted herebelow :- 133A.(4) An income-tax authority acting under this section shall, on no account, remove or cause to be removed from the place wherein he has entered, any cash, stock or other valuable article or thing. xxx xxx xxx xxx ( 6) If a person under this section is required to afford facility to the income-tax authority to inspect books of account or other documents or to check or verify any cash, stock or other valuable article or thing or to furnish any information or to have his statement recorded either refuses or evades to do so, the income tax authority shall have all the powers under sub-section (1) of section 131 for enforcing compliance with the requirement made : Provided that no action under sub-section (1) shall be taken by an Assistant Director or a Deputy Director ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ay require. It is admitted that the ITO did enter the business premises of the petitioner and whatever books of account and other documents he wanted to examine, were made available to him. Under Section (3) of Section 133A the ITO could place marks of identification on the books of account or other documents inspected by him or could make inventory of any cash, stock or other valuable article or thing checked or verified by him or record the statement of any person which may be useful for, or relevant to, any proceedings under the Act. It is again admitted that the petitioner caused no impediment for the ITO to exercise power under Sub-section (3) of Section 133A of the Act. xxx xxx xxx xxx 6 . It is clear that the ITO is debarred from removing the books of account or other documents etcetera from the business premises of the assessee under Sub-section (4) during the survey under Section 133A. The ITO can, however, resort to powers under Sub-section (1) and (2) of Section 131 of the Act, in case th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Income Tax Officer and another 1986(2) BCR 63 the Bombay High Court framed the following question :- Can, in the matter of an assessee's completed and concluded assessment, a summons under section 131(1) of the Income-tax Act (for short, the Act ) be issued against him without there being in existence before the officer issuing the same a pending proceeding? In the answer the following are the observations :- 11. Again, under sub-section (3) of section 131, any authority referred to in sub-section (1) or sub-section (1A) of section 131 may impound and retain in its custody any books of accounts or other documents produced before it in any proceeding under this Act. Further still, Explanation 2 to section 132 of the Act also indicates that but for its artificial and extended definition of the word proceeding , proceeding would mean one actually pending and not one completed and concluded. Also relevant to the context is the form of the summons (under section 131(1) of the Act) which commences with the words: Whereas your attendance is required in connection with the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mischief and/or likely abuse and/or arbitrariness. A completed assessment is a valuable right. It cannot be lightly ignored nor can it, at the mere whim of the officer, be put into jeopardy. To permit such a course would be akin to permitting entry into the penumbra so speculative uncertainty. For reopening an assessment, the Act sets down stringent conditions. The same must first be fulfilled before issuing summons to the assessee. A request simpliciter to the assessee to assist without anything more and without any consequence in default may stand upon an altogether different footing than a summons under section 131(1) with penalty in default of compliance therewith. Such, however, is not the case here. Similarly, we are in agreement with the argument of the learned counsel for the petitioner that provisions of Section 131(1) could be invoked only if some proceedings were pending. In the instant case there was only a survey operation and no proceedings were pending at that point of time. But the income-tax authority exercised the powers of a court in the absence of any pending proceedings. This issue was determined by a Division Bench of Patna High Court in Ri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ief of the authority must be that the only way in which the Income Tax Department will be in a position to obtain books of accounts and documents from a person is by the conduct of a search and consequent seizure of the documents thereof. In our opinion some facts or circumstances must exist on the basis of which such a belief can be formed. For example, if the Department has information that a person has duplicate sets of account books or documents where havala transactions are recorded then the Department can legitimately come to the conclusion that if a notice is sent then that person is not likely to produce the said documents etc. Duplicate books of accounts and such like documents are maintained primarily for the reason that they are not to be produced before the Income Tax authorities. To put it differently, the nature of the documents may be such which are not, in the normal course, likely to be produced before the Income Tax authorities either voluntarily or on requisition being sent. It may also happen that the documents may exists and be in the custody of a person which would show the existence of immoveable property which he may have acquired from money or income which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee that the receipt of such amount is not taxable, may be incorrect and, in law, the same may be taxable but where, the Department is aware of the existence of such an asset or the receipt of such an income by assessee then the Department may be fully justified in issuing a notice under Section 148 of the Act, but no action can be taken under Section 132(1)(c). Authorisation under Section 132(1) can be issued if there is a reasonable belief that the assessee does not want the Income Tax Department to know about the existence of such income or asset in an effort to escape assessment. Section 132(1)(c) has been incorporated in order to enable the Department to take physical possession of those moveable properties or articles which are or represent undisclosed income or property. The words undisclosed income must mean income which is liable to be taxed under the provisions of the Income Tax Act but which has not been disclosed by an assessee in an effort to escape assessment. Not disclosed must mean the intention of the assessee to hide the existence of the income or the asset from the Income Tax Department while being aware that the same is rightly taxable. xxx ..... X X X X Extracts X X X X X X X X Extracts X X X X
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