2002 P T D 1055

[241 I T R 446]

[Bombay High Court (India)]

Before Dr. B. P. Saraf and D. K. Deshmukh, JJ

G.M. BREWERIES LTD. and another

Versus

UNION OF INDIA and others

Writ Petition No.4989 of 1994, decided on 24/08/1999.

Income‑tax‑‑‑

‑‑‑‑Inquiry‑‑‑Powers of Income Tax Authorities under S.131‑‑‑Condition precedent for exercise of power‑‑‑Proceedings under Income‑Tax Act must be pending‑‑‑No pending proceedings‑‑‑No application of mind by ITO‑‑ Notice under S.131 was not valid‑‑‑Indian Income‑Tax Act, 1961, S. 131.

It is clear from a plain reading of section 131(1) of the Income‑Tax Act, 1961, that the powers there under can be exercised only "for the purposes of the Act". The expression "for the purposes of the Act" must mean for the purposes of proceedings under the Act pending before the concerned authority. The powers given to the Income‑tax Authorities under section 131(1) are powers of the Court of law. While exercising these powers, the income‑tax authorities act in a quasi‑judicial capacity. These powers must be exercised strictly for the purposes set out in subsection (1) of section 131 of .the Act and not for any extraneous purposes. The powers under‑section 131 can be exercised only if proceedings are pending before the authority concerned under the Income‑tax Act. The same is the position under the Wealth Tax Act and the Gift Tax Act.

Held, that, in the instant case, it was contended by the petitioners before the Income‑tax Officer that no proceedings whatsoever were pending before him for the purpose of which the books of account and documents called for could have been required. The jurisdiction of the Income‑tax Officer to issue the summons was also questioned. The Income‑tax Officer did not bother to consider the same. On the other hand, he directed the petitioners to comply with the same under the threat of penalty for non compliance. None of the contentions of the petitioners in the writ petition had been challenged by the respondents by filing any affidavit nor had the records been produced. There was no appearance on behalf of the Revenue to oppose the writ petition. Even at the time of admission, the notice before admission issued by the Court went unattended. Hence the summons issued under section 131 of the Income Tax Act, 1961, section 37 of the Wealth Tax Act, 1957 and section 36 of the Gift Tax Act, 1958, directing the petitioner‑company to produce: the books of account and documents as specified therein as also the notices issued to show cause against imposition of penalty for non‑compliance with the same were liable to be quashed.

G.S. Jetley with Atul Tungare for Petitioners.

Nemo for Respondents.

JUDGMENT

DR. B. P. SARAF, J. ‑‑‑By this writ petition, the petitioners seek to challenge the summons dated August 2, 1994, issued by the Income‑tax Officer (TDS) Circle‑Thane, and the summons, dated November 10, 1994, issued by the Income‑tax Officer (TDS‑1), Pune "under sections 131/37/36 of the Income‑tax Act, 1961/Wealth Tax Act, 1957/Gift Tax Act, 1958" directing the petitioner‑company to produce the books of account and documents as specified therein as also the notice issued to show‑cause for imposition of penalty for non‑compliance of the same. It is stated in the above summons that the books of account and documents were required an connection with the proceedings "under the Income‑tax Act, 1961 /Wealth Tax Act, 1957/Gift Tax Act, 1958". The case of the petitioners is that the summons issued are illegal and without jurisdiction because they are issued without any application of mind by the concerned Income‑tax Officer which is evident from the fact that even the portions not applicable have not been struck off in the notices. It is also stated that no proceedings were pending before either of the two Income‑tax Officers under any of the enactments mentioned in the summons, which could have entitled him to issue summons for production of documents, etc., mentioned in the summons. It is also stated that the summons were issued to make fishing enquiry in regard to non‑deduction of tax at source by the assessee. It is also stated that none of the Income‑tax Officers had jurisdiction to issue summons for that purpose, because if any enquiry was to be made in regard to non‑deduction of tax at source by the petitioner‑company, none else than the Income‑tax Officer who had jurisdiction in respect of the assessee could have done that.

When this petition came up for admission, the notice before admission was issued to the respondents by this Court which was returnable on December 16, 1994. Despite notice, no affidavit was filed by the respondents. nor any of the contentions made by the petitioners were challenged even by producing the records. Under the circumstances, rule was issued and, by interim order, dated December 16, 1994, respondent No. 2, the Income‑tax Officer (TDS) Circle, Thane, and respondent No. 3, the Income‑tax Officer (TDS‑1), Pune, were restrained from taking any steps in furtherance of the impugned summons and letters. When the matter came up on board for hearing, it was noticed that no affidavit had been filed on behalf of the respondent. The respondents did not attend the hearing even through counsel. The matter was adjourned to enable the Revenue to attend the case. Now again the matter is on board for final hearing. So far as the Revenue is concerned, the position remains the same. Neither there is any affidavit nor anybody appears for them.

We have heard Mr. G.S. Jetley, learned counsel for the petitioners, who submits that the issue of summons in this case is, wholly illegal and without jurisdiction inasmuch as no proceedings under the Income‑tax Act or any of the other two enactments mentioned in the notice were pending before the two Income‑tax Officers who had issued the same either in the matter of the assessee or any other person. Mr. Jetley, also submits that there is, gross misuse of power to issue summons. Learned counsel pointed out that in the impugned summons even the portions which are not applicable have not been struck off. It is contended that the total non‑application of mind before issue of summons is glaring on the face of the summons.

We have considered the above submissions. The two summonses which are the subject‑matter of challenge in this case are set out below:

"Summons to assessee/witnesses under sections 131/37/36 of the Income‑tax Act, 1961/Wealth Tax Act, 1957/Gift Tax Act, 1958.

P.A.No‑‑‑Office of the Income‑tax Officer, dated ‑‑‑TDS Circle, Thane, dated August 2, 1994.

To

G.M. Breweries Ltd.,

S. Veer Savarkar Marg,

Virar (E), Dist. Thane.

Whereas your attendance is required in connection with the proceedings under the Income‑tax Act/Wealth Tax Act/Gift Tax Act, in your case, you are hereby required personally to attend my office at Thane on August 8, 1994, at 11 a.m. to give evidence and/or to produce either personally or through an authorised representative the books of account and/or other documents specified overleaf, and not to depart until you receive my permission to do so.

Without prejudice to the provisions of any other law for the time being in force, if you intentionally omit to so attend and give evidence or to produce the books of account and/or document, required, a fine of up to Rs. 500 may be imposed upon you under sections 131(2)/37(2)/36(2) of the Income‑tax Act, 1961/Wealth fax Act, 1957/Gift Tax Act, 1958.

(1) Sales register for the financial year 1993‑94;

(2) Sales bill for the financial year 1993‑94;

(3) Excise register for the financial year 1993‑94;

(4) Bank/cash book for the financial year 1993‑94.

Seal

Signature of Officer

Name: D.S. Deshpande

Designation ITO (TDS)

Circle, Thane. "

"Summons to assessee/witnesses under sections 131/37/36 of the Income‑tax Act, 1961/Wealth Tax Act, 1957/Gift Tax Act, 1958.

P.A.No.‑‑‑Office of the ITO, TDS, Pune:

Dated: November 10, 1994.

TO,

The Chief Executive,

G.M. Breweries Ltd,

S. Veer Savarkar Marg,

Virar (E).

Whereas your attendance is required in connection with the proceedings under the Income‑tax Act/Wealth Tax Act/Gift Tax Act, in your case/the case of .your are .hereby required personally to attend my office at ..Thane, on November 14, 1994; at 1.1 a.m. to give evidence and/or to produce either personally or through an authorised representative the books of account and/or other documents specified overleaf, and not to depart until you receive my permission to do so.

Without prejudice to the provisions of any other law for the time being in fore. , if you intentionally omit to so attend and give evidence or to produce the books of account and/or document, required, a fine of up to Rs. 10,000 may be imposed upon you under sections 131(2)/37(2)/36(2) of the Income Tax Act, 1961/Wealth Tax Act, 1957/Gift Tax Act, 1958.

(1) Books of account for the period 1st June, 1993 to 31^st March, 1994, and 1st April, 1994; to 31st October, 1994.

(2) Information as required by Letter No. Pn/TDS‑1/GM/1994‑95, dated November 10, 1994.

Seal

Signature of Officer

Name: Income‑tax

Officer

(TDS) 1, Pune,

Designation "

It is clear even from a look at the two summons which have been reproduced verbatim that neither the Manks have been filled up nor the inapplicable portions scored out. The total non‑application of mind is manifest on the face of the summons. As stated above, further: action pursuant to the above summons had been stayed by this Court on December 16, 1994. About five years have lapsed since then. The respondents have not even cared to refute the contentions of the petitioners or meet the challenge to the validity and legality of the impugned summons and/or to take steps to get the stay order vacated or the writ petition disposed of. That clearly goes to show that the respondents are not interested in pursuing the matter, either because they have no case or they are totally in different and callous.

As stated above, the above summons clearly demonstrate the total non‑application of mind by the concerned Income‑tax Officer. Even it is not clear from the summons whether these are under the Income‑tax Act or Wealth Tax Act or Gift Tax Act. We have not been told by the Revenue in what connection and tinder which Act the books of account and documents were required to be produced by the petitioners. So far as the scope and ambit of section 131(1) of the Income‑tax Act is concerned it is clear from a plain reading of the provision itself that the powers there under can be exercised only "for the purposes of the Act". The expression "for the purposes of the "Act" must mean for the purposes of proceedings under the Act pending before the concerned authority. The powers given to the income‑tax authorities under section 131(1) are powers of the Court of law, While exercising these powers, the Income‑tax Authorities act in a quasi judicial capacity. These‑powers must be exercised strictly for the purposes set out in subsection (1) of section 131 of the Act and not for any extraneous purposes. The powers under section 131 can be exercised only if proceedings are pending before the authority concerned under the Income‑tax Act. The same is the position under the Wealth Tax Act and the Gift Tax Act. In the present case, the petitioners seriously challenged the exercise of the powers by the Income‑tax Officer. It was contended by the petitioners before the Income‑tax Officer that no proceedings whatsoever were pending before him for the purpose for which the books of account and documents called for could have been required. The jurisdiction of the Income‑tax Officer to issue the summons was also questioned. The Income‑tax Officer did not bother to consider the same. On the other hand, he directed the petitioners to comply with the same under tire threat of penalty for non‑compliance. It is in such circumstances that the petitioners challenged the summons and notices before this Court:

As stated above, none of the contentions of the petitioners in the writ petition have been challenged by the respondents by filing any affidavit nor the records have been produced. There is even no appearance on behalf of the Revenue to oppose the writ petition. Even at the time of admission, the notice before admission issued by this court went unattended.

Under these circumstances, we are left with no option but to quash the impugned summons and .all consequential notices issued for non compliance of the same. In the result, the writ petition is allowed with no order as to cost.

M . B. A ./601 /FCPetition allowed.