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1977 (7) TMI 39 - HC - Income Tax

Issues Involved:
1. Validity of the notice issued u/s 131 of the Income-tax Act, 1961.
2. Application of mind by the Income-tax Officer before issuing the summons.
3. Comparison of powers under section 131 of the Income-tax Act with section 30 of the Civil Procedure Code.

Summary:

1. Validity of the notice issued u/s 131 of the Income-tax Act, 1961:
The respondents, New Central Jute Mills Co. Ltd., sought to quash the notice dated June 5, 1969, issued by the appellant-Income-tax Officer u/s 131 of the Income-tax Act, 1961. The court of first instance, under article 226 of the Constitution, quashed the notice, and this decision was upheld in the appeal.

2. Application of mind by the Income-tax Officer before issuing the summons:
The court found that the Income-tax Officer did not apply his mind to the matter before issuing the summons. The officer had no idea about the nature of the documents in the sealed boxes and thus could not determine their relevancy for the assessment or reassessment of the respondent company's income. The court emphasized that statutory powers must be exercised with due application of mind, particularly regarding the relevancy of documents to the issues involved.

3. Comparison of powers under section 131 of the Income-tax Act with section 30 of the Civil Procedure Code:
The court opined that the power of the Income-tax Officer u/s 131 is co-extensive with that of a court trying a suit u/s 30 of the Civil Procedure Code, read with rules 12, 14, and 15 of Order 11 of the Code. The court rejected the argument that the Income-tax Officer's power is unfettered except for the purposes of the Act. The officer must be satisfied that the documents are relevant for deciding the case pending before him. The court held that the wide ambit of the language in the notice requiring the production of documents indicated non-application of mind by the officer.

Conclusion:
The appeal was dismissed, and the summons issued u/s 131 of the Income-tax Act was struck down due to non-application of mind by the Income-tax Officer. There was no order as to costs.

 

 

 

 

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