2020 (5) TMI 144 - HC - Income Tax

Summons u/s 131 - patent violation of the Fundamental Rights guaranteed under Part-III of the Constitution of India - Assistant Commissioner issued the impugned summons to the assessee u/s 131 asking the assessee to be present on 07.02.2020 at 2.30 p.m., to give evidence and to produce personally the books of accounts or other documents specified therein and not to depart until he grants permission to do so - HELD THAT - A perusal of the impugned summons shows that apart from asking the assessee to be present on a particular day, the Assistant Commissioner also directed the assessee not to depart from the premises till he grants permission to do so. In the considered opinion of this Court, the impugned summons to the extent of asking the assessee to be present for unlimited period till the time he obtains permission from the Assistant Commissioner, is highly unreasonable. Though there is no infirmity in asking the petitioner to be present for enquiry, this Court does not find any justification on the part of the Assistant Commissioner in asking the assessee to be present for unlimited period. Keeping in view the submissions of the learned counsel for the petitioner and the learned Standing Counsel for respondents, this Court deems it appropriate to direct the petitioner herein to co-operate with the enquiry initiated by the Assistant Commissioner and be present before the officer concerned on the day on which the officer asks the assessee to be present, till 7.00 p.m., or any other time earlier thereto specified by the officer concerned.

Summary

Issues:
1. Validity of notice under Section 148 of the Income Tax Act, 1961
2. Legality of summons issued under Section 131 of the Income Tax Act
3. Fundamental Rights violation by the Assistant Commissioner

Analysis:
1. The petitioner challenged the notice issued under Section 148 of the Income Tax Act, alleging that the income chargeable to tax for the assessment year had escaped assessment. The petitioner's initial writ petition was dismissed by a Division Bench of the High Court. The validity of the notice was a crucial issue in this case.

2. Subsequently, the Assistant Commissioner issued a summons under Section 131 of the Income Tax Act to the assessee, directing them to appear and produce documents. The petitioner contended that the directive not to depart without permission violated Fundamental Rights. The Court examined the legality of the summons and the Assistant Commissioner's authority to issue such directions.

3. The Court found that while it was reasonable to ask the assessee to be present for an inquiry, directing them to stay until permission was granted was deemed highly unreasonable. The Court held that such a requirement was unjustified and directed the petitioner to cooperate with the inquiry but only be present until 7.00 p.m. or any earlier specified time. The judgment emphasized the balance between the rights of the taxpayer and the authority of the tax officer.

Overall, the High Court's judgment addressed the issues of notice validity, legality of summons, and Fundamental Rights violation, providing a balanced approach by upholding the need for cooperation in the inquiry while limiting the duration of the assessee's presence.