1996 (5) TMI 105 - AT - Income Tax

Summary

Issues Involved:
1. Legality of the penalty imposed under section 272A of the Income-tax Act, 1961.
2. Compliance with summons issued under section 131 of the Income-tax Act, 1961.
3. Validity of the summons and the requirement for personal attendance and production of documents.

Issue-wise Detailed Analysis:

1. Legality of the Penalty Imposed Under Section 272A of the Income-tax Act, 1961:
The DC, Special Range-17, New Delhi, imposed a penalty of Rs. 5,000 on the assessee for non-compliance with summons issued under section 131. The DC observed that the assessee deliberately and intentionally failed to produce the required books of account and other documents on the specified dates. The CIT(A) confirmed the penalty, noting that the appellant did not comply with the terms of the summons and failed to produce relevant books and documents before the DCIT. The Tribunal, however, found that the penalty was not justified, as the DC had issued omnibus summons without proper application of mind, and the summons lacked specificity and proper issuance.

2. Compliance with Summons Issued Under Section 131 of the Income-tax Act, 1961:
The assessee contended that they had complied with the summons by furnishing the required information, including copies of accounts and relevant documents. The Tribunal noted that the assessee had indeed furnished the information requested in the initial summons and covering letters. The Tribunal also observed that the DC's requirement for producing all books of account, bank pass book, stock register, and other documents was excessive and not necessary for verifying the purchases made by the assessee. The Tribunal concluded that the assessee had complied with the summons to the extent required and that the DC's insistence on further documents was unreasonable.

3. Validity of the Summons and the Requirement for Personal Attendance and Production of Documents:
The Tribunal found that the summons issued by the DC lacked proper application of mind and were omnibus in nature, requiring the production of all books of account, bank pass book, stock register, and other documents for an extended period. The Tribunal referred to the Calcutta High Court's judgment in New Central Jute Mills Co. Ltd. v. Dwijendralal Brahmachari, which held that an order to produce all documents without due application of mind is not valid. Additionally, the Tribunal noted that the summons did not specify the year and were addressed to the firm, which is not a physical person, making personal attendance impossible. The Tribunal concluded that the summons were not properly issued and could not be supported.

Conclusion:
The Tribunal allowed the appeal, canceling the penalty imposed under section 272A of the Income-tax Act, 1961. The Tribunal held that the assessee had complied with the summons to the extent required and that the DC's omnibus summons lacked proper application of mind and specificity. The Tribunal emphasized that the requirement for personal attendance and the production of all documents was unreasonable and not justified in the circumstances of the case.