1969 (9) TMI 32 - HC - Income Tax

Summons under section 131 of the Income-tax Act, 1961 - Director of Inspection is not one of the authority mentioned in section 131 to issue a notice for personal appearance or production of accounts, on any person

Summary

Issues Involved:
1. Jurisdiction of the Assistant Director of Inspection under Section 131 of the Income-tax Act, 1961.
2. Interpretation of Sections 131 and 135 of the Income-tax Act, 1961.
3. Application of the maxim "generalia specialibus non derogant."

Detailed Analysis:

Jurisdiction of the Assistant Director of Inspection under Section 131

The petitioner was summoned by the Assistant Director of Inspection (Intelligence) under Section 131 of the Income-tax Act, 1961, to attend and produce certain documents related to Aruna Estates Ltd. The petitioner objected, leading to the issuance of a rule calling upon the respondents to show cause why the notice should not be quashed. The core contention was whether the Assistant Director of Inspection had jurisdiction to issue such a notice under Section 131.

Interpretation of Sections 131 and 135 of the Income-tax Act, 1961

To address the jurisdictional issue, the court examined the relevant provisions of the Income-tax Act, 1961. Section 131(1) grants specific powers to the Income-tax Officer, Appellate Assistant Commissioner, Inspecting Assistant Commissioner, and Commissioner, akin to those of a court under the Code of Civil Procedure, 1908, including discovery and inspection, enforcing attendance, compelling production of documents, and issuing commissions. Section 131(2) and (3) provide additional procedural details, including penalties for non-compliance and the authority to impound documents.

The petitioner argued that since the Director of Inspection was not explicitly mentioned in Section 131, the Assistant Director of Inspection could not exercise these powers. The respondent countered by invoking Section 135, which states that the Director of Inspection, Commissioner, and Inspecting Assistant Commissioner have all the powers of an Income-tax Officer for making inquiries under the Act.

The court noted that the original Section 131 did not include the Inspecting Assistant Commissioner until amended by the Finance Act, 1965. The Statement of Objects and Reasons for this amendment clarified that the legislature intended only the specified officers to exercise these powers, necessitating the amendment to include the Inspecting Assistant Commissioner.

Application of the Maxim "Generalia Specialibus Non Derogant"

Dr. Pal, representing the petitioner, argued that the specific provisions of Section 131 should override the general authority granted under Section 135. He cited Supreme Court decisions to support the view that legislative intent should be derived primarily from the statute's wording unless ambiguity necessitates examining the surrounding circumstances or the Statement of Objects and Reasons.

The court agreed with Dr. Pal, stating that Section 131 explicitly empowers only the officers mentioned therein. The court found that Section 135's general authority to make inquiries does not extend to the specific powers under Section 131. If the Director of Inspection were to exercise these powers, it would lead to an absurdity, as he would need the Commissioner's approval to impound documents, despite not being subordinate to the Commissioner.

The court concluded that Section 131's specific provisions could not be overridden by Section 135's general authority. The maxim "generalia specialibus non derogant" (general provisions do not derogate from specific ones) was deemed applicable. Consequently, the Assistant Director of Inspection lacked jurisdiction to issue the notice under Section 131.

Judgment:

The court ruled in favor of the petitioner, making the rule absolute and quashing the impugned notice. Each party was directed to bear its own costs, considering the lack of reported decisions on this specific issue.