1973 (4) TMI 22 - HC - Income Tax

Jurisdiction of Income-tax Officer to call for accounts for more than three years for making an assessment - This is an appeal from a judgment of Mr. Justice K. L. Roy delivered on 11 th March 1970. In an application under article 226 of the Constitution, the petitioner, which is the appellant before us, had challenged a notice under section 131 issued to the principal officer of the appellant by the Income-tax Officer- for making an assessment the Income-tax Officer is empowered u/s 143(3) to require production of such documents as he might require - his power is not curtailed by section 142(1)(b)

Summary

Issues: Challenge to notice under section 131 of the Income-tax Act, 1961 for production of accounts beyond three years prior to the previous year.

Analysis:
The case involved an appeal challenging a notice under section 131 of the Income-tax Act, 1961, issued to the principal officer of the appellant by the Income-tax Officer. The appellant contended that the Income-tax Officer exceeded jurisdiction by calling for the production of books of accounts for financial years beyond three years prior to the previous year, as per section 142, proviso, clause (b). The appellant argued that the Income-tax Officer should be restricted to clause (b) of the proviso to section 142 and cannot invoke powers under section 131 to demand accounts for periods exceeding the specified limit.

The court analyzed the provisions of the Income-tax Act, particularly sections 131, 142, and 143. It noted that section 142 pertains to the "Enquiry before assessment," while sections 143(2) and 143(3) specify the type of evidence the Income-tax Officer can call for. The court emphasized that the Income-tax Officer is entitled to require the assessee to produce additional evidence beyond what was submitted in support of the return. It concluded that the Income-tax Officer can rely on section 131 to exercise this power for the purposes of the Income-tax Act. Therefore, there was no conflict between section 131 and section 142, proviso, clause (b), and the Income-tax Officer did not exceed jurisdiction by issuing the impugned notice.

Additionally, the court referenced a similar view taken by the Full Bench of the Madras High Court in a related case. Ultimately, the appeal was dismissed, and no costs were awarded. An interim stay was granted regarding the production of further documents in response to the notice under section 131 for a specified period.

In a concurring opinion, Justice Sabyasachi Mukharji agreed with the analysis and decision of the Chief Justice.