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TMI Blog1970 (3) TMI 23X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer, Companies District III, and a notice under section 23(2) of the old Act read with section 143(2) of the present Act dated the 11th August, 1965, for compliance on the 23rd August, 1965, was served on the petitioner by the last mentioned Income-tax Officer. Thereafter, the petitioner's case was again transferred to the Income-tax Officer, Central Circle XV, Calcutta, the present respondent to this application. In the meantime the authorised representative of the petitioner appeared before the respondent-Income-tax Officer and his predecessors in compliance with the notice under section 143(2) and discussions took place between the said authorised representative and the respective Income-tax Officers. By a letter dated 6/9th December, 1965, the Income-tax Officer forwarded two notices under sections 143(2) and 142(1) to the petitioner for compliance on the 13th December, 1965, and in the said letter asked for certain informations to be furnished consisting of fourteen items. The notice under section 143(2) was in the usual form requiring the petitioner to be present either in person or by a representative duly authorised in writing and to produce or cause to be produced any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n respect of notices which were not proper notices under section 142(1). By a summons under section 131 of the 1961 Act, dated the 17th February, 1966, the respondent-Income-tax Officer required the petitioner, inter alia, to produce its books of accounts or documents for the financial years ending on 3 1st March, 1949, 31st March, 1950, 31st March, 1951, and 31st March, 1952, respectively, on the 22nd February, 1966. This is the summons which is impugned in the second part of the application. Before I deal with the respective contentions of the learned counsel for the parties it would be necessary to set out the provisions of the relevant sections of the Income-tax Act, 1961, with reference to the corresponding sections in the repealed Act of 1922. Section 131 (old section 37) endows certain income-tax authorities such as the Income-tax Officer, Appellate Assistant Commissioner, Inspecting Assistant Commissioner and the Commissioner with some of the powers vested in a civil court under the Code of Civil Procedure when trying a suit, viz., (1) discovery and inspection, (2) enforcing the attendance of any person, (3) compelling the production of books of account and other document ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the failure of the assessee to comply with the aforesaid notices is provided in section 144 (old section 23(4)) which enacts that if any person either fails to make a return in response to a notice under section 139 or fails to comply with all the terms of a notice issued under section 142(1) or having made a return fails to comply with all the terms of a notice issued under section 143(2) the Income-tax Officer shall make the assessment of the total income or loss to the best of his judgment. A further penalty is provided for in section 271 (old section 28) which enables an Income-tax Officer if satisfied that any person has without reasonable cause failed to comply with a notice either under section 142(1) or under section 143(2) to direct that such person shall pay certain amounts as penalty as provided for in that section. Section 274 lays down the procedure for initiating such penalty proceedings by way of issue of notice, etc. It is, therefore, clear that the failure to comply with a notice under section 143(2), that is, a failure on the part of the assessee to produce before the Income-tax Officer any evidence to support the return filed by him might expose him to a best ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... penalty notice under section 271/274 of the Income-tax Act, 1961, is concerned and the said notice dated the 11/14th February, 1966, must be struck down. But the summons under section 131 is quite a different matter. Dr. Pal, the learned counsel for the petitioner, contended that section 131 in so far as it authorised the respondent-Income-tax Officer to compel the assessee to produce its books of account and other documents covered the same field as section 142(1) and as proviso (b) to the last-mentioned section prohibited the Income-tax Officer from calling for the books of the assessee beyond the period of three years from the accounting year corresponding to the assessment year, the application of section 131 would be oppressive and discriminatory and must to that extent be struck down. He relied on the decision of the Supreme Court in Suraj Mall Mohta and in Shree Meenakshi Mills Ltd. In the first case reported at page 1 of that volume the Supreme Court struck down section 5(4) of the Investigation Commission Act which provided that if in the course of any investigation the Commission has reason to believe that some person other than the person whose case is being investigate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... they were dealt with under the Indian Income-tax Act, in that situation it is no defence to say that the discriminatory procedure also advances the course of justice. The matter has to be judged from the point of view of the ordinary reasonable man and not from the point of view of the Government. The ordinary reasonable man would say, when the stakes are heavy and serious charges of evasion of income-tax are made against him, why one person similarly placed should have the advantage substantially of the procedure prescribed by the Indian Income-tax Act, while another person similarly situated be deprived of it. It is from this aspect that the application of article 14 to the facts of this case has to be considered. " On a comparison of the relative sections of the impugned Act and the Indian Income-tax Act, their Lordships held that the provisions of the impugned Act were more onerous than those of the Indian Income-tax Act, and, accordingly, they struck down section 5(4) of the impugned Act. In the other case, reported at page 713 of the same volume, on the amendment of section 34 of the Indian Income-tax Act by introduction of sub-section (1A), section 5(1) of the Investigatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is also provided in the section itself. He referred me to a decision of a Full Bench of the Madras High Court, where the distinction between the powers exercised by the Income-tax Officer under section 22(4) and section 37 of the old Act were clearly enunciated. In T. M. M. Sankaralinga Nadar & Bros. v. Commissioner of Income-tax the court observed as follows : " Reading these sections together we think that the proviso to sub-section (4), section 22, when read with section 23, sub-section (4), only limits the power to call for accounts for more than three years prior to the previous year, when the Income-tax Officer has to make the assessment to the best of his judgment where the conditions mentioned in section 23(4) exist. Where, however, during the course of an inquiry the Income-tax Officer is not going to make the assessment to the best of his judgment owing to want of material but proceeds to make an inquiry as regards the truth or otherwise of the allegations made by the assessee in his return in order to determine whether the assessee has made out his allegations, there is nothing to prevent the Income-tax Officer from requiring the assessee to produce any evidence includ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e limitations under the proviso to section 142, would have the inevitable consequence of depriving the Income-tax Officer of the power to call for books of accounts of an assessee which the legislature expressly conferred upon him. " Then, after citing with approval the passage from the judgment of the Full Bench of the Madras High Court I have already quoted above, his Lordship finally observed as follows: " It seems to me that the power conferred upon the Income-tax Officer to call for the account books under section 131 of the Act cannot be taken away or whittled down because of the limitations imposed by the proviso to section 142 of the Act. " Naturally, in none of these two decisions the contention raised by Dr. Pal before me, namely, that section 131 was bad in so far as it gave to the Income-tax Officer power to call for books of accounts from an assessee beyond the period covered by the proviso to section 142 was not considered, but the said two cases clearly lay down that the powers exercised by the Income-tax Officer under section 131 are in quite a distinct context from the powers exercised by him under section 142. As I have already pointed out the heading of sect ..... X X X X Extracts X X X X X X X X Extracts X X X X
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