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TMI Blog2019 (7) TMI 1157X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Second Schedule to the Act, 1961 declared as illegal or erroneous in law. We hold that it is permissible for the authority concerned to secure and enforce the personal attendance of the assessee/defaulter for the purpose of necessary inquiry pursuant to the summons under Rule 83 of the Second Schedule to the Act, 1961. To put it in other words, for effective and expeditious disposal of the recovery proceedings, it is always permissible for the Tax Recovery Officer to call for necessary and relevant information and conduct an inquiry by securing and enforcing the personal attendance of the assessee/defaulter. In the result, this writ application fails and is hereby rejected. Notice is discharged. - R/SPECIAL CIVIL APPLICATION NO. 12227 of 2019 - - - Dated:- 18-7-2019 - MR J. B. PARDIWALA AND MR A. C. RAO, JJ. For The Petitioner (s) : MR VISHWAS K SHAH (5364) AND MS MOHINI K SHAH (775) For The Respondent (s) : MRS MAUNA M BHATT (174) ORAL JUDGMENT ( PER : HONOURABLE MR.JUSTICE J.B.PARDIWALA) 1. By this writ application under Article 226 of the Con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2.5 The petitioner states and submits that in response to letter dated 30.05.2019, petitioner's lawyer has filed a letter along with the Vakalatnama seeking time on 17.06.2019. The said letter is received by respondent no.2 on 18.06.2019. The copy of the letter dated 17.06.2019 issued by the petitioner's lawyer to respondent no.2 is annexed herewith and marked as Annexure-P/6. 2.6 Despite the aforesaid, petitioner states that the respondent no.1 has issued a summons dated 04.07.2019 which is received by the petitioner on 11.07.2019 by virtue of which petitioner has been directed to personally attend the office of respondent no.1 on 16.07.2019 at 11:30 A.M to give the evidence and to produce books of account and other documents and not to depart until petitioner receives permission to do so. 3. Thus, the writ applicant seeks to question the legality and validity of the summons dated 4th July, 2019 issued by the Tax Recovery Officer-4, Ahmedabad in exercise of his powers under Rule 83 of the Second Schedule to the Income Tax Act, 1961. The summons is as follows: SUMMONS UNDER RULE 83 OF THE SECON ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No. Date Events 1 16.12.16 Assessment order is passed against the petitioner under section 144 of the Income Tax Act, 1961 for A.Y. 2014-15 2 16.12.16 Notice of demand of ₹ 1,64,67,650/- under section 156 of the Income Tax is issued to the petitioner. The demand has remain unpaid by the petitioner. 3 30.05.2019 Letter of recovery of demand of arrears is issued by respondent no.2 to the petitioner. 4 15.06.2019 Appeal is filed in form No.35 before the Commissioner of Income Tax (Appeals). The said appeal is pending for adjudication. 5 18.06.2019 Petitioner's lawyer has filed letter along with Vakalatnama and sought for ti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1961. Section 131 is with respect to the power of the Assessing Officer regarding the discovery, production of evidence etc. Mr. Shah pointed out that Section 131 very clearly provides or stipulates that for the purposes of the Act, 1961, the Assessing Officer shall have the same powers as are vested in a Court under the Civil Procedure Code when trying a suit in respect of matters like discovery and inspection; enforcing the attendance of any person; compelling the production of books of account and other documents and issuing commissions. Rule 83 is absolutely silent as regards the aforesaid. In such circumstances, according to Mr. Shah, although the respondent No.1 may be empowered to issue summons under Rule 83 of the Second Schedule to the Act, 1961, yet he cannot insist for the personal attendance of the writ applicant. To put it in other words, according to Mr. Shah, the personal attendance cannot be made compulsory. 9. Mr. Shah, in the last, submitted that summons under Rule 83 of the Second Schedule to the Act could have been issued, provided any proceedings could be said to be pending with the Income Tax Officer, Ward-4(2)(3), Ahmedabad. In the absence o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the Assessing Officer after obtaining the necessary permission from the Addl. Commissioner of Income Tax, Range-4(2), Ahmedabad vide Letter No.Addl.CIT, Range-4(2)/Approval/TRC/2018-19. ( iv) After the receipt of the TRC, the office of the Tax Recovery Officer (4), Ahmedabad issued the ITCP-1 on 25th March, 2019 for the A.Y.2014-15 and the same was served upon the writ applicant on 27th March, 2019. ( v) The writ applicant neither paid the outstanding demand nor filed any reply to the ITCP-1/Form No.57 dated 25th March,2019. In such circumstances, a letter was addressed to the writ applicant to pay demand of ₹ 2,88,59,337/- plus interest under section 220(2) of the Act for the A.Y.2014-15. The said letter was duly served upon the assessee. ( vi) The assessee neither attended nor has paid the demand till this date. ( vii) In such circumstances, referred to above, a summons under Rule 83 of the Second Schedule to the Act, 1961 was issued to the writ applicant dated 4th July, 2019 for the purpose of collecting necessary details/information from the writ applicant/assessee. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icer has issued and served a notice upon the defaulter calling upon him to appear before him on the date specified in the notice and to show cause why he should not be committed to the civil prison, and unless the Tax Recovery Officer, for reasons recorded in writing, is satisfied- ( a)that the defaulter, with the object or effect of obstructing the execution of the certificate, has, after [the drawing up of the certificate by the Tax Recovery Officer], dishonestly transferred, concealed, or removed any part of his property, or ( b) that the defaulter has, or has had since [the drawing up of the certificate by the Tax Recovery Officer], the means to pay the arrears or some substantial part thereof and refuses or neglects or has refused or neglected to pay the same. ( 2) Notwithstanding anything contained in sub-rule (1), a warrant for the arrest of the defaulter may be issued by the Tax Recovery Officer if the Tax Recovery Officer is satisfied, by affidavit or otherwise, that with the object or effect of delaying the execution of the certificate, the defaulter is likely to abscond or leave the lo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Civil Procedure 1908 (5 of 1908 ), when trying a suit in respect of the following matters, namely:- ( a) discovery and inspection; ( b) enforcing the attendance of any person, including any officer of a banking company and examining him on oath, ( c) compelling the production of books of account and other documents; and ( d) issuing commissions. ( 1A) If the Director General or Director or Deputy Director or Assistant Director, or the authorised officer referred to in sub- section (1) of section 132 before he takes action under clauses (i) to (v) of that sub- section,] has reason to suspect that any income has been concealed, or is likely to be concealed, by any person or class of persons, within his jurisdiction, then, for the purposes of making any enquiry or investigation relating thereto, it shall be competent for his to exercise the powers conferred under sub- section (1) on the incometax authorities referred to in that sub- section, notwithstanding that no proceedings with respect to such person or class of persons are pending be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1) When an assessee is in default or is deemed to be in default in making a payment of tax, the Tax Recovery Officer may draw up under his signature a statement in the prescribed form specifying the amount of arrears due from the assessee (such statement being hereafter in this Chapter and in the Second Schedule referred to as certificate ) and shall proceed to recover from such assessee the amount specified in the certificate by one or more of the modes mentioned below, in accordance with the rules laid down in the Second Schedule- ( a) attachment and sale of the assessee's movable property; ( b) attachment and sale of the assessee's immovable property; ( c) arrest of the assessee and his detention in prison; ( d) appointing a receiver for the management of the assessee's movable and immovable properties. Explanation For the purposes of this sub-section, the assessee's movable or immovable property shall include any property which has been transferred, directly or indirectly on or after the 1st day of June ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax Recovery Officer or other officer, acting under the provisions of Schedule-II, are conferred with the powers of a Civil Court while trying a suit for the purpose of receiving evidence, administering oaths, enforcing the attendance of witnesses and compelling the production of documents. Section 136 of the Act, 1961 further clarifies that the proceedings before the Income Tax Authorities are in the nature of judicial proceedings. In the aforesaid context, we may refer to the observations of the Madras High Court in the case of G.V. Films Ltd. (supra). Mrs. R. Banumathi, J. (as her Ladyship then was) has observed as under: On behalf of the plaintiff, it is mainly contended that the Tax Recovery Officer has no jurisdiction to go beyond the documents shown to him and cannot conduct any further enquiry. This contention has no substance. The Tax Recovery Officer derives his powers under the Second Schedule and the Income-tax (Certificate Proceedings) Rules. Under Section 136, Income-tax Act, all proceedings before the officer shall be judicial proceeding. Under Rule 82 of the Second Schedule, every officer acting under this Schedule shall be deemed to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld be governed by the provisions of Schedule-II of the Act. In this regard, section 222 of the Act should be read along with Rule 83 of the Rules. It is the case of the Tax Recovery Officer that for the purpose of proceeding further with the recovery, it is necessary to collect relevant information and details as regards the movable and immovable properties of the writ applicant, and for that purpose, his presence is required. We are of the view that it is too much for the writ applicant to say that his personal attendance should not be insisted and that whatever information is required, the same shall be furnished by him through his legal representative or his chartered accountant. 27. We are also not impressed by the submission of Mr. Shah that as no proceedings could be said to be pending, as on date, before the Income Tax Officer, who passed the assessment order, the summons under Rule 83 of the Second Schedule to the Act could not have been issued. The assessment order came to be passed by the Income Tax Officer. The notice of demand under Rule 156 of the Act was also issued by the Income Tax Officer and sent along with the order of assessment to the writ ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce under Section 143(2) was issued on 3rd September, 2015 and was served on the writ applicant. A notice under Section 142(1) was also issued on the assessee dated 4th May, 2016 along with the detailed questionnaire. At this stage, we quote the relevant observations of the Assessing Officer from the order of assessment: Further, notice u/s. 142(1) was issued on 04.05.2016 along with detailed questionnaire, which was served on the assessee. Thereafter, notice u/s. 142(1) were issued on 12.05.2016, 26.05.2016, 14.06.2016, 05.08.2016 04.10.2016 along with detailed questionnaire, which were served on the assessee. However, in response to these notices neither the assessee has made any request for adjournment nor filed any other submission. Further, a show cause notice for penalty u/s.271(1)(b) of the I.T. Act, 1961 for non compliance and notice u/s. 142(1) were issued on 13.10.2016, which were served on the assessee. However, neither any compliance has been made nor any details furnished by the assessee in response to the said notices. Therefore, penalty of ₹ 10,000/- has been levied in the case of the assessee by passing order u/s.271(1)(b) of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the name at the end of the writ applicant. 32. It is in the aforesaid set of circumstances that the Assessing Officer had to issue the summons under Rule 83 of the Second Schedule calling for the necessary information for the purpose of recovery of the demand along with the penalty. 33. We inquired with Mr. Shah, the learned counsel appearing for the writ applicant as to why his client is so reluctant to personally appear before the respondent No.1. The only reply that came was that the respondent No.1 has no power to secure or enforce the personal attendance of the writ applicant on the strength of the summons under Rule 83 of the Second Schedule. 34. At this stage, Ms. Bhatt, the learned senior standing counsel appearing for the respondents brought to our notice a Division Bench decision of the Orissa High Court in the case of K.V. Mohamad vs. Sales Tax Officer Cuttack II East Circle Cuttack , reported in Laws (Ori) 1997 118. In the said case, the petitioner was a registered dealer under the provisions of the Orissa Sales Tax Act, 1947 and the Central Sales Tax Act, 1956 and he was assessed to tax for the year 1989-90. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that no case is made out by the writ applicant for the purpose of getting the impugned summons under Rule 83 of the Second Schedule to the Act, 1961 declared as illegal or erroneous in law. We hold that it is permissible for the authority concerned to secure and enforce the personal attendance of the assessee/defaulter for the purpose of necessary inquiry pursuant to the summons under Rule 83 of the Second Schedule to the Act, 1961. To put it in other words, for effective and expeditious disposal of the recovery proceedings, it is always permissible for the Tax Recovery Officer to call for necessary and relevant information and conduct an inquiry by securing and enforcing the personal attendance of the assessee/defaulter. 36. In the result, this writ application fails and is hereby rejected. Notice is discharged. 37. We may clarify, at this stage, that it shall be open for the writ applicant to ask his legal representative or the chartered accountant to accompany him for the purpose of appearing before the respondent No.1. The respondent No.1 shall permit the writ applicant to remain personally present along with any of his legal representative o ..... 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