“Explore the intricacies of summons issued by Income-tax Authorities under Section 131 of the Income-tax Act. Learn about the authorities empowered to issue summons, their powers, and the specific purposes for which summons can be issued. Understand the importance of recording reasons, compliance, representation, and the nuances surrounding the presence of lawyers during summons. Stay informed about the legal aspects to ensure due process and minimize unnecessary litigations.”
One of the methods to gather evidence by judicial authorities is issue of summons. Courts issue summons to compel the parties to a suit, to produce evidence in order to decide the issue in dispute. Income-tax authorities being quasi-judicial authorities, enjoy similar powers under Income-tax Act. Section 131 of Income-tax Act (IT Act) empowers them to issue summons. The section specifies the authorities who can issue summons. These authorities enjoy the powers that are vested in a court under Code of Civil Procedure (CPC) when trying a suit. But this is not carte blanche given to the authorities. Powers under section 131 are specific and limited, only to the matters relating to
i. Discovery and inspection
ii. Enforcing attendance of any person, including any officer of a banking company and examining him on oath
iii. Compelling production of books of account and other documents and
iv. Issuing commissions
Under CPC, section 30, Orders V and XVI deal with the procedure relating to issue of summons.
Who can issue summons?
According to section 131(1), the authorities who can issue summons are: Assessing Officer, Deputy Commissioner (Appeals), Joint Commissioner, including Joint Commissioner (Appeals), Commissioner, including Commissioner (Appeals), Principal Commissioner, Chief Commissioner or Principal Chief Commissioner.
Sub-section (1A) of the section empowers authorities acting under section 132 of the Act to exercise the powers available under section 131(1). These authorities are, Principal Director General, Direct General, Principal Director, Director, Joint/Deputy/Assistant Director or Authorised Officer.
Similarly sub-section (2) says that authorities notified by CBDT, not below the rank of an Assistant Commissioner, acting under section 90 or 90A, also enjoy the powers specified in section 131.
Meaning of the term, “Assessing Officer” in section 131(1) has given rise to some litigations. In a case before Hon’ble High Court of Allahabad, the question was, whether ITO(TDS) falls within the definition of “Assessing Officer”. It was held that the expression ‘Assessing Officer’ in Sec 2(7A) of IT Act is not confined to regular assessment. It extends to enquiry regarding non deduction of tax also and summons in this regard is valid. Peerless Finance and Investment Co. Ltd. Vs AO 248 ITR 113 All. Similar view was expressed by Hon’ble High Court of Calcutta also in Reckitt Colman of India Ltd. s ACIT 252 ITR 550 Cal; 251 ITR 306 Cal
Purpose of Issue:
When authorities invoke section 131, it should be for the purpose of any proceeding under IT Act. That is, if the proceeding pending is under WT Act, section 131 cannot be applied. In that case the Officer has to take recourse to section 37 of that Act.
Pendency of Proceedings:
Section 131 does not specifically say that some proceedings must be pending for issue of summons. But it does so indirectly. Sub-section (1A) says that authorities acting under section 132 can issue summons even if no proceedings are pending before any IT authority. In other words, if sub-section (1A) is being applied, no proceeding need be pending; whereas, if sub-section (1) is being invoked, proceedings must be pending. Of course, the proceeding need not be in the case of the person to whom summons is being issued.
Recording of Reasons:
What is important is that the Officer issuing summons must apply his/her mind. Summons issued without application of mind is liable to be struck down by courts. Recording of reasons for the issue of summons demonstrates application of mind. Therefore, even though the section does not explicitly require recording reasons, it is an essential requirement. Discussion about the relevance of the documents required or the need to examine the taxpayer/witness, would go a long way in satisfying both the requirements i.e., application of mind and also their relevance to the pending proceedings.
In G.M.Breweries Ltd. Vs UOI 241 ITR 446 Bom ITO, TDS, issued summons under section 131/37/36 of IT Act/WT Act/Gift-tax Act to produce books of accounts which are required for proceedings under IT Act/WT Act/Gift-tax Act. It was held that not filling up the blank spaces and not striking out inapplicable portions clearly show that the Officer concerned has not applied his mind before issue of summons. Accordingly, the summons was quashed. Similar view was expressed by Hon’ble High Court of Calcutta in Dwijendra Lal Brahmachari Vs New Central Jute Mills Co. Ltd 112 ITR 568 Cal. Here it was further held that the information/documents sought in the summons must be relevant to the proceedings before the authority issuing summons.
Contents:
When the summons is issued to a witness at the taxpayer’s request, it must be mentioned so. Order XVI, Rule 5 of CPC states that the summons must specify with reasonable clarity, the date, time, place etc. Similarly, in case personal attendance is required, it must be clearly mentioned so.
To Whom?
The authority issuing summons must ensure that the same is addressed to proper person as mentioned in section 282(2) of the IT Act; it must not be addressed to a non-living person. Section 132 of CPC says that ladies, who according to customs and manners of the country do not appear in public, are exempt from personal appearance before courts. Therefore summons should not be issued for personal appearance of such women.
Similarly, section 133 of CPC exempts certain dignitaries like President of India, judges of Supreme and High Courts etc., from personal appearance before courts. Summons cannot be issued to such persons for personal appearance.
Letter or Summons?:
Can summons be substituted by a simple letter? Order V, Rule 30 of CPC says that if the defendant is, in the opinion of the court, of such rank that entitles him such consideration, letter can be issued in place of summons. This letter shall for all purposes be treated as summons.
Jurisdiction to Issue:
Order V, Rule 4 of CPC places certain restrictions on the jurisdiction of Officers to issue summons. It says that personal appearance can be insisted upon only if:
i. The person resides within the jurisdiction of the authority or
ii. If he is residing outside the jurisdiction –
a. Resides at a place less than 50 miles or
b. Resides at a place less than 200 miles and there is public conveyance for not less than 5/6th of the distance
Order XVI, Rule 19 also states that in the case of witness, summons can be issued if
i. Witness resides within the jurisdiction of the authority or
ii. if the witness resides outside the jurisdiction,
a. At a place within 100KM or
b. At a place less than 500KM and there is public conveyance for not less than 5/6th of the distance
Proviso to this Rule says that in case the two places, i.e., residence of witness and office of the court, are connected by air and the witness is paid air fare, he can be summoned to be personally present.
Time and Place of Examination:
An important question that may arise is that, when summons is issued for personal appearance and examination on oath, whether sufficient time should be allowed or can the witness be asked to give a statement immediately?
In a Customs case, Bal Krishna Chhaganlal Soni Vs State of West Bengal(1974(2) SCR 107 SC, Hon’ble Supreme court has held, “……Customs Act is wide in its terms and is clearly designed to facilitate the investigatory process by examination without restriction on person, place or time….”. This ratio should be applicable to proceedings before IT authorities also as they are quasi-judicial authorities.
Order XVIII Rule 16 of CPC says that a witness can be examined immediately without allowing any time under following circumstances:
i. The witness is about to leave the jurisdiction of the court or
ii. If the court is satisfied that the evidence is to be taken immediately
According to Order XVI, Rule 7 of CPC any person present in the court may be required by the court to give evidence or to produce any document then and there in his possession or power.
Compliance:
Generally, there is a misconception that when summons is issued, compliance is ONLY through personal appearance. But this is not so. Section 288(1) of the IT Act states that taxpayer is entitled to be represented by an authorised representative, unless he is required under section 131 to personally attend for examination under oath. Therefore, if personal attendance is required, it must specifically be mentioned so in the summons; else, other modes of representation, including a written reply should suffice.
Order V, Rule 2 of CPC also says that response to summons may be
i. In person or
ii. By a pleader duly instructed and able to answer questions relating to the suit or
iii. By pleader accompanied by some person who is able to answer all such questions
The above provision, read with section 288(2)(i) of IT Act indicates that in case taxpayer’s accountant is conversant with the affairs of the taxpayer, he can accompany a lawyer or a Chartered Accountant (CA). Courts have also held that when personal attendance is required, representation by lawyer is not permissible – Sarju Prasad Sharma Vs ITO 93ITR 36 Cal; V.Datchinamurthy Vs ADI 149 ITR 341 Mad.
Presence of a Lawyer:
Another contentious issue is the presence of a lawyer or CA when taxpayer is required to attend personally. According to Ground Rule for Search and Seizure {159 ITR 1 (J)}, a person searched is not allowed the services of lawyer during examination in the course of search. However, Hon’ble High Court of Bombay has held in Abdul Rajak Haji Mohammed Vs UOI 26 Taxman 234 Bom that mere presence of lawyer cannot be objected to, though he cannot participate in the interrogation. It may also be noted that the Apex Court has held in Poolpandi Vs Supdt.,C.Excise 62 Taxman 447 SC that under Customs Act and FERA, even presence of lawyer is not allowed. But looking into the nature of IT Act and these two enactments, perhaps under IT Act, the former judgement may be more relevant, rather that the later.
Recently, Hon’ble High Court of Bombay, in Prakash Kumar Rameshbhai Patel Vs State of Maharashtra (Criminal Writ Petition No 2053 of 2023 dated 28.06.2023) has allowed presence of an advocate at a visible but not audible distance during interrogation. Though the judgement is under Central GST proceedings, the ratio should be applicable to IT proceedings too. This decision is based on an Apex Court judgement in Birendra Kumar Pandey Vs UOI ( Writ Petition(Criminal) No 28 of 2012 dated 08.06.2023) under Customs Act, 1962. Here the Hon’ble court gave the verdict after examining its earlier judgements, and noticing the difference in facts of Poolpandi’s case mentioned above.
Copy of Statement:
Another vexatious issue is furnishing copy of the sworn statement recorded after issuing summons. Should it be furnished immediately after recording the statement? Or can it be furnished at a later stage? Ground Rules for Search and Seizure, mentioned earlier and also Charter of rights and duties of persons being searched 208 ITR(St) 5-7 say that assessee is entitled to copy of the statement when it is used against him. Hon’ble High Court of Orissa has held in J B Patnaik Vs Bennet Colman & Co AIR (1989) 216, 218 that party is not entitled to know the facts which constitutes opponent’s exclusive evidence; otherwise, it may enable unscrupulous to tamper with the evidence.
Conclusion:
Issue of summons is an important tool available to the investigating authorities to gather evidence. Vast powers that have been conferred on the authorities must be exercised with great care. Authorities must ensure that due process of law is strictly adhered to. Exercise of due care will reduce unnecessary and unproductive litigations.
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