Summon in the Income Tax.
It is easy and simple to get an Income Tax assessment on one hand and difficult on the other. The person related to Income Tax is definitely aware of the word Summon but very few know about the word “Commission”. The terms “Summon” and “Commission” both are closely related to each other, so knowledge about these two is necessary for the defendants in the assessment proceeding of Income Tax.
In the Income-Tax proceedings, the officer of the Income Tax department is having wide powers for making the inquiry, discovery, or inspection. In course of completing the assessment or otherwise required the AO or other Competent Officer has to issue summons many times. The summon can be issued by the Assessing Officer/Competent Authority, therefore, first of all, the power of the Assessing Officer has to be taken into consideration, as provided in different sections. The powers relating to summoning are mainly as under:-
- Assessing Officer/Competent Authority can enforce attendance of the assessee.
- Assessing Officer/Competent Authority can ask for furnishing information.
- Assessing Officer/Competent Authority can call the assessee.
- Assessing Officer/Competent Authority can call the witnesses.
The Assessing Officer/Competent Authority can call for, and in course of the execution of his duties has to issue summon many times for the above purposes.
The Income-tax Law is an independent law. Directly, the other provisions of major laws or minor laws are not applicable under Income-Tax Act, but in some of the sections of the other laws are applicable which are specifically provided for in the Income Tax Act.
The post of the Assessing Officer/Competent Authority is administrative as well as quasi-judicial; therefore, he also has the power to issue a summons. Section 116 of the Income Tax Act provides the name of the authorities of Income-Tax, the name of the inspector is also appearing in this section but the inspector is having no powers as to the issue of summons under the act.
As provided under section 131 of the Income-Tax Act, the Act confers the authorities of the Income-Tax Offices/Competent Authorities, some powers as provided under the Code of Civil Procedure, 1908.
The Order XI, XII XVI, and XIX are the relevant orders dealing with the scope and procedure. Order XI contains the rules of discovery and inspection, order XII contains the rules in respect of issuing notice as well as admission, Order XIV and XVI contain rules for summoning and attendance of witnesses. Section 27 of CPC is providing that when a suit has been instituted, summon may be issued to appear in support of his claim.
Difference between Summon and Commission.
The CRPC provides for issue of Summoning and Commission. As per the CPC, summon can be issued within the distance of 500 Kms. and compelled the persons for their attendance, but if the distance is more than 500 Kms, he can verify by issuing a commission to a competent person (distance is subject to amendment, previously, it was 300 km which was extended to 500km after amendment). In case of summoning, the issuing authority himself can investigate, whereas in the case of the commission the Commissioner to whom the matter has been referred can record or acts as per the requirement.
When the Summon can be issued
Summon can only be issued during the pendency of proceedings under the Act like assessment, penalty proceedings, recovery, etc but pendency of proceedings is a must. If no pendency of proceedings is there, in that case no summon can be issued. Summon, cannot be issued for malafied reasons or when there was no pendency.
The Hon’ble Madras High Court in case of M/s Datchinha Murthi & another Vs. Assistant Director in respect of Income-Tax Department reported in 149 ITR page 341 held that the Income-Tax Officer had power, issued commission, for recording statements and obtaining evidence.
The Hon’ble Court also held that there is no provision under the law that authorizes the witnesses to be represented by the authorized representative. Whenever any statement is recorded, a witness does not have any right under the law to take his advocate along with him at the time when the statement is recorded.
In the case of the Income-Tax Officer and others Vs. Jamesh Joseph O ‘Gorman reported in 204 ITR 454, the Hon’ble Court held that power under Section 131 of the Income Tax Act can be exercised only if the proceedings are pending before the authority concerned.
Though, there are conflicting judgments in respect of the pendency of the proceedings. Most of the High Courts are of the opinion that the pendency to proceedings is essential; therefore, this objection can be raised before the appropriate authorities.
It is also worthwhile to mention that though there are conflicting judgments but there is a golden rule that if there are two different judgments in that case the judgments which are favorable to the subject should be applicable into the matter at hand.
Besides the aforementioned judgment, there is another judgment in which it was held that the pendency of proceedings is not essential. The relevant portion of the same is as under:
The Hon’ble Allahabad High Court in case of Peerless General Finance & Investment Co. Ltd Vs. Assessing Officer and others held that Section 131 of the Income-tax Act does not expressly lay down that proceedings must be pending before the same Income-tax authority who exercises his power under Section 131 of the Income-Tax Act. No doubt some High Courts have taken a view that some proceedings must be pending before the same authority but we do not think this can be made an absolute principle.
In the case of Union of India v/s Gopal Das Gupta 1974 Tax LR 656, the Director of Inspection (DI) held that there is no power to issue a summon under Section 131 of the Income-Tax Act.
Summon to the assessee
The Income-Tax authorities as provided under Section 116 of the Income-Tax Act like the Assessing Officer, Joint Commissioner, Additional Commissioner, Chief Commissioner Etc. can issue the notice to an assessee for personal presence, for recording the statement on oath, or for production of any document information or record. The above authorities can also issue summon for any reason as stated earlier.
Who can issue
The Assessing Officer/Competent Authority can issue summon to assesses who fall under his jurisdiction, be it territorial or jurisdictional as assigned. The witnesses can also be called by way of Summon.
The Hon’ble Madras High Court in case of M/s Datchinha Murthi & another Vs. Assistant Director in respect of Income-Tax Department reported in 149 ITR Page 341 also held that the Income-Tax Officer had power to issue a commission for recording statement and obtaining evidence.
About the Summon
If the Summon is issued for the purpose of personal presence or otherwise in that case, there must be a mentioning of the correct name, date, time, and place where to appear in prescribe form. For example, if the Summon is issued, in prescribe form to the artificial persons, in that case, there must be specification thereof, for example, if the authority, wants to issue a summon to trust in that case through trusty, in case of the company through the director or managing director, in case of the HUF can be only to the Karta of HUF. These are the main ingredients, should be verified before the compliance thereof. If there was no proper address .name and PAN has not been properly mentioned, if there is the wrong mentioning of these, on summon and there is, any non compliance, in that case, the adverse view cannot be taken.
If the summon has been issued under the wrong status in that case also the summon shall not be treated as a valid summon, in this respect the order of the Tribunal reported in 11 TTJ page 45 can be helpful
SATPAL SHARMA (LATE).
INCOME TAX OFFICER
In our opinion, there is force in the contention of ld. counsel. The fact that the notice of advance-tax in the name of Shri Satpal Sharma, individual, was received by him during his life-time and on account of his death on 25th Aug., 1972 the other members of the HUF could have a bona fide belief that the notice of advance-tax in fact pertains to Shri Sharma in his individual capacity and did not relate to the HUF. In our opinion, this constituted a reasonable cause which prevented the assessee to file an estimate of advance-tax under s. 212(3A) of the IT Act. In the circumstances mentioned above it is not a fit case for the levy of any penalty under s. 273(c) of the IT Act. Accordingly, we cancel the penalty of Rs. 1,600 under s. 273(c) which has been upheld by the AAC.
Service of summons:
After issuance of summons by the Court/Competent Authority/Assessing Officer the next stage is the service of summons. Rules 9 to 16 deal with the manner in which the service of summons should be issued. Rule 9 states that summons should be served by the proper officer or his subordinate. Rule 10 prescribes the mode of service i,e. by delivering or tendering.
Summon can be issued and served by the competent authority as per the procedure, as provided in the Income-Tax Act but in summon there must be complete name and address to whom summon has been issued. In the Performa so prepared by the Department of Income-Tax, there is a column whether the authority is willing to examine the assessee or the witness. Therefore, the proper lines/ words should be ticked or stroked off.
The Central Board of Direct taxes notifies vide notification number 89 / 2015 dated 2nd December 2015 in respect of service . This notification can be accessed by clicking on the following link:-
Attendance /Assistance by Advocate or Representative
Where the summon is being issued by any Competent person for personal presence and recording statement in that case the person cannot be represented by the Authorized Representative. In that case person has to appear himself for compliance thereof; it is the sweet will of the authority, whether he allowed the appearance of authorized representative along with the person or not. In case it is permitted even then the authorized representative cannot intervene in recording the statement.
The Hon’ble Madras High Court in case of M/s Datchinha Murthi & another Vs. Assistant Director in respect of Income-tax Department reported in 149 ITR page 341, held that there is no provision under the law which authorize the witnesses to be represented by the council when any statement is recorded and a witness does not have any right under the law to take his counsel along with him at the time when the statement is recorded.
In the case of Sarju Prasad Sharma Vs. Income-tax Officer, D-Ward, Calcutta reported in 93 ITR Page 36 held that the firm has right to be represented by an Authorized Representative. The relevant portion of the case law is as under:-
“A witness has no right to be represented in a proceedings by a lawyer or an authorised representative. So, it seems to me that Sarju Prosad Sharma when he appears before the said ITO in terms of the summons dt. 11th Feb., 1972, has no right to be represented by an authorised representative but the proceeding before the said ITO is nonetheless a proceeding for assessment of the assessee-firm, S. P. Sharma. The assessee-firm certainly has the right which it cannot be deprived of, in my opinion, to be present when any proceeding in regard to its assessment goes on or takes place. Thus, the said firm has the right to be represented by an authorised representative at the assessment proceeding including examination of the said Sarju Prosad Sharma under s. 131 of the Act.”
The summon for production of the document
If the summon has been issued for the purpose of production of the document in that case the compliance can be treated by furnishing the document. As per the various judicial pronouncement, the submission of the document even by post or by messenger can be treated as compliance of summoning, if the summon is only for the production of the document.
Summon to witnesses
The competent authority can issue summon to the witnesses like as the persons whose presence is relating to a matter required to be verified by the Assessing Officer/Competent Authority for issuing the summon to the witnesses. The Authority issuing summon to the witnesses, should have jurisdiction over the witnesses also or the person in case summon is issued. The statement of a witness can be recorded in absence of the assessee.
The issue of summon on the request of the assessee
In respect of verification of summoning information/ evidence where the Income-Tax Officer/Competent Person is not willing to call for witness in that case the assessee can request the authorities so as to issue the summon. For the purpose of issuing summon, as per law responsibility of providing the address is on the person who is making the request.
As per the practice the authority used to summon but sometimes the authorities can refuse on the plea that the burden is on the assessee so as to justify the correctness of himself.
In case of Jhaver Bhai Biharilal & Co. vs. CIT reported in 154 ITR 591, the Hon’ble Patna High Court held that duty of the Income-tax Officer to issue summons on the request of the assessee.
In case of the Additional Commissioner of Income-tax Vs. Sh. Hanuman Agarwal reported in 151 ITR page 150, (Patna), the Hon’ble Court also held that section 131 (1) (b) of the Income Tax Act empowers, but does not oblige the revenue authorities concerned to the administered oath, therefore, the statement of witnesses taken without administration of oath are equally admissible in evidence.
For issuing the summon, the assessee can request as a matter of right, the judgment delivered by the Kolkata High Court in the case of CIT V/s. M/s. Kamdhenu Vyapar Co. Pvt. Ltd. reported in 263 ITR 692 is also relevant in this respect.
As per the Order XXVI Rule 1 of CPC 1908, in any type of suit if the situation arises, then the Court may engage the Commissioner and issue the commission. But this can be when the witness/assessee is unable to present in the office of an Officer of Income Tax due to any valid reason or any other condition. In Padam Sen and other vs. The State of U.P., AIR 1961 SC 218, the Hon’ble Supreme Court held that, the Court has no inherent power to appoint a Commissioner for any purpose not mentioned in section 75 of the CPC.
Section 75 to 78, Order XXVI under the Code of Civil Procedure commission can be issued in respect of only in the categories and conditions as lay down. The authority to whom commission has been issued shall submit the report after inquiries to the person/ persons issued the commission, to the authority issuing commission. The commission is more or less a summon but the person is out of territorial limit therefore for examination the original Court/Assessing Officer/Competent Authority is issuing mostly to their counter parts, who is having jurisdiction of that person.
Expenses of commission
When any court or competent person is issuing commission in that case also ordering some amount as an expense, which has to be paid but the amount of expenses shall be at the wisdom of Court/Authority issuing the Commission. The commission expense is to be paid by the party in whose favour commission is being issued.
Result of non compliance
Where there is non-compliance of summoning or commission the provisions of section 272 A of the Income-Tax Act is attracted. In case any person who received summon refused to accept/fails to appear or fails to produce the record/information/evidence as called for before the Court/Assessing Officer/ Competent Authority. Such person is liable for penalty under section 272 A (1) of the Income-Tax Act. If there is any reasonable cause in that case the competent authority can drop the proceedings if initiated.
Fate of un-served Summon/Commission
In case summon/commission issued remained un served in that case no adverse view whatsoever can be taken by the authority issuing summon/commission.
Disclaimer: Before making this article the basis of any type of a legal decision, consult your Lawyer, Advocate, Tax Advisor, Legal Advisor. The interpretation presented in this article is of the author himself, on the basis of which the author will not be responsible for any decision taken. Reference to the article has been taken as per the author’s understanding, based on the judgments published in tax magazines and law journals or material available on the internet. All rights reserved with the writer.