Issuance of notice u/s 131 (1A) of the Income Tax Act 1961 after conclusion of Income Tax Search and Seizure u/s 132 of the Income Tax Act 1961
November, 06th 2020
Ever since the enactment of the original Income-tax statute of 1922, the Income-tax authorities have been vested with certain powers that are coterminous with the powers of a Court under the Code of Civil Procedure, 1908. Section 131 of the Income-tax Act, 1961 is one such provision which includes, inter alia, the power to enforce the attendance of any person and examine him on oath.
The justification or rationale for these powers, depending on the reader’s point of view, is amply supported by the well-settled and pervasive judicial principle of ‘audi alterem partem,’ (no one be condemned unheard) in spite of the equally well-settled principle that ‘nobody can be compelled to render evidence against himself’.
The powers u/s 131(1) are exercised for the proper administration of tax laws and for obtaining further elucidation, on information available with the authorities, from the assessee concerned. It enables the authorities to conduct inquiry and collect evidences in support of their contentions. It also helps to bring to light the correct facts and circumstances, for the purpose of carrying out proceedings under the Act and is treated to be equally fair to the Department as well as the assessee.
Section 131(1A) was introduced with effect from 1-10-1975 to empower the officers of the Investigation Wing (also to include officers authorized to carry out search operations i.e ‘authorised officers’), to exercise the powers mentioned in the Section 131(1).
The said provision was introduced to nullify the effect of the ruling of the Calcutta High Court in the case of UOI v. Gopal Das Gupta, (1974 Tax LR 656) wherein the Court held that the officer of the Investigation Wing had no power to issue a notice u/s.131 and record a statement of the person under the said Section as the same was available to the assessing officer.
This practical difficulty was explained by the Departmental Circular No. 551 dated 23-1-1990 which was issued to explain the scope and effect of the amendment in the following words :
“. . . difficulty felt was that an authorized officer could record a statement on oath only during the course of search under the provisions of Section 132(4). Sometimes it becomes necessary to record a preliminary statement before the commencement of search for proper investigation. This was not possible as the Courts had held that such a preliminary statement before the search could not be re-corded under the provisions of S. 132(4) . . .”
To overcome these difficulties, the Income Tax Act , Section 131(1A) was introduced to extend similar powers to an ‘authorised officer’ within the meaning of Sub-Section (1) of Section 132 before he takes search and seizure action under clauses (i) to (v) of that sub-section.
Section 131 is comprised of two complementary sub-sections relating to two different classes of officers. Whereas Section 131(1) empowers the jurisdictional assessing officer to issue summons, Section 131(1A) empowers the officers of the investigation wing viz. Assistant Director, Deputy Director or the Director of Income-tax (Investigation).
Another point of distinction is that powers u/s 131(1) can be exercised by the assessing officer only when any proceedings are pending before him in relation to that assessee. Whereas power u/s 131(1A) can be exercised notwithstanding that no proceeding is pending before the investigation officers. In other words, Section 131(1A) can also be invoked for the purposes of a preliminary inquiry before carrying out the search operations.