The power of summon under section 131 of the Income Tax Act is great power available to to the income tax authorities for completing the task assigned to them under the tax law. The real power under section 131 is not explicitly written in the Income Tax Act , but emanates from another law i.e Code of Civil Procedure , 1908 because the provision under section 131 itself provides that the income tax authorities will have all the power vested in Civil Court while trying a civil suit . Over time , various issues have received attention of the Courts and in four instances , a notice u/s 131 may be challenged before court of law as illegal notice .
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No notice u/s 131 if no proceeding pending
The assessing officer can not issue notice u/s 131 of the Income Tax Act unless there is proceeding pending before him. Exception to the rule is that officers posted in the investigation wing of the department , usually ADIT or DDIT , can issue notice u/s 131(1A) without any pending proceeding. you need to first examine the notice who has sent you the notice u/s 131 . Is it from your assessing officer or from the officer attached to Director of Investigation.
If it is from assessing officer , you need to ascertain if any proceeding is pending before he issued notice u/s 131 . If not , such a notice can be held as illegal if challenged under a Writ.
Various courts have held so. For example ,in the case of Dwijendra Lal Brahamchan & Ors. v. New Central Jute Mills Co. Ltd. & Anr. (1978) 112 ITR 568 (Cal), the Hon’ble Calcutta High Court was seized with the issue relating to powers of the Income Tax Officer under section 131 of the Act and their Lordships have laid down that powers of Income Tax Officer under section 131 are co-extensive with that of a court trying a suit under section 30 of CPC read with rules 12, 14 and 15 of order 11 of the Court. The officer can summon any document, if any suit is pending before him and not otherwise.
This view was approved by Hon’ble Bombay High Court in the case of Jamnadas Madhvji & Co. v. J.B. Panchal, Income Tax Officer(1986) 162 NR 331 (Bom) and material observations of their Lordships are as ‘under:
“The officers mentioned in section 131(1) of the Income Tax Act, 1961, viz., the Income Tax Officer, Appellate Assistant Commissioner, Inspecting Assistant Commissioner, Commissioner (Appeals) and CIT are conferred with the same powers as are vested in a court under the Code of Civil Procedure, 1908, when trying a suit. The Code of Civil Procedure confers upon a court powers, for the exercise whereof, existence of a suit or a proceedings is a sine qua non. In pari materia, therefore, powers in respect of matters mentioned in section 131(1) , viz., (a) discovery and inspection; (b) enforcing the attendance of any person and examining him on oath; (c) compelling the production of books of account and other documents; and (d) issuing commissions, can be exercised only if a proceeding is pending before the concerned officer and not otherwise
Similar view was expressed by Calcutta High Court in ITO v. James Joseph O’Gorman 1989 Tax LR 871 (Cal.) and Mumbai HC in case of M. Breweries Ltd. v. Union of India  108 Taxman 547 (Bom.).
So, the notice u/s 131 cannot be issued , if no proceeding under the Income Tax Act is pending .
No power to set up camp office
Section 131(1A) does not empower an officer to set up a comp office elsewhere . The court has gone into the issue in case of Sanghvi v. Ramesh G., Dy. DIT (Investigation)  219 Taxman 131 (Mag.)/40 taxmann.com 16 (Kar.)
8. A perusal of order XI, CPC under the nomenclature ‘Discovery and inspection’, and rr. 1 to 23 thereunder, do not indicate that the Court can issue notice to a party and open a Court in the house of the party and call upon that party to give statement in his house. If that is so. then the IT Act does not invest in the first respondent, the power to have a camp office at the residence of the petitioner and call the petitioner’s attendance in connection with proceedings under the IT Act.
Similar judgment was given in case of N. K. Mohnot v. Dy. CIT  83 Taxman 238 (Mad.) . The case relates to period when there was no pwer of impounding documents under survey u/s 133A . The A.O , in the said case , attempted a survey and then impounded various documents u/s 131 of the Income Tax Act. High Court held that the action of the A.O was illegal .
No Power to Refer Valuation of Asset Under Sec. 131
Allahabad High Court entertained the Writ petition in Dr. Avinesh Kumar Agarwal vs ADIT / 184 CTR 587 (Allahabad) that no power vests in the officer to refer the valuation of property under section 131 of the Income Tax Act. This issue has been settled by Supreme Court in – Smt. Amiya Bala Paul v. CIT  130 Taxman 511/262 ITR 407 (SC).
Readers should note that although the power u/s 131 to refer the matter of valuation was questioned, section 142A was inserted by the Finance (No. 2) Act, 2004, w.r.e.f. 15-11-1972. So, if the ADIT or DDIT request valuation of any asset u/s 131 , it is wrong . But on;y the Assessing Officer has power to refer the valuation of any asset mentioned in sec. 69, 69A , 69B or section 56(2) , that to for the purpose of assessment or reassessment.
Personal Appearance Beyond Specified Limit
The power of income tax authorities u/s 131 emanate from Code of Civil Procedure 1908 because it has been provided under section 131 of the Income Tax Act that Civil Procedure, 1908 (5 of 1908) . Under the civil procedure code , under Rule 4 of Order V in Schedule 1 of CPC , 1908 , it is clearly provided that a person will not be called to appear personally unless
1. he resides within jurisdiction of the Court which is issuing summon or
2. He resides within 50 Miles or
3. He resides within 200 miles if 5/6 th of distance between the house of person and the court is connected by rail or steamer
If any summon notice u/s 131 of I.T.Act personal appearance to any persons is issued who leaves beyond that limit, the notice is not in accordance with law.