Income Tax officers most frequently harass the Registrar of Companies (ROC) calling for copies of balance sheets of companies by using powers under section 131/133 of the Income Tax Act 1956. But all balance sheets of companies, once filed with ROC, goes into public domain (except profit and loss account of private limited companies). Is it lawful for I-T officers to thereaten ROC with section 131 or 133 calling for information which are already available in public domain? D. Bandopadhyay ,Kolkata
Yes, the income tax officers have the power to call for information or documents from almost all the persons and categories or class of persons for the purpose of the enquiry or investigation under I T Act. However, section 131 and 133 are for different occasion and also having different powers embedded in.
Section 131 gives very wide powers to A.O and all the powers vested in a Court under the Code of Civil Procedure, 1908 (5 of 1908), when trying a suit. The excerpts of section 131 is as under
131. (1) The Assessing Officer, Deputy Commissioner (Appeals), Joint Commissioner , Commissioner (Appeals), Chief Commissioner or Commissioner and the Dispute Resolution Panel referred to in clause (a) of sub-section (15) of section 144C shall, for the purposes of this Act, have the same powers as are vested in a court under the Code 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.
Whether A.O can call for documents or information in possession of Magistrate u/s 131?
This was the issue before the Calcutta High Court in Jhabarmull Agarwalla vs Kashiram Agarwalla And others 71 ITR 269 , decided in favour of Revenue. Relevant extract is as under :
"Section 131(1) must, therefore, be construed to confer on the Income-tax Officer all the relevant powers which the civil courts have under the Code of Civil Procedure regarding the production of books of account and other documents. Since Order Xiii, rule 10, confers such power on the civil court to call for documents from other courts, the Income-tax Officer too has such powers under section 131(1) of the Act.
We should in this connection refer to the decision of S. K. Sen and K. C. Sen JJ. in Union of India vs State ( 1961 ) 42 ITR 753 . There in that case the Income-tax Officer called for certain documents from the Chief Presidency Magistrate under section 37(1) of the then Income-tax Act read with Order Xiii, rule 10, of the Code of Civil Procedure. Section 131(1) of the present Act is in the same terms as section 37(1) of the old Act. Mr. Dutt has, however, submitted that all concerned proceeded in that case on the assumption that the Income-tax Officer can call for documents from a Magistrate under Order Xiii, rule 10, of the Code and this point was not specifically raised and considered. It is true that this point was not specifically considered but the decision no doubt indicates the mind of the judges and no objection was raised in this respect on behalf of the assessee that the Income-tax Officer has not the power under Order Xiii, rule 10, of the Code to call for documents from a Magistrate.
Similar view was also taken by D. N. Sinha J., as his Lordship then was, in Ganpatrai Rawatmull vs Collector, Land Customs, Calcutta ( 1961 ) 42 ITR 107 . For the reasons we have discussed, we respectfully agree with the views expressed in these cases and we hold that the Income-tax Officer has the power under Order Xiii, rule 10, of the Code"
Power under 133 of the I T Act
The powers under section 133 is milder than section 131 of the I T Act. An assessing officer can call for information under this section from a variety of persons . Subsection 6 is utilised mostly by the A.O for completing assessments. The extract of su-section 6 of 133 is as under
133. The Assessing] Officer, the Deputy Commissioner (Appeals),the Joint Commissioner or the Commissioner (Appeals)may, for the purposes of this Act,
6) require any person, including a banking company or any officer thereof, to furnish information in relation to such points or matters, or to furnish statements of accounts and affairs verified in the manner specified by the Assessing Officer, the Deputy Commissioner (Appeals), the Joint Commissioner or the Commissioner (Appeals), giving information in relation to such points or matters as, in the opinion of the Assessing] Officer, the Deputy Commissioner (Appeals)] , the Joint Commissioner or the Commissioner (Appeals), will be useful for, or relevant to, any enquiry or proceeding under this Act :
Some of the features of this section are :
1. The A.O can not issue the notice for information without pending proceeding.
2. If there is no pending proceeding under I T Act, then if there is requirement , previous approval of Commissioner of Income Tax has to be sought.
Consequences of failure to comply with notices u/s 131 and 133
1. Power u/s 131 of the I T Act is that of a court . therefore consequences of not complying notices u/s 131 can in extreme case be arrest and penalty both.The penalty is Rs 10,000 for each default.
2. However, for non compliance of notice u/s 133(6), penalty can be imposed under section 272A(2)(c) of the I T Act after being given an opportunity of hearing . The penalty Rs 100 per day of failure .
3. The power to impose penalty u/s 131 or 133 is not with A.O but with the Range Head i.e Joint Commissioner or Add.CIT.