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G.M Breweries Ltd. And Another v. Union Of India And Others
Factual and Procedural Background
The petitioners challenged two summonses: one dated 2 August 1994 issued by the Income-tax Officer (TDS) Circle, Thane, and another dated 10 November 1994 issued by the Income-tax Officer (TDS‑1), Pune. Both summonses were framed “under section 131/37/36 of the Income‑tax Act, 1961. Wealth‑tax Act, 1957. Gift Tax Act, 1958” and directed the petitioner company to produce books of account and specified documents; notices threatening penalty for non‑compliance were also impugned. The petitioners alleged total non‑application of mind (blanks not filled and inapplicable portions not struck out), absence of any pending proceedings that would justify the summonses, and that the summonses amounted to a fishing enquiry into non‑deduction of tax at source which only the assessing officer with territorial jurisdiction could pursue.
On admission, the court issued notice returnable 16 December 1994. The respondents filed no affidavit and did not appear; by interim order dated 16 December 1994 the respondents were restrained from acting on the summonses. After further adjournments and continued non‑appearance or participation by the revenue, the matter proceeded to final hearing.
Legal Issues Presented
- Whether the summonses issued under the headings “section 131/37/36 of the Income‑tax Act, 1961. Wealth‑tax Act, 1957. Gift Tax Act, 1958” were valid when blanks were unfilled and inapplicable portions not struck out (alleged non‑application of mind).
- Whether powers under section 131 (and corresponding provisions in the Wealth‑tax and Gift Tax Acts) can be exercised absent proceedings pending before the authority “for the purposes of the Act.”
- Whether the Income‑tax Officers who issued the summonses had jurisdiction to call for documents in respect of alleged non‑deduction of tax at source, or whether such enquiry was within the jurisdiction of the assessing officer for the assessee.
- Whether the impugned summonses and consequential penalty notices should be quashed in view of the respondents' failure to justify or defend them before the court.
Arguments of the Parties
Petitioners' Arguments
- The summonses were illegal and issued without jurisdiction because the issuing officers showed no application of mind (blanks unfilled; non‑applicable portions not scored out).
- No proceedings under the Income‑tax Act, Wealth‑tax Act or Gift Tax Act were pending before the issuing officers that could justify issuance of the summonses.
- The summonses were issued as a fishing enquiry into non‑deduction of tax at source, and the officers who issued them lacked jurisdiction to make such an enquiry in respect of the assessee.
Respondents' Position
- The respondents filed no affidavit, produced no records, and made no oral or written submissions in opposition to the petition.
Table of Precedents Cited
No precedents were cited in the provided opinion.
Court's Reasoning and Analysis
The court examined the reproduced summonses and found on their face that blanks were not filled and inapplicable portions not struck out, demonstrating a total non‑application of mind by the issuing officers. The court interpreted section 131(1) of the Income‑tax Act to confer powers exercisable only “for the purposes of the Act,” which the court explained to mean for purposes of proceedings pending under the Act before the concerned authority. The court characterized powers under section 131 as akin to the powers of a court of law and exercised in a quasi‑judicial capacity, therefore to be strictly confined to the statutory purposes and pending proceedings. The court observed the same principle applied under the Wealth‑tax Act and the Gift Tax Act. The petitioners had specifically contested jurisdiction and the absence of pending proceedings before the issuing officers; the officers had neither addressed those contentions nor produced supporting records. Given the absence of any justification from the revenue and the manifest procedural defects in the summonses, the court concluded the summonses were invalid.
Holding and Implications
DISPOSED OF — The writ petition is allowed.
Holding: The court quashed the impugned summonses dated 2 August 1994 and 10 November 1994 and all consequential notices issued for non‑compliance. The writ petition was allowed with no order as to costs.
Implications: The direct effect is the nullification of the two summonses and related penalty notices against the petitioners. The opinion does not purport to establish any broader precedent beyond applying the principle that powers under section 131 (and corresponding provisions in the Wealth‑tax and Gift Tax Acts) must be exercised for pending proceedings and with proper application of mind; no further sweeping legal pronouncement or new precedent is asserted in the text.
Dr. B.P Saraf, J.:— By this writ petition, the petitioners seek to challenge the summons dated 2nd August, 1994 issued by the Income-tax Officer (TDS) Circle-Thane and the summons dated 10th November, 1994 issued by the Income-tax Officer (TDS) 1, Pune “under section 131/37/36 of the Income-tax Act, 1961.Wealth-tax Act, 1957.Gift Tax Act, 1958” directing the petitioner company to produce the books of accounts and documents as specified therein as also the notices issued to show cause for imposition of penalty for non-compliance of the same. It is stated in the above summonses that the books of accounts and documents were required in connection with proceedings “under the Income-tax Act, 1961.Wealth-tax Act, 1957.Gift Tax Act, 1957”. The case of the petitioners is that the summonses issued are illegal and without jurisdiction because they are issued without any application of mind by the concerned Income-tax Officer which is evident from the fact that even the portions not applicable have not been struck off in the notices. It is also stated that no proceedings were pending before either of the two Income-tax Officers under any of the enactments mentioned in the summonses, which could have entitled him to issue summons for production of documents, etc. mentioned in the summons. It is also stated that the summonses were issued to make fishing enquiry in regard to non-deduction of tax at source by the assessee. It is also stated that none of the Income-tax Officers had jurisdiction to issue summons for that purpose, because if any enquiry was to be made in regard to non-deduction of tax at source by the petitioner company, none else than the Income-tax Officer who had jurisdiction in respect of the assessee could have done that.
2. When this writ petition came up for admission, notice before admission was issued to the respondents by this Court which was returnable on 16th December, 1994. Despite notice, no affidavit was filed by the respondents nor any of the contentions made by the petitioners were challenged even by producing the records. Under the circumstances, rule was issued and, by interim order dated 16th December, 1994, respondent No. 2, the Income-tax Officer (TDS) Circle-Thane and respondent No. 3, the Income-tax Officer (TDS-1), Pune, were restrained from taking any steps in furtherance of the impugned summonses and letters. When the matter came up on board for hearing, it was noticed that no affidavit had been filed on behalf of the respondents. The respondents did not attend the hearing even through counsel. The matter was adjourned to enable the revenue to attend the case. Now again the matter is on board for final hearing. So far as the revenue is concerned, the position remains the same. Neither there is any affidavit nor anybody appears for them.
3. We have heard Mr. G.S Jetly, learned counsel for the petitioners, who submits that issue of summonses in this case is wholly illegal and without jurisdiction inasmuch as no proceedings under the Income-tax Act or any of the other two enactments mentioned in the notice were pending before the two Income-tax Officers who had issued the same either in the matter of the assessee or any other person. Mr. Jetly also submits that there is gross misuse of power to issue summons. The learned counsel pointed out that in the impugned summonses even the portions which are not applicable have not been struck off. It is contended that total non-application of mind before issue of summonses is glaring on the face of the summonses.
4. We have considered the above submissions. The two summonses which are subject matter of challenge in this case are set out below:
“Summons to Assessee/Witnesses under section 131/37/36 of the Income-tax Act, 1961.Wealth-tax Act, 1957.Gift Tax Act, 1958.
P.A No.___Office of the Income Tax Officer Dated TDS Circle, Thane, Dt. 2-8-1994.
G.M Breweries Ltd.
S. Veer Savarkar Marg,
Virar (E), Dist. Thane.
Whereas your attendance is required in connection with proceedings under the Income Tax Act/Wealth-tax Act/Gift Tax Act. In your case, you are hereby required personally to attend my office at Thane on 8-8-1994 at 11 a.m to give evidence and/or to produce either personally or through an authorised representative the books of accounts and/or other documents specified overleaf, and not to depart until you receive my permission to do so.
Without prejudice to the provisions of any other law for the time being in force, if you intentionally omit to so attend any give evidence or to produce the books of accounts and/or document, required, a fine of up to Rs. 500/- may be imposed upon you under section 131(2)/37(2)/36(2) of the Income-tax Act, 1961.Wealth-tax Act, 1957.Gift Tax Act, 1958.
(1) Sales register for F.Y 93-94
(2) Sales bill for F.Y 93-94
(3) Excise register for F.Y 93-94
(4) Bank/Cash book for F.Y 93-94
SealSignature of Officer__Sd/-__
Name: D.S Deshpande
Designation: ITO (TDS) Cir. Thane”
“Summons to Assessee/Witnesses under section 131/37/36 of the Income-tax Act, 1961.Wealth-tax Act, 1957.Gift Tax Act, 1958.
P.A No.___ Office of the ITO, TDS, Pune Dated: 10-11-1994
The Chief Executive,
G.M Breweries Ltd.
S. Veer Savarkar Marg,
Virar (E)
Whereas your attendance is required in connection with proceedings under the Income Tax Act/Wealth-tax Act/Gift Tax Act in your case/the case of …………………………………………… you are hereby required personally to attend my office at ………………………………………………….Thane on 14-11-1994 at 11 a.m to give evidence and/or to produce either personally or through an authorised representative the books of accounts and/or other documents specified overleaf, and not to depart until you receive my permission to do so.
Without prejudice to the provisions of any other law for the time being in force, if you intentionally omit to so attend any give evidence or to produce the books of accounts and/or document, required, a fine of up to Rs. 10,000/- may be imposed upon you under section 131(2)/37(2)/36(2) of the Income-tax Act, 1961.Wealth-tax Act, 1957.Gift Tax Act, 1958.
(1) Books of account for the period 1st June, 1993 to 31st March, 1994 and 1-4-1994 to 31st October, 1994.
(2) Information as required by letter No. Pn/TDS-1.GM/94-95 dated 10-11-1994
SealSignature of Officer__Sd/-__
Name Income Tax Officer (TDS) 1, Pune Designation____________”
5. It is clear even from a look at the two summonses which have been reproduced verbatim that neither the blanks have been filled up nor the inapplicable portions scored out. Total non-application of mind is manifest on the face of the summonses. As stated above, further action pursuant to the above summonses had been stayed by this court on 16th December, 1994. About five years have lapsed since then. The respondents have not even cared to refute the contentions of the petitioners or meet the challenge to the validity and legality of the impugned summonses and/or to take steps to get the stay order vacated or the writ petition disposed. That clearly goes to show that the respondents are not interested in pursuing the matter, either because they have no case or they are totally indifferent and callous.
6. As stated above, the above summonses clearly demonstrate total non-application of mind by the concerned Income-tax Officer. Even it is not clear from the summonses whether these are under the Income-tax Act or Wealth Tax Act or Gift Tax Act. We have not been told by the revenue in what connection and under which Act the books of accounts and documents were required to be produced by the petitioners. So far as the scope and ambit of section 131(1) of the Income-tax Act is concerned, it is clear from a plain reading of the provision itself that the powers thereunder can be exercised only “for the purposes of the Act”. The expression “for the purposes of the Act” must mean for the purposes of proceedings under the Act pending before the concerned authority. The powers given to the Income-tax Authorities under section 131(1) are powers of the court of law. While exercising these powers, the Income-tax Authorities act in a quasi-judicial capacity. These powers must be exercised strictly for the purposes set out in sub-section (1) of section 131 of the Act and not for any extraneous purposes. Powers under section 131 can be exercised only if proceedings are pending before the authority concerned under the Income-tax Act. The same is the position under the Wealth-tax Act and the Gift Tax Act. In the present case, the petitioners seriously challenged the exercise of the powers by the Income-tax Officer. It was contended by the petitioners before the Income-tax Officer that no proceedings whatsoever were pending before him for the purpose for which the books of account and documents called for could have been required. The jurisdiction of the Income-tax Officer to issue the summons was also questioned. The Income-tax Officer did not bother to consider the same. On the other hand, he directed the petitioners to comply with the same under the threat of penalty for non-compliance. It is in such circumstance that the petitioners challenged the summonses and notices before this Court.
7. As stated above, none of the contentions of the petitioners in writ petition have been challenged by the respondents by filing any affidavit nor the records have been produced. There is even no appearance on behalf of the revenue to oppose the writ petition. Even at the time of admission, the notice before admission issued by this Court went unattended.
8. Under these circumstances, we are left with no option but to quash the impugned summonses and all consequential notices issued for non-compliance of the same. In the result, writ petition is allowed with no order as to costs.
Writ petition allowed.
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