Firstly, it is important to understand that Section 131 is part of Chapter X111 C of the Income Tax Act, 1961. Through the power bestowed through section 131, the tax officials can summon for –
This is the generalized view of the powers that have been given to certain individuals, empowering them to take the matter into their hands as and when needed. In addition to this, there are two additional corresponding sub-sections. These two additional sub-sections, section 131(1) and section 131(1A) relate to the diverse classes of the officers. Section 131(1) related to allowing the jurisdictional assessing officer to be able to issue any summons that might be needed for the purpose of implementation of the section
In other words, Section 131 of the Income Tax Act of 1961 empowers the Tax Authorities so that they can issue summons and also have the right to enforce any individual or person who can be brought in for questioning under oath. It empowers the Tax Authorities to demand the production of the necessary book of accounts and/or any other related documents in case the proceeding is pending for any reason
Section 131(1A) works to empower the officers related to the investigation wings to exercise their powers. The notice under section 131(1A) can be used even if no proceeding is pending.
Section 131(1A) helps give the officers more power; there are certain situations that need the Income Tax officers to have little more authority and power. Below are the situations which make use of Section 131(1A) and allow the Income Tax officers to have notices issued –
It’s again important to understand here that when it comes to any action taken illogically, it can lead to questioning of the entire situation. The same applies to the Income Tax Department – If the summons is sent to a particular person or even, for that matter, a group of people. If the information that surfaces creates the first impression of being illogical, then there will be a chance that questions will be raised on the reasons for the summons that were issued. Hence, it becomes of utmost importance that there needs to care be taken, and there has to be proper logical reasoning that needs to be applied before having the summons issued. There has been added, and a lot of authority has been provided to the income tax officers under section 131(1A); hence, there needs to be care taken while having the notices issued. It definitely should not be used as a cover for examining any investigation or a meandering inquiry.
When a summon was issued under section 131 (instead of section 131-1A), the summon was considered invalid. However, this situation changed after introducing section 292(B) under the Income Tax Act 1961.
When the summons is issued, certain particulars need to be filled out, or the portion that is not applicable has to be scored out. When these actions or items are not followed, the court would assume that the summons was issued without any logical application of the mind. The reason for the summons has to be clearly stated, and the specific Act should be mentioned.
The main thing is that the person who receives the summons or whom the summons is used against never knows the full details. In other words, to say that he is not entitled to know the full details of why the summons has been issued or the purpose behind the summons being issued.
Personal Appearance is of the utmost importance when it comes to the witness. In saying so, it has been very clearly stated in the law that an authorized representative cannot represent the witness, and he or she himself or herself needs to be present in person at the court. However, on the other hand, a notice has been circulated that states that any person other than the witness can choose or be represented through the presence of an authorized representative. This notice was in response to the notice under section 131.
There are two points where the notice is issued under different sections of the Income Tax Act 1961. There is one issued under section 131 (1A) after the search and seizure have been concluded and another under section 131, which is during the survey.
The notice that is issued under section 131(1A) has been very controversial so far. The controversy is due to the conflicting decisions that the various courts have taken. There was a case handled by the Gujarat High Court in which the court mentioned that notices under section 131(1A) could be issued after the relevant searches had been completed that was undertaken under the provisions of section 132. It sounds completely logical that the information should have been called for later so that a better idea or a complete understanding of the particulars could have been obtained in connection with the materials that were seized during the search.
In another case held in the Allahabad High Court, the court ruled that the authorizing officer had no reason to believe nor had any material to the context on which the warrant under section 132 needed to be issued.
No notice can be issued during the course of conducting the survey under section 133A, except the survey under section 133 A(6), and this, too, can only be issued under undeniable circumstances. The issuing of the notice under section 131 depends on the behavior of the assessee. Notice under section 131 can be issued if the assessee has yet to cooperate with the survey team during the course of the survey. On the other hand, if the assessee has offered or helped the survey team with all the necessary materials while conducting the survey, then there is no way that it can be issued. Further, it can only be issued for the recording of the survey. Additionally, no notice under section 131 can be issued once the survey has been completed. In other words, it can be issued only when the proceeding is ongoing or pending.
When it comes to having the notices issued in practice, the assessing officer or the authorizing office mainly issues the notice under section 131, and that too during the course of the survey. The main outcome of issuing it is that they want the assessee to be called once the survey has been completed. Since the notice under section 131 cannot be used once the survey has been completed (and there is no pending proceeding), the matter of practice issues the notice under section 131 during the course of the survey. There have also been a number of court decisions that mention that the notice under section 131 should only be issued during the course of conducting or proceeding with the survey if the survey team receives the relevant cooperation from the assessee.
To begin with, a notice under Section 131(1A) is very common nowadays, which means there is little to fuss about. The first thing you must do is to keep all the summoned documents ready. You must be careful of paying attention to such notice, and if you have been asked to be present physically, make sure you do. If you have a valid reason, you can seek an extension, but it is limited to once generally.
The notice under Section 131(1A) primarily shows up when the AO thinks there is income you may have been concealing. If you have purchased a property recently, you may be asked to prove such a purchase and the source of its funding. In such a case, you can do it electronically.
In any other case, if your physical presence is demanded, see if it allows hiring an Authorized Representative (AR). You may ask him to represent you or accompany you during the proceedings. You can also send all the documents within the deadline mentioned in the notice. If some document is missing, make sure you seek an extension from AO.
The Civil Code of Procedure manages civil proceedings in India. It gives Section 131(1A) the power to issue commissions and enforce an individual's attendance, discovery, and inspection of any property. It also allows the section to examine the assessees on oath and produce the necessary books of accounts and documents.
The conferring of the various powers should not mean that illogical and irrelevant usages are identical. Also, misuse needs to be kept in check with the intention of avoiding duplication or even triplication at times, which is, most of the time, unnecessary and uncalled for. Additionally, this also serves as a botheration when it comes to the taxpayers or the assessee and is an unnecessary inconvenience to them. When it comes to the use of powers entitled to the authorities, they need to be used with utmost care and guidance and ensure that there is the proper logical path to the same for the issue of the relevant notices. Also, the guidelines that have been laid down need to be followed to ensure no discrepancy.