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 own 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) is related to allowing the jurisdictional assessing officer to issue any summons that might be needed for the purpose of implementing the section.
In other words, Section 131 of the Income Tax Act of 1961 empowers the Tax Authorities to issue summons and 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) of the income tax act 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 a 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 –
Earlier, when a summon was issued under Section 131 (rather than Section 131-1A), it was deemed invalid. However, this situation changed with the introduction of Section 292(B) in the Income Tax Act of 1961.
Now, when a summon is issued, specific particulars need to be completed, or any irrelevant portion must be crossed out. Failure to adhere to these actions or items can lead the court to presume that the summon was issued without due application of logical reasoning. The purpose of the summon must be clearly stated, and reference to the relevant Act should be provided."
The key point is that the individual who receives the summon or against whom the summon is employed is often unaware of the complete details. In essence, this means that they are not entitled to be fully informed about the reasons for issuing the summon or the underlying purpose behind it.
The personal presence of the witness holds paramount significance. In emphasizing this point, the law unequivocally specifies that an authorized representative cannot stand in for the witness; rather, the witness must be physically present in court. Nevertheless, a notification has been disseminated, indicating that individuals other than the witness can opt for representation by an authorized agent. This notification was issued in response to the notice pursuant to 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) of the income tax act after the search and seizure have been concluded and another under section 131, which is during the survey.
The notice issued under Section 131(1A) has been subject to significant controversy. This controversy stems from the divergent decisions rendered by various courts. A notable case before the Gujarat High Court articulated that notices under Section 131(1A) might be issued subsequent to the conclusion of pertinent searches conducted under the provisions of Section 132. This perspective aligns logically with the notion that soliciting information at a later stage could provide a more comprehensive grasp of the particulars concerning the materials seized during the search.
Conversely, in another case adjudicated by the Allahabad High Court, the court determined that the authorizing officer lacked both a reasonable basis for belief and substantive material to support the issuance of a warrant under Section 132.
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) of the income tax act is very common nowadays, which means there is little to fuss about. Here’s how to respond to notice under section 131(1A) -
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.
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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.