2019 (7) TMI 1157 - HC - Income Tax

Tax Recovery Officer's Summons Authority Upheld under Income Tax Act

MAULIKKUMAR VINODKUMAR PATEL Versus TAX RECOVERY OFFICER-4

The court upheld the Tax Recovery Officer's authority to issue summons under Rule 83 of the Second Schedule to the Income Tax Act, 1961, for personal ... Power of TRO in recovery proceedings - personal attendance of the assessee/defaulter for the purpose of necessary inquiry pursuant to the summons under Rule 83 of the Second Schedule to the Act, 1961 - HELD THAT:- The plain reading of Rule 83 makes it clear that the tax Recovery Officer or other officer, acting under the provisions of Schedule-II, are conferred with the powers of a Civil Court while trying a suit for the purpose of receiving evidence, administering oaths, enforcing the attendance of witnesses and compelling the production of documents. Section 136 further clarifies that the proceedings before the Income Tax Authorities are in the nature of judicial proceedings. The mere absence of the word 'assessee' or 'defaulter' would not make any difference. It is always open for the Tax Recovery Officer to seek necessary information from the assessee himself and any other witness or witnesses, if any. We are convinced that no case is made out by the writ applicant for the purpose of getting the impugned summons under Rule 83 of the Second Schedule to the Act, 1961 declared as illegal or erroneous in law. We hold that it is permissible for the authority concerned to secure and enforce the personal attendance of the assessee/defaulter for the purpose of necessary inquiry pursuant to the summons under Rule 83 of the Second Schedule to the Act, 1961. To put it in other words, for effective and expeditious disposal of the recovery proceedings, it is always permissible for the Tax Recovery Officer to call for necessary and relevant information and conduct an inquiry by securing and enforcing the personal attendance of the assessee/defaulter. In the result, this writ application fails and is hereby rejected. Notice is discharged. Issues Involved:1. Legality and authority of the Tax Recovery Officer to issue summons under Rule 83 of the Second Schedule to the Income Tax Act, 1961.2. Justification for personal attendance despite the filing of Vakalatnama by the petitioner’s lawyer.3. Validity of the stipulation in the summons that the petitioner cannot depart without permission from the Tax Recovery Officer.Detailed Analysis:1. Legality and Authority of the Tax Recovery Officer to Issue Summons:The petitioner challenged the summons dated 04.07.2019 issued by the Tax Recovery Officer (TRO) under Rule 83 of the Second Schedule to the Income Tax Act, 1961, questioning the legality and authority of the TRO to enforce personal attendance. The court clarified that Rule 83 explicitly grants the TRO powers equivalent to a civil court for receiving evidence, administering oaths, enforcing attendance, and compelling the production of documents. This interpretation aligns with Section 136 of the Income Tax Act, which deems proceedings before Income Tax Authorities to be judicial proceedings. The court referenced the Madras High Court decision in G.V. Films Ltd., affirming that the TRO can lift the corporate veil to address tax evasion or fraud. Thus, the TRO's issuance of the summons was within legal bounds.2. Justification for Personal Attendance Despite the Filing of Vakalatnama:The petitioner argued that the TRO should not insist on personal attendance since a Vakalatnama was filed, and the petitioner was willing to provide the required documents through a legal representative. However, the court found this argument unconvincing, emphasizing that Rule 83 allows the TRO to compel personal attendance for effective inquiry and recovery of tax dues. The court noted that the petitioner had been non-cooperative during the assessment proceedings, failing to comply with multiple notices and requests for information. The court held that the TRO's insistence on personal attendance was justified to gather necessary details about the petitioner’s assets for tax recovery purposes.3. Validity of the Stipulation That Petitioner Cannot Depart Without Permission:The petitioner contested the TRO's stipulation in the summons that he could not depart without prior permission. The court interpreted Rule 83 as encompassing the power to enforce personal attendance, which includes ensuring the petitioner remains present until the required information is obtained. The court dismissed the petitioner’s claim that the TRO lacked authority to enforce such a stipulation, noting that it is inherent in the power to enforce attendance. The court also referenced Section 32 of the Civil Procedure Code, which allows for measures to compel attendance, further supporting the TRO’s authority in this regard.Conclusion:The court concluded that the TRO acted within the scope of Rule 83 by issuing the summons and insisting on personal attendance. The petitioner’s arguments were found to lack merit, and the writ application was rejected. The court emphasized that while the petitioner must cooperate and provide necessary information, the TRO should avoid unnecessary harassment and allow the petitioner to be accompanied by a legal representative or chartered accountant during the proceedings.