UNION OF INDIA Vs. GOPAL DAS GUPTA

JUDGEMENT

(1.) A common question regarding interpretation, mainly of two S. of the Income-tax Act, 1961, viz., sec. 131 and 135, has arisen in the two appeals which we have heard one after the other. The question arose by an action taken by the Assistant Director of Inspection of the Income-tax Department in connection with what was said to be a proceeding under the Income-tax Act, in the case of Aruna Estate Limited by issuing summons under sec. 131 of the Income-tax Act, 1961, to compel attendance before him of two persons who are the two respondents in the two appeals before us. It appears that by a notice dated 19.06.1968, purported to be a summons to witness under section 131 of the Income-tax Act, 1961, Sri D. K. Guha, Assistant Director of Inspection, required Sri Gopal Das Gupta who is respondent in Appeal No. 129 of 1971 and Sri Ranendra Chandra Roy who is respondent in Appeal No. 292 of 1970, informing each of them that his attendance was required " in connection with a proceeding under the Income-tax Act in the case of Aruna Estate Limited " to give evidence either personally or through an authorised representative, the books of account and other documents specified and not to depart until permitted to do so, in the respective letters dated 19.06.1968. It was also mentioned that "If you intentionally omit to so attend to give evidence, a fine up to Rs.500 may be imposed upon you u/s. 131(2) of the Income-tax Act, 1961 ". Each of these persons, i.e., Sri Gopal Das Gupta and Sri Ranendra Chandra Roy, by separate letters, raised various objections and in the course of that correspondence, by letter dated 24.06.1968, each of them asked for information regarding " legal powers " to require attendance although " you are not an assessee of mine " as was mentioned in the letter of the Assistant Director of Inspection dated 22.06.1968. Then only, by a letter dated 25.06.1968, the Assistant Director of Inspection said " I am to inform that I called you to appear before me in terms of the summons issued u/s. 131 of the Income-tax Act, 1961. These summons have been issued u/s. 131 of the Income-tax Act, 1961, in exercise of my legal jurisdiction ".

(2.) Upon that controversy, each of these two persons, i. e., Gopal Das Gupta and Ranendra Chandra Roy, moved applications in this court under article 226 of the Constitution praying for writs to quash the proceedings and cancel the summons issued by the Deputy Director of Inspection. Two rules were issued and in each of these rules, the Assistant Director of Inspection, Shri D. K. Guha, was a party-respondent along with two other respondents, namely, Union of India through Director of Inspection and Assistant Director of Inspection (Intelligence), Income-tax Department. These two rules were heard and disposed of by K. L. Roy J. Before that learned trial judge, on behalf of the petitioners, contentions were raised by pointing out that the Director of Inspection, not being one of the authorities mentioned in sec. 131, the Assistant Director of Inspection had no jurisdiction to issue the impugned notice and the proceedings should be quashed. By contesting that proposition on behalf of the Department, it appears to have been contended that the definition in sec. 221 of the Income-tax Act, 1961, provides that in the Act, Director of Inspection includes an Assistant Director of Inspection also and that by dint of the provision in sec. 135 of the Act, that officer is authorised to exercise all the powers of the Income-tax, Officer u/s. 131; as such it was contended that the Officer of the Department had acted within his jurisdiction. These conflicting arguments advanced for the parties before the learned trial judge made it incumbent to examine the two S. to ascertain the true meaning and import of the contents of each of these. The two S. of the Income-tax Act, 1961, are quoted below :

(3.) The learned trial judge, K. L. Roy J., accepted the contentions advanced for the petitioners before him that the claim of the Department that the officer was authorised under the provisions of sec. 135 to exercise all the powers of the Income-tax Officer u/s. 131 should be rejected mainly on the reason of the particular language that appears in the two S. and also for the reason that was advanced before him by pointing out that in 1965, sec. 131 was amended by adding " Inspecting Assistant Commissioner of Income-tax " which amendment, according to the contentions of the petitioners, would be unnecessary if the meaning attributed to sec. 135 by the Department were correct because in that sec. 135, "Inspecting Assistant Commissioner" has been mentioned. To strengthen that contention the learned counsel for the petitioners before the learned trial judge referred to the Finance Bill, 1965, and the Statement of Objects and Reasons in respect of clause 38 therein which subsequently was enacted as sec. 38 of the Finance Act, 1965, effecting the aforesaid amendment in sec. 131. By relying on that Statement of Objects and Reasons, it was contended that the Legislature interpreted S. 131 before its amendment as authorising only the three officers mentioned therein, namely, the Income-tax Officer, the Appellate Assistant Commissioner and the Commissioner, to exercise the powers mentioned in that section. The amendment to enlarge the number of officers so authorised by that sec. 131 was therefore felt necessary.