Section 131 of the Income Tax Act provides power to the income tax authorities to summon witnesses, to force production of books of account and other documents as well as to issue commissions. It is similar to that available under the Code of Civil Procedure, 1908.
Purpose of issuing summons:
Assessees are usually represented by their lawyers or authorized persons at the time of proceedings before the income tax authorities. But for inquiry in a particular matter, it is necessary to examine them or to examine witnesses related to them. For such purposes, provisions of section 131 of the Act are invoked.
If summons are addressed to a person under section 131, it is mandatory for him to appear personally before the concerned authorities. He cannot appear through a representative or a lawyer. A person can also be forced to produce books of account or other documents by invoking the provisions of section 131.
The said provisions are resorted to for the proper administration of laws relating to income tax and for discovering the truth upon information available to the tax authorities from the assessees. It helps the authorities to conduct inquiry and gather proof in support of their holdings. It enables them to discover the facts and for carrying out proceedings under the Act. It also gives equal opportunity to the Department and the assessee.
The object of the legislature is to enable the officers of the investigation wing to discover the truth and justify their opinion.
Consequences of non-compliance of the provisions of section 131:
Non-compliance of any summons or notice issued as per the provisions of section 131 results in levy of penalty amounting up to a sum of Rs.10,000/-
Instances where the provisions of section 131 can be invoked:
Section 131 is a very vital instrument available to the income tax authorities for unveiling the truth. It can be invoked at the time of a search or during any survey for examining any person. At the time of inquiry after a search these provisions can be invoked for summoning any person and recording his statement. This has become a recent trend after conclusion of the search.
An assessing officer can take the help of section 131 for making inquiries in case of pending proceedings. During any assessment proceedings, the assessing officer can call a third party under this section to verify facts stated before him by the assessee. He can also summon the assessee to his office for recording his statement on any of the issues relevant to the assessment.
However officers of the investigation department can take the help of these provisions where no proceedings are pending before them.