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1 - 4 of 4 (0.20 seconds)Section 131 in The Income Tax Act, 1961 [Entire Act]
Section 37 in Income Tax Rules, 1962 [Entire Act]
Kanodia Brothers vs S.S. Seth, Income-Tax Officer on 9 March, 1959
5. From this order, it is quite clear that the account books enumerated in the order delivered to the petitioner-firm were impounded and retained by respondent No. 1 on October 3, 1969. The only point for determination is whether respondent No. 1 had recorded the reasons in support of his order impounding the account-books. I have seen the original order sheet and have no doubt that the order, in which reasons were recorded, was passed on October 3, 1969, in the presence of Shri Parkash Chand and his counsel, Shri R. K. Goel. It may be that the reasons were not communicated to them, which led the petitioner-firm and its counsel to believe that no reasons were recorded as the order delivered to them did not contain any reasons. The fact, however, is that respondent No. 1 did record reasons for impounding and retaining the account books and thus complied with the provisions of Section 131(3) of the Act. This sub-section only requires the Income-tax Officer to record his reasons for impounding any books of account or other documents but does not cast any duty on him to communicate those reasons to an assessee. The learned counsel for the petitioner submits that it is of the essence of the mandate of the legislature to the Income-tax Officers to record reasons and that those reasons should also be communicated to the assessee in order to enable him to take further remedies against impounding. Reliance is placed on a judgment of a Division Bench of the Allahabad High Court in Kanodia Brothers v. S. S. Seth, Income-tax Officer, [1960] 39 I.T.R. 228 (All.) wherein the provisions of proviso (a) to Section 37(2) of the Income-tax Act, 1922, were considered. That section corresponded to Section 131(3) of the Income-tax Act, 1961. In that case, the Income-tax Officer had summoned the books of account from the Secretary, Income-tax Investigation Commission, and, after obtaining them, retained them in his possession without making any order impounding them and thus without recording any reasons for impounding the same. All he did was that he made a subsequent report for obtaining the approval of the Commissioner for impounding the books of account. The learned judges held that the provision contained in Sub-section (2) of Section 37 of the 1922 Act for recording reasons for impounding books of account or other documents was of a mandatory character and, therefore, the Income-tax Officer had first to record reasons for impounding the books and then pass an order for impounding them. Without following this procedure, the books of account could not be retained by the Income-tax Officer. There is
nothing in that judgment to suggest that the communication of the reasons
recorded by the Income-tax Officer in support of his order to the assessee
impounding the account books was also necessary. The language of Sub-section (3) of Section 131 of the Income-tax Act, 1961, does not indicate
that the communication of the reasons in support of the order impounding
the account books is necessary to be made to the assessee.
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