In explaining the significance of powers enshrined u/s 131(1) of the Income-tax Act the Bombay High Court in the case of G.M. Breweries Ltd. v. Union of India (108TAX547) held that the powers given to the income-tax authorities under section 131(1) are powers of the court of law.
While exercising these powers, the income-tax authorities act in a quasi-judicial capacity. These powers are to be exercised strictly for the purposes set out in sub-section (1) of section 131 and not for any extraneous purposes and only if some proceedings are pending before the authority concerned. In this case the court found that there was total non-application of mind on the face of summons in as much as neither the blanks had been filled up nor the inapplicable portions were scored out. Further it did not specify the connection and under which Act the documents were required. The court quashed the summons issued in the ultimate.
The Assessing Officer cannot proceed mechanically and also on erroneous information that may have been supplied to him vide 411ITR602. In this case the Assessing Officer issued a notice u/s 148 to a wrong person.
Further there is limited power given u/s 131(1) vide 318ITR29 so that in this case the Court awarded compensation to the assessee for unauthorized keeping of records beyond the reasonable period.
At the same time the Income-tax Officers and authorities do not have any power to interrupt the ordinary peaceful citizens of the country in any manner they like by utilising the large powers given to them, without keeping strictly within the four corners of those large powers. Since the powers vested are large, even a millimetre of departure therefrom must be immediately shorn off by the impartial courts of law, if this country is to continue to remain a free one vide250ITR354. In the instant case
the officers who conducted a survey issued summons for production of books on the same day and the books instantaneously impounded despite that fact that there was no obstruction put by the assessee. The Court levied costs upon the survey party.