Sachchidanand Jha, J.
1. The proposition raised for consideration on which, it s said, there is no precedent of this court, is straight and simple enough to admit of any doubt or dispute. There may of course be dispute regarding its application in the facts and circumstances of the particular case. The petitioner has been served with a notice issued in terms of Section 131(1)(d) of the Income-tax Act (in short, 'the Act'), in the matter of ascertainment of cost of construction of a house by the Assistant Valuation Officer, the Income-tax Department at the behest of the Income-tax Officer, Ward-III, Ranchi. She seeks quashing of the notice and' a declaration that the proposed investigation is illegal and without jurisdiction principally on the ground that an investigation of the kind can be made only in connection with and during pendency of a proceeding, and inasmuch as no proceeding is pending (or can be initiated) the proposed investigation is an abuse of the process of law and liable to be quashed. The relevant facts are as follows .
2. The petitioner purchased four kathas of land being portion of plot No. 1175 at Village Hesal (Aryapuri), Ratu Road, Ranchi, for a consideration of Rs. 2,000 on March 6, 1965. She got her name mutated in the revenue records of the State in Case No. 786 R-27 of 1965-66 by the Circle Officer, Ranchi. In furtherance of the said order of mutation a correction slip was issued in her name on January 4, 1966, and she was granted rent receipt. On December 28, 1966, the petitioner applied for permission to build a new house before the Executive Officer of the Ranchi Municipality along with a building plan. Permission was granted vide letter No. 376/B/Engineering of 1966 on July 15, 1967. It is said that after the sanction of the building plan, the petitioner started construction of the house some time in the year 1967 and constructed a major portion on the ground floor some time in the month of September, 1968. She thereafter applied for electric connection before the Ranchi Electric Supply Company Ltd. After due enquiry and verification an estimate was served on her on October 28/31, 1968. After deposit of the requisite amount on December 23, 1968, she was granted electric connection vide Consumer No. G. 3579. The petitioner in course of time constructed the second storey in the month of December, 1973. The total cost of construction of the entire building, according to her, was Rs. 30,000 approximately. She has been assessed to holding tax, etc., by the Ranchi Municipality, vide Holding No. 495 M2 with respect to the house since 1973-74. The petitioner has annexed documents in support of her above-stated case regarding purchase of the land, mutation of name, sanction of building plan, grant of electric connection and municipal receipts.
3. Pursuant to a notice issued by the Income-tax Officer, Circle-I, Ward-'D', Ranchi, dated June 3, 1982, under Sections 139(2) and 133 of the Act, the petitioner filed a return of income for the assessment year 1982-83 relevant to the accounting year 1981-82 on August 27, 1982, showing her total income at Rs. 5,714 in which she showed rental income from the said house apart from other income. According to the petitioner, her income never exceeded the exemption limit allowed under the Act and, therefore, there was no occasion for her to file any return of income or to show the rental income from that house. The abovesaid return filed on August 27, 1982, was finally accepted after hearing under Section 143(3) of the Act. The petitioner's case of receiving rental income from the said house property was thus accepted without any objection. She did not file the return of her income thereafter up to the assessment year 1989-90 as her income, according to her, remained below the taxable limit. For the assessment year 1990-91, however, when her total income exceeded the taxable limit she filed the return on August 31, 1990, showing the total income at Rs. 18,300 as rental income from the said house. She was assessed under Section 143(1) of the Act and an intimation under Section 143(1)(a) of the Act was issued to her by the Income-tax Officer, Ward-III, Ranchi, on December 10, 1990. However, after completing the assessment in the aforesaid manner, the Income-tax Officer, Ward-III, Ranchi, issued notice on March 8, 1991, asking the petitioner to appear before him in order to furnish certain information as may be required by him in connection with the very same assessment year, i.e., 1990-91. The petitioner in compliance with the said notice appeared before the Income-tax Officer through her advocate who was asked to give details of the house. The petitioner filed an affidavit on June 14, 1991, stating therein that the house had been constructed and investments made in the construction between June, 1967, and December, 1975. Thereafter, it is said, the Income-tax Officer asked the. Valuation Officer, Income-tax Department, Ranchi, vide his letter dated January 22, 1992, to inspect the property and make investigation as may be considered necessary to determine the true and correct cost of construction of the house property and to submit the valuation report. The impugned notice was thereafter issued to the petitioner by the Assistant Valuation Officer, Income-tax Department, Ranchi, on January 24, 1992, requiring her to produce certain documents, as mentioned in the notice, on February 7, 1992, informing her further that he would like to inspect the property on February 11, 1992. The petitioner at this stage filed the present writ petition challenging the validity of the said notice dated January 24, 1992, as indicated at the outset.
4. The respondents have filed a counter affidavit. They have rejected the affidavit dated June 14, 1991 (supra), describing it as a self-serving document and claimed that there is nothing in the records of the Income-tax Department to substantiate the facts alleged by the petitioner. According to the respondents, in order to determine the correctness of the petitioner's case regarding the construction of the house and ascertain the cost of construction involved it is necessary to get an investigation made by the Valuation Officer who possesses the necessary expertise. It is said that in the statement of affairs filed by the petitioner along with her return she did not declare the cost of construction and when the Department came to know about the property it was considered necessary to refer the matter to the Valuation Officer for ascertainment of the cost of construction as well as the period of construction of the house in question. As regards the case of the petitioner that no proceeding was pending in connection with which the notice had been issued and investigation was sought to be made, the respondents have stated 'in view of the notice served on the assessee on March 22, 1992, the proceeding was pending before the Assessing Officer and, therefore, the Assessing Officer was competent to issue notice under Section 131(1)(d) of the Income-tax Act, 1961.'
5. The aforesaid notice said to be have been served on the petitioner on March 22, 1992, it may be mentioned, refers to the very same notice which has been issued by the Assistant Valuation Officer in the matter of ascertainment of the cost of construction, etc., of the house and is under challenge in this writ petition.
6. Mr. Binod Poddar, learned counsel for the petitioner, contended that the Assessing Officer and/or the Appellate Officer have power to issue commission under Section 131(1)(d) of the Act but the power can be exercised only in connection with a pending proceeding. The power, it was submitted, is the same as that of a civil court under the relevant provisions of the Code of Civil Procedure and since the civil court has power to issue commission and/or to pass other orders referred to in Clauses (a), (b) and (c) of Section 131(1) of the Act while trying a suit, as said so in the Section itself, the power of the Assessing Officer, etc., under the Income tax Act cannot be enlarged and be exercised even though no proceeding is pending, under the Act. Counsel relied on Jamnadas Madhavji and Co. v. J.B. Panchal, ITO : [1986]162ITR331(Bom) and Dwijendra Lal Brahmachari v. New Central Jute Mills Co. Ltd. : [1978]112ITR568(Cal) .
7. Mr. K.K. Jhunjhunwala, learned counsel for the respondents, did not, very fairly, dispute the proposition that commission can be issued under Section 131(1)(d) of the Act only in connection with a pending proceeding; he however, reiterated the stand of the respondents that by reason of the issuance of the notice, a proceeding within the meaning of Section 131 would be deemed to have commenced. Alternatively, he argued that the notice dated March 8, 1991 (supra), issued in terms of Section 143(2) of the Act asking the petitioner to appear and furnish information as may be required of her in connection with the assessment year 1990-91 would amount to commencement and pendency of proceeding.
8. Before considering the submission of counsel for the parties it would be appropriate to notice the provisions of Section 131(1) as follows :
'131. Power regarding discovery, production of evidence, etc.--(1) The Assessing Officer, Deputy Commissioner (Appeals), Deputy Commissioner, Commissioner (Appeals) and Chief Commissioner or Commissioner shall, for the purposes of this Act, have the same powers as are vested in a court under the Code of Civil Procedure, 1908 (5 of 1908), when trying a suit in respect of the following matters, namely :--
(a) discovery and inspection ;
(b) enforcing the attendance of any person, including any officer of a banking company and examining him on oath ;
(c) compelling the production of books of account and other documents ; and
(d) issuing commissions.'
9. In Dwijendra Lal Brahmachari v. New Central Jute Mills Co. Ltd. : [1978]112ITR568(Cal) , the Calcutta High Court explained the scope of the provisions of Section 131 in these words (page 573) :
'From a perusal of Section 131 of the Income-tax Act, we are of the opinion, that the power of the Income-tax Officer under that section is co-extensive with that of a court trying a suit under Section 30 of the Civil Procedure Code, read with Rules 12, 14 and 15 of Order 11 of the Code. Section 131 empowers the officers mentioned in the section to act for the purpose of the Act, but that cannot be the only limitation set out under Section 131 imposed upon the powers of the officers mentioned in the said section to act in the terms of the said section. All statutory bodies must act for the purposes of the statute even though the term 'for the purposes of the Act' be not expressly stated. Secondly, it appears to us that the statutory power cannot be exercised without application of mind as urged by Mr. R.C. Deb appearing on behalf of the respondent. If such powers are granted then such powers would be so naked that the section itself would become ultra vires. Application of mind must be in regard to the question of relevancy of the documents to the lis involved in the matter before the Income-tax Officer. A civil court cannot order discovery, production or inspection of documents until it is of the opinion that such documents are relevant for the purpose of the issues involved in the suit pending before it. Similarly, it seems to us, that the officers mentioned in Section 131 of the Income-tax Act have been vested with powers to make the orders as mentioned therein provided they are satisfied that the orders made would be relevant for the purpose of deciding the case pending before them. If we hold otherwise we would be holding that Section 131(1) has conferred naked and arbitrary powers upon such officers which would make the section itself liable to be struck down.'
10. The above observations of the Calcutta High Court were quoted with approval by the Bombay High Court in Jamnadas Madhavji and Co. v. J.B. Panchal, ITO : [1986]162ITR331(Bom) and it was held that the existence of a pending proceeding was a condition precedent and sine qua non for the exercise of power under Section 131(1).
11. Reference to the provisions of Sub-section (1A) of Section 131, which was inserted by the Taxation Laws (Amendment) Act, 1975, would make the intention of the Legislature clear. Sub-section (1A) reads as follows :
'(1A) If the Director General or Director or Deputy Director or Assistant Director, or the authorised officer referred to in Sub-section (1) of Section 132 before he takes action under Clauses (i) to (v) of that sub-section, has reason to suspect that any income has been concealed, or is likely to be concealed, by any person or class of persons, within his jurisdiction, then, for the purposes of making any inquiry or investigation relating thereto, it shall be competent for him to exercise the powers conferred under Sub-section (1) on the income-tax authorities referred to in that Sub-section, notwithstanding that no proceedings with respect to such person or class of persons are pending before him or any other income-tax authority.'
12. The words 'notwithstanding that no proceedings with respect to such person or class of persons are pending' occurring in Sub-section (1A) of Section 131 leave no room for doubt that while the authorities specified under Section 131(1A) of the Act are empowered to take action if there is 'reason to suspect' that any income has been concealed or is likely to be concealed by any person or class of persons even though no proceeding with respect to such person or class of persons is pending before them or any other income-tax authority, the authority specified in Section 131(1) of the Act can do so only if a proceeding is pending before them.
13. The submission of Mr. Jhunjhunwala that the service of the impugned notice on March 22, 1992, would be deemed to be initiation of proceeding is completely misconceived. The petitioner has challenged the validity of the very same notice and its service cannot therefore be interpreted as amounting to initiation of any proceeding. In order to confer jurisdiction on the Assessing Officer, etc., to issue commission, that is to say, make reference to the Valuation Officer to ascertain the cost and age of construction of the house, a proceeding must be pending from before. It is plain that if the impugned notice is struck down, the so-called proceedings would also automatically stand quashed. The proceedings within the meaning of Section 131(1) of the Act must therefore be independent proceedings pending from before and it is only in connection with that proceeding in which commission can be issued.
14. The other submission of Mr. Jhunjhunwala that proceeding should be deemed to be pending with the issuance of the notice dated March 8, 1991, under Section 143(2) of the Act is equally misconceived. From a bare perusal of the said notice, copy whereof has been marked annexure-7 to the writ petition, it is clear that it has been issued in connection with the assessment year 1990-91. In other words, pursuant to the said notice, the Assessing Officer is entitled to require the petitioner to furnish such information as may be necessary in connection with ascertainment of income during the accounting year relevant to the assessment year 1990-91. However, it is the definite case of the petitioner that the house in question was constructed during the period from 1967 to 1973. While considering the question of ascertainment of income during the period relevant to the assessment year 1990-91 under Section 143(3) of the Act, the Assessing Officer cannot travel back to the alleged period of construction. I must observe that the petitioner has produced evidence which strongly suggests that after purchase of the land in 1965, she constructed a portion of the house at least prior to December, 1968, when she was granted electric connection vide Consumer No. G-3579 and completed the construction prior to 1974 when the Ranchi Municipality started collection holding tax, etc., with respect to the house. It is be kept in mind that in her return filed for the assessment year, 1982-83, the petitioner had declared rental income, allegedly from the said house, at Rs. 5,714 which after due enquiry her return was accepted by the Income-tax Officer under Section 143(3) of the Act. This, also shows, prima facie, that the house was in existence prior to April 1, 1982.
15. If the respondents so thought it was open to them to reopen the assessment taking recourse to the provisions of Section 148 read with Section 147 of the Act. Neither any such notice has been issued nor it is possible to interpret the action of the respondents as amounting to pendency of any proceeding under Section 147 of the Act on the basis of materials on record. Section 147 as it stood at the relevant time empowered the Assessing Officer, if he had reason to believe that by reason of the omission or failure on the part of the assessee to make a return under Section 139 or to disclose fully or truly all material facts necessary for assessment for the particular year, income chargeable to tax had escaped assessment for the year, or notwithstanding that there had been no such omission or failure, he was in possession of some information leading him to believe that income chargeable to tax had escaped assessment for an assessment year, to assess or reassess such income subject to the provisions of Sections 148 to 153 of the Act. I have grave doubts if, in view of the provisions of Section 149 of the Act, this can now be done or could be done even in January/March 1992, when the impugned notice was issued and served. It is well-settled that the object of Section 147 of the Act is not to make a roving or fishing enquiry. While it is open to the authority in an appropriate case to make an enquiry confidential or otherwise--in order to obtain information or verify facts disclosed to him by the assessee or coming to his notice, before reaching the stage of reasonable belief, he cannot compel the assessee to associate himself in such roving or fact-finding enquiry. The assessee can be required to appear only after the Assessing Officer has come to the conclusion as to reasonable belief within the meaning of Section 147 of the Act. In this connection, I would like to refer to the following observations of the Calcutta High Court in Prahladrai Agarwalla v. ITO : [1973]87ITR655(Cal) :
'The correct position seems to me that the Income-tax Officers in particular cases have the right and indeed the duty to investigate. Such investigations might be done from all sources including the assessee. He cannot, however, in my opinion, compel the assessee to produce any evidence before a notice under Section 148 has been issued. The notice of May 25, 1967, has to be judged in that light. I am of the opinion that there is no power on the part of the Income-tax Officer to compel the assessee to produce the particulars or to ask him to show cause why the assessment should not be reopened.'
16. Earlier, in Gaya Ram Gabbu Lal v. CIT : [1951]19ITR114(All) , the Allahabad High Court had observed (page 121) :
'The Income-tax Officer has no right to make a preliminary enquiry before issuing notice under Section 34 and the assessee is not bound at that stage either to produce his books or to give any information or explanation. But, if in the course of the performance of his usual duties, while assessing the income of other assessees or for other years of the assessee himself, definite facts come to the knowledge of the Income-tax Officer, which relate to a year about which the assessment has already been concluded, the Income-tax Officer is not bound to shut his eyes to them nor is it necessary that when the Income-tax Officer gets some information, he should not verify the correctness thereof or trace it out further so long as he can do it without calling upon the assessee either to supply him with facts or explanations or produce his books. Within those limits he may inform himself. Before notice can be issued, the Income-tax Officer must be satisfied, and the satisfaction must be that of a reasonable man, (i.e., the definite information in his possession should lead to the conclusion) that income has escaped assessment.'
17. In the above premises, I am satisfied that the petitioner has made out a case for interference by this court and the impugned notice is liable to be quashed.
18. In the, result, the notice dated January 24, 1992, contained in annexure-10 is quashed and the writ petition is allowed but without any order as to costs.
Aftab Alam, J.
19. I agree.