" The court held that "The special agent was not obliged to disclose in detail the facts relative to his investigation and conclusion, nor was the District Court obliged to require proof of facts showing reasonable grounds to believe that the tax returns of E.F. Prichard, Sr., and others were false or fraudulent." This decision was followed in In re Wood, D.C.W.D.Ky., 123 F. Supp. 297; Id., D.C., 130 F. Supp. 121. Several cases have held investigations not to be "unnecessary," although it does not appear that facts were alleged which indicated probable cause for the investigation.

The same division between maintenance and production was observed by courts which interpreted the predecessors of § 6001 and § 7602. Falsone v. U.S., 205 F.2d 734, 739 (5th Cir.) cert. den. 346 U.S. 864, 74 S.Ct. 103, 98 L.Ed. 375 (1953); In re Wood, 123 F. Supp. 297, 302 (W.D.Ky. 1954). There are decisions which indicate that when a taxpayer is required to maintain records under § 6001 he cannot claim that these records are "private papers" which are immune from inspection pursuant to a subpoena or search warrant, U.S. v. Clancy, 276 F.2d 617, 631 (7th Cir. 1960), rev'd on other grounds, 365 U.S. 312, 81 S.Ct. 645, 5 L.Ed.2d 574 (1961); U.S. v. Remolif, 227 F. Supp. 420 (D.Nev. 1964), but Ohio Bell appears to be the only case in which a court authorized an inspection solely on the basis of § 6001.

On the contrary, where the statute of limitations is involved on the face of the complaint, an inquiry may be required upon merely a conclusory allegation of suspicion of a false and fraudulent tax return, without even the necessity of the proof of facts showing reasonable grounds to believe the return to be fraudulent. United States v. United Distillers Products Corp., 2 Cir, 156 F.2d 872; In re Wood, D.C., 123 F. Supp. 297, and D.C., 130 F. Supp. 121. In Falsone v. United States, 5 Cir., 205 F.2d 734, it appeared that the statute of limitations had run against the returns for certain years, but an inquiry into those years was permitted on an allegation that it was necessary to a so-called net worth case involving more recent years.

As for the question of Martin's qualifications, he is qualified by virtue of that delegation. This is not a judicial proceeding where legal rights are being finally determined; rather it is a hearing which is inquisitorial in nature, see In re Wood, D.C.W.D.Ky. 1954, 123 F. Supp. 297; Torras v. Stradley, D.C.N.D.Ga. 1951, 103 F. Supp. 737, and cases, cited therein, and it can be properly conducted by an investigative official of the Treasury Department. Petitioner has the right to have counsel at this examination, 5 U.S.C.A. § 1005(a), and this should serve amply to protect his interests. There being no sufficient reason to vacate the summons in this proceeding, this motion is denied and the temporary stay vacated.

The principal arguments offered being, first, that since the limitations had run under the Code for assessment of taxes for the years 1938 through 1949, the re-examination of records for those years should be barred unless the Bureau clearly demonstrated fraudulent concealment of income during the period, and second, that since the Bureau had already had an opportunity to examine the records for the years 1949-1951, written notice must first be served upon the defendants informing them of the Bureau's intention to re-examine those records, the service of such notice being denied by the defendants. This Court overruled the motion, D.C., 123 F. Supp. 297. Thereafter the defendants filed their answer to the complaint and a motion to require the production of the report of the agent of the Bureau who had examined their records in 1945, as well as the net worth statements prepared by agents of the Bureau for the years 1938, 1939, 1946, 1947, 1948 and 1954. This motion was also overruled by this Court and the cause was heard. At the hearing the only evidence introduced by the Bureau was the testimony of Special Agent S.L. Guthrie to the effect that he had made a review of the information in the Government's files relative to the defendants, had estimated their net worth therefrom and that "* * * Based on my net worth computation, compared with the net income reported by the taxpayers during the years involved, I have strong suspicion that the taxpayers made a fraudulent understatement of the taxable net income reported to the Government during those years."

Petitioner does not contend that the reexamination conducted by respondent was ‘unnecessary.’ See DeMasters v. Arend, 313 F.2d 79 (C.A. 9, 1963); Application of United States (Carroll), 246 F. 2d 762 (C.A.2, 1957); In Re Wood, 123 F.Supp. 297, 303 (W.D.Ky. 1954). for we find that respondent has not in any way violated section 7605(b).