THE issues before the Bench are - Whether provisions of
Sec 133(6) vest powers in Assessing Officers to indulge in fishing information
of general nature and there is no need for assessee to cooperate only if there
is any assessment proceeding pending; Whether power to gather
information u/s 133(6) applies to specific areas only; Whether issue of notice
for collecting information u/s 133(6), without the approval of Commissioner is
valid and Whether enquiry of general nature can also be made by issuing such a
notice. And the verdict favours the Revenue.
Facts of the
case
Assessee is a
Service Co-operative Rural Bank. The Income Tax Officer (ITO)(CIB), Calicut
issued a notice to the assessee u/s 133(6) calling for general information
regarding details of all persons (whether resident or non- resident) who have
made (a) cash transactions (remittance, transfer, etc.) of Rs. 1,00,000/- and
above in any account and/or (b) time deposits (FDs, RDs, TDs, etc.) of Rs.
1,00,000/- or above for the period of three years between 01.04.2005 and
31.03.2008, dated 02.02.2009. It was expressly stated that the failure to
furnish the aforesaid information would attract penal consequences. The assessee
objected to the said notice on grounds that such a notice seeking information
which was unrelated to any existing or pending proceeding against the assessee
could not be issued under the provisions of the Act and requested for withdrawal
of the said notice by its letter-in-reply, dated 26.02.2009.
The
AO addressed to the objections raised by the assessee and accordingly rejected
them. Assessee, aggrieved by the aforesaid, filed Writ challenging the aforesaid
notice. The Single Judge discussed the case of assessee including the
submissions made by the parties in extenso and reached the conclusion that the
impugned notice was validly issued under the provisions of the Act and
therefore, dismissed the said petition. Thereafter, the assessee approached
the Division Bench of HC by way of Writ questioning the said notice on grounds,
that the issuance of such notice u/s 133(6) was bad in law as Section 133(6)
only provides for power to seek information in case of pending proceedings under
the Act and does not contemplate the powers to seek fishing information which
was unrelated to any existing proceedings or which may enable the AO to decide
upon institution of proceedings under the Act. The Division Bench observed that
the questions raised were no longer res integra in view of the decision
of HC in Karnataka Bank Ltd. v. Secretary, Government of India and
Ors.,(2002-TIOL-764-SC-IT) and
accordingly, dismissed the said appeal.
On appeal, the Apex Court held
that,
++ it
is the case of the assessee that though this Court in Karnataka Bank case has
considered the powers of respondent-authorities to issue notice under Section
133(6) but has not considered as to whether the said provision clothes the
respondent-authorities with any power for conducting a roving or fishing enquiry
into the affairs of the assessee or regarding the deposits made by its
customers. Further, that this Court has considered only "case specific" or "area
specific" information sought under Section 133(6). Counsel for the assessee
would therefore submit that the High Court has erred by not appreciating the
decision of this Court in Karnataka Bank case and erroneously dismissed the case
of similarly placed banks. Au contraire Solicitor General for the Assessing
Authority, would support the impugned judgment and order and contend that for
the purposes of enquiry under the provisions of the Act, the Assessing Authority
can issue such notice under the said Section;
++
since the language of the Section 133(6) is wholly unambiguous and clear,
reliance on interpretation of statutes would not be necessary. Before the
introduction of amendment to Section 133(6) in 1995, the Act only provided for
issuance of notice in case of pending proceedings. As a consequence of the said
amendment, the scope of Section 133(6) was expanded to include issuance of
notice for the purposes of enquiry. The object of the amendment of section
133(6) by the Finance Act, 1995 (Act 22 of 1995) as explained by the CBDT in its
circular shows that the legislative intention was to give wide powers to the
officers, of course with the permission of the CIT or the Director of
Investigation to gather general particulars in the nature of survey and store
those details in the computer so that the data so collected can be made use of
for checking evasion of tax effectively. The assessing authorities are now
empowered to issue such notice calling for general information for the purposes
of any enquiry in both cases: (a) where a proceeding is pending and (b) where
proceeding is not pending against the assessee. However in the latter case, the
assessing authority must obtain the prior approval of the Director or
Commissioner, as the case maybe before issuance of such notice. The word
"enquiry" would thus connote a request for information or questions to gather
information either before the initiation of proceedings or during the pendency
of proceedings; such information being useful for or relevant to the proceeding
under the Act;
++
this Court in Karnataka Bank Ltd. v. Secretary, GOI and Ors.,(2002-TIOL-764-SC-IT) has
examined the proposition whether a notice under Section 133(6) could be issued
to seek information in cases where the proceedings are not pending and construed
Section 133(6) of the Act. The petitioner therein was a financial institution
which had impugned the notice issued under section 133(6) on grounds that the
notice requiring furnishing of information in respect of its customers regarding
payment of loans when no enquiry was pending was not envisaged by the said sub-
section. This Court has observed that mere from the reading of the said
provision that it is not necessary that any inquiry should have commenced with
the issuance of notice or otherwise before Section 133(6) could have been
invoked. It is with the view to collect information that power is given under
Section 133(6) to issue notice, inter alia, requiring a banking company to
furnish information in respect of such points or matters as may be useful or
relevant. The second proviso makes it clear that such information can be sought
for even when no proceeding under the Act is pending, the only safeguard being
that before this power can be invoked the approval of the Director or the
Commissioner, as the case may be, has to be obtained;
++ in
view of the aforesaid, we are of the view that the powers under section 133(6)
are in the nature of survey and a general enquiry to identify persons who are
likely to have taxable income and whether they are in compliance with the
provisions of the Act. It would not fall under the restricted domains of being
"area specific" or "case specific." Section 133(6) does not refer to any enquiry
about any particular person or assessee, but pertains to information in relation
to "such points or matters" which the assessing authority issuing notices
requires. This clearly illustrates that the information of general nature can be
called for and names and addresses of depositors who hold deposits above a
particular sum is certainly permissible;
++ in
the instant case, by the impugned notice the assessing authority sought for
information in respect of its customers which have cash transactions or deposits
of Rs. 1,00,000/- or above for a period of three years, without reference to any
proceeding or enquiry pending before any authority under the Act. Admittedly, in
the present case notice was issued only after obtaining approval of the
Commissioner of Income Tax, Cochin. In light of the aforesaid, we are of the
considered opinion that the Assessing Authority has not erred in issuing the
notice to the assessee-financial institution requiring it to furnish information
regarding the account holder with cash transactions or deposits of more than Rs.
1,00,000/-. Therefore, we hold that the Division Bench of the High Court was
justified in its conclusion that for such enquiry under Section 133(6) the
notice could be validly issued by the Assessing Authority. In view of the above,
the appeal requires to be dismissed and accordingly, stands dismissed. In view
of the order passed in Civil Appeal No.7460 of 2013 @ S.L.P.(C) No.3976 of 2010
above, all these appeals also stands dismissed.
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