IRITTY CO-OPERATIVE RURAL BANK LTD V. COMMISSIONER OF INCOME TAX

WA/2333/2009

AI Insights

The case involves multiple appellants, primarily co-operative banks, challenging the validity of notices issued by income tax authorities under Section 133(6) of the Income Tax Act, 1961. These notices required the banks to provide details of cash transactions exceeding Rs. 1 lakh. The appellants argued that the notices were invalid and that the banks did not fall under the definition of 'person' as per the section. The High Court of Kerala, referencing previous judgments and the Supreme Court's decision in Karnataka Bank Ltd. v. Secretary, Govt. of India, upheld the validity of the notices, stating that such information could be demanded even if no proceedings were pending, provided there was approval from the Director or Commissioner.

• Counselvise Citation: [2009] 140 COUNSELVISE.COM (IT) 701423 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 24-11-2009
• Assessment Year: misc
• Other Referred Cases: M.V. RAJENDRAN V. I.T.O., KARNATAKA BANK LTD. V. SECRETARY, GOVT. OF INDIA, KECHERY SERVICE CO.OP. LTD. V. C.I.T., D.B.S. FINANCIAL SERVICES P.LTD. v. I.T.O., GRINDLAYS BANK LTD. v. I.TO.
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: JOSE JOSEPH
• Assessee Lawyers: K S MADHUSOODANAN; T V NAMBOODIRI; THUSHAR SARATHY; M M KUMAR; K M RAMYA
• Keywords: Cash transactions; Co-operative societies; Income Tax; Notices; Validity
• Section: 133(6); 272A

Judgement Text

" IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.N.RAMACHANDRAN NAIR & THE HONOURABLE MR. JUSTICE V.K.MOHANAN TUESDAY, THE 24TH NOVEMBER 2009 / 3RD AGRAHAYANA 1931 WA.No. 2333 of 2009() --------------------- AGAINST THE JUDGEMENT/ORDER IN WPC.24660/2009 Dated 26/08/2009 .................... APPELLANT(S): PETITIONERS ------------------------- 1. IRITTY CO-OPERATIVE RURAL BANK LTD., IRITTY, KANNUR REP. SECRETARY. 2. PUNNAD SERVICE CO-OPERATIVE BANK LTD., PUNNAD, KANNUR REP. BY SECRETARY. 3. VENGAD SERVICE CO-OPERATIVE BANK LTD., VENGAD, KANNUR, REP. BY SECRETARY. BY ADV. SRI.K.S.MADHUSOODANAN SRI.T.V.JAYAKUMAR NAMBOODIRI SRI.THUSHAR NIRMAL SARATHY SRI.M.M.VINOD KUMAR SMT.K.M.RAMYA RESPONDENT(S): --------------- 1. COMMISSIONER OF INCOME TAX (CIB), COCHIN. 2. ASSISTANT DIRECTOR OF INCOME TAX (INV.) 8TH FLOOR, AAYAKAR BHAVAN, NORTH BLOCK, KOZHIKODE. ADV. SRI.JOSE JOSEPH, SC, FOR INCOME TAX DEPT. THIS WRIT APPEAL HAVING BEEN FINALLY HEARD ON 24/11/2009, ALONG WITH WA NO. 1854 OF 2009 AND CONNECTED CASES, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: C .N. RAMACHANDRAN NAIR & V.K. MOHANAN, JJ. ---------------------------------------------------------- W.A.Nos. 2333, 1854, 2343, 2344, 2345,2346, 2347, 2348, 2349, 2350, 2351, 2352, 2424, 2536, 2538, 2539, 2541, 2543, 2544, 2552, 2553, 2554, 2588, 2589, 2590, 2591, 2595, 2596, 2598, 2599, 2602, 2603, 2613, 2614, 2630, 2632, 2633, 2634, 2635, 2637, 2639, 2645, 2650, 2654, 2655, 2657, 2658, 2661, 2662, & 2664/2009 & W.P.C. Nos. 25385, 28486, 28504, 28505, 28506, 28525, 28526, 28527, 28528, 28728, 29430, 29943 & 29945/2009 ------------------------------------------------------------ Dated this the 24th day of November, 2009 JUDGMENT Ramachandran Nair, J. Appellants in the Writ Appeals and Petitioners in the Writ Petitions are societies registered under the Kerala Co-operative Societies Act engaged in banking. Various Income tax authorities have issued notices to the appellants/petitioners under Section 133(6) of the Income Tax Act, 1961, hereinafter called the \"Act\" calling for particulars of cash transactions above Rs. 1 lakh with details of account holder/deposit holder in the format prepared by the authority issuing the notices. The societies challenged the validity of the notices before this Court by filing Writ Petitions. Two learned single Judges have 2 written separate judgments upholding the validity of the notices issued under Section 133(6) of the Act, against which Writ Appeals are filed. In the connected Writ Petitions, the societies are challenging similar notices issued to them under the same provision of the Act. 2. We have heard various counsel appearing for the appellants/petitioners and standing counsel appearing for the respondents. Same contentions raised by the appellants/petitioners were first decided by one of us, (C.N.Ramachandran Nair, J.) vide judgment in M.V. RAJENDRAN V. I.T.O., 260 I.T.R. 442. The provision considered therein was Section 133(6) with amendments introduced particularly after the inclusion of second proviso vide Finance Act 1995 with effect from 1.7.1995. This Court held that the contentions of the co-operative societies that they do not answer the description of \"person\" referred to in the Section and that details could be called for only pertaining to enquiry pending were turned down based on the amendments. It was held that the powers conferred under the Section are in the nature of survey by the department and the same can be initiated against private banks, co-operative societies and even against nationalised banks. The judgment was rendered by this Court 3 without noticing the judgment of the Supreme Court in KARNATAKA BANK LTD. V. SECRETARY, GOVT. OF INDIA, A.I.R. 2003 SC 2096 wherein the Supreme Court has held that the power to call for information can be exercised under Section 133(6) of the Act even if no proceeding is pending enquiry under any provisions of the Act. All what the Supreme Court held is that in such cases, details could be called for by the officer concerned with the approval of the Director, or the Commissioner, as the case may be. Following this, the above judgment of the learned single Judge is confirmed by a Division Bench of this Court in the decision in KECHERY SERVICE CO.OP. LTD. V. C.I.T., 263 I.T.R. 161. In view of the decisions above referred, the questions raised are no longer res integra. Even though counsel for the appellants/petitioners referred to judgment of the Bombay High Court in D.B.S. FINANCIAL SERVICES P.LTD. v. I.T.O., 207 I.T.R. 1077 and the judgment of the Calcutta High Court in GRINDLAYS BANK LTD. v. I.TO., 231 I.T.R. 612, we notice that those decisions are rendered on Section 133(6) prior to it's amendment in 1995. In any case, in view of the consistent judgments of this Court and the decision of the Supreme Court, we do not think there is any scope for 4 interference with the judgments of the learned single Judges upholding the validity of notices after overruling the contentions raised by the appellants. 3. The only remaining issue worth considering is whether the general notice calling for cash particulars including deposits of various depositors above Rs. 1 lakh is issued by the concerned officer with the prior approval of the Director or the Commissioner, as the case may be. Standing counsel appearing for the respondents referred to various notices and stated that the notice itself states that particulars are called for with the approval of the Commissioner or the Director, as the case may be. In such case, of course, the challenge cannot be entertained. However in the other notices, it is seen that all the notices are issued by the same authority which obviously means that he has taken prior approval from the Director or the Commissioner, as the case may be. In any case, if any of the appellants wants to get clarification they are free to approach the Officer concerned who issued the notice and ask for clarification on this issue and if notice issued is without approval of the Commissioner of the Director, such authority on request by the appellant/petitioner concerned will verify the same and if no approval 5 is obtained, he will recall the notice. However, the authority concerned can issue fresh notice after getting approval from the Director or the Commissioner, as the case may be. Since all the issues raised are covered by judgments above referred subject to the direction above, we have to only dismiss the Writ Appeals and Writ Petitions upholding the judgments of the learned single Judges and the impugned notices issued and produced in the fresh Writ Petitions filed. 4. Counsel for the appellants/petitioners submitted before us their problems in regard to collection and furnishing of details pertaining to three years within a short time. In the first place, we feel that the notices do not pertain to loans advanced by societies and even renewals granted by them by closing the old loans against fresh loans. In our view, particulars of the transactions called for are cash transactions above Rs. 1 lakh and deposit amount of Rs. 1 lakh and above, the details of which the appellants/petitioners are liable to furnish. We therefore extend the time for furnishing details called for till 31st January, 2010. In view of the extension of time granted by us, we direct the respondents-Officers to recall the penalty proceedings, if any, initiated under Section 272A of the Act after receipt of 6 information. If any appellant/petitioner after collecting substantial details requires further time, such society is free to furnish the collected details and then apply to the Officer for further extension of time, and we are sure, the Officer concerned will grant reasonable time if there is bona fide in the request made by the society and if substantial details are already furnished. Subject to the direction contained in paragraph 3, the Writ Appeals and Writ Petitions are dismissed, but by granting time as above. (C.N.RAMACHANDRAN NAIR) Judge. (V.K. MOHANAN) Judge. kk 7 "