KADUTHURUTHY REGIONAL SERVICE CO-OPERATIVE BANK LTD.NO.4061 V. THE JOINT COMMISSIONER OF INCOME TAX (TDS)

ITA/13/2021

AI Insights

The case involves Kaduthuruthy Regional Service Co-operative Bank Ltd., the appellant, contesting a penalty imposed by the Income Tax Officer for failing to comply with a notice requesting information under Section 133(6) of the Income Tax Act. The notice sought details related to TDS for the financial years 2012-13 to 2014-15. The appellant argued that complying with the notice would infringe on the privacy rights of its depositors, a claim supported by the Supreme Court's ruling in Justice K.S Puttuswami vs. Union of India. Additionally, the appellant contended that it was exempt from deducting tax at source on interest from deposits under Section 194A(3)(viia) of the Income Tax Act. The Income Tax Appellate Tribunal upheld the penalty, leading to this appeal.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 683179 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 29-09-2022
• Assessment Year: misc
• Other Referred Cases: Justice K.S Puttuswami vs. Union of India and others (2017) 10 SCC 1
• Laws Referred To: Income Tax Act
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: CHRISTOPHER ABRAHAM
• Assessee Lawyers: T R HARIKUMAR; ARJUN RAGHAVAN
• Keywords: Co-operative Bank; Income Tax; Penalty; Privacy; TDS
• Section: 133(6); 272A(2)(C); 194A(3)(viia)

Judgement Text

" IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE S.V.BHATTI & THE HONOURABLE MR.JUSTICE BASANT BALAJI THURSDAY, THE 29TH DAY OF SEPTEMBER 2022 / 7TH ASWINA, 1944 ITA NO. 13 OF 2021 AGAINST THE ORDER ITA 308/2020 OF I.T.A.TRIBUNAL,COCHIN BENCH APPELLANT/S: KADUTHURUTHY REGIONAL SERVICE CO-OPERATIVE BANK LTD.NO.4061 REPRESENTED BY ITS SECRETARY, KADUTHURUTHY P.O, KOTTAYAM DISTRICT. BY ADVS. T.R.HARIKUMAR SRI.ARJUN RAGHAVAN RESPONDENT/S: THE JOINT COMMISSIONER OF INCOME TAX (TDS) OFFICE OF THE JOINT COMMISSIONER OF INCOME TAX (TDS), 3RD FLOOR, AAYAKAR BHAVAN, KOWDIAR, THIRUVANANTHAPURAM OTHER PRESENT: SC CHRISTOPHER ABRAHAM THIS INCOME TAX APPEAL HAVING COME UP FOR ADMISSION ON 29.09.2022, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: I.T.A. No.13/2021 -2- J U D G M E N T S.V. Bhatti, J. Heard Advocate Mr Arjun Raghavan and learned Standing Counsel Mr Christopher Abraham for parties. 2. Kaduthuruthy Regional Service Co-operative Bank Ltd/assessee is the appellant. The Joint Commissioner of Income Tax/Revenue is the respondent. The appeal, at the instance of the Assessee, is directed against the order dated 05.11.2020 of the Income Tax Appellate Tribunal (for short ‘Tribunal’) Cochin Bench in ITA No.308/Coch/2020. The subject matter of appeal relates to the return filed by the assessee for the Assessment Year 2015-16. 3. The following substantial questions of law are raised for our consideration: (a) In the wake of the declaration by the Hon'ble Apex Court in I.T.A. No.13/2021 -3- Justice K.S Puttuswami vs. Union of India and others reported in (2017) 10 SCC 1, that privacy is a fundamental right, won't the notice issued by Income Tax Officer call for the information pertaining to the account details of members of the appellant co-operative society under Section 133(6), becomes non-est in the eyes of law? Whether penalty orders under Section 272 A (2) (c) can be issued on the basis of non-compliance of such a notice? (b) Whether the Tribunal is correct in law upholding the penalty orders when the appellant co-operative society is exempted from deducting tax at source with respect to the interest generated from the deposits of its members by virtue of Section 194A (3) (viia) of the Income Tax Act, and there was no rationale in calling for information pertaining to the tax deducted at source regarding the interest generated from the deposits of members? 5. The circumstances relevant for disposing of the appeal are noted thus: The appeal relates to the Assessment Year 2015-16. The assessee was called upon by the Income Tax Officer (TDS) Kottayam under Section 133(6) of the Income Tax I.T.A. No.13/2021 -4- Act to furnish TAN details of the Bank, details of TDS quarterly statement etc for the Financial Years 2012-13, 2013-14 and 2014- 15. The assessee claims to have furnished reply to the communication received under Section 133(6) of the Income Tax Act (for short ‘the Act’). The Income Tax Officer, not satisfied with the reply given by the assessee, initiated penalty proceedings under Section 272A(2)(c) of the Act and imposed Rs.21,500/- by way of penalty. The assessee unsuccessfully challenged the said order of penalty. Hence, the appeal before this court. 6. Mr Arjun Raghavan commends to this Court the substantial questions of law excerpted above and argues that the communication now received under Section 133(6) is contrary to the ratio laid down by the Supreme Court in Justice K S Puttuswami (Retd) v. Union of India1. According to him, if the 1 (2017) 10 SCC 1 I.T.A. No.13/2021 -5- assessee divulges the details without notice to the depositors, then, the assessee would be infringing the right to privacy of the respective depositors. Therefore, the initiation of penalty proceedings and levy of penalty are illegal. It is further argued that assessee/Society enjoys exemption from effecting deducting tax at source under Section 194A(3)(viia)(a) and there is no rationale in calling upon the assessee to furnish the details. 7. We note the contentions, and we are of the view that the contentions are stated out of the context and scheme of Income Tax Act. A ground for referring to what has been decided in Justice K S Puttuswami v. Union of India (supra) is stated as substantial questions in this case. The communication is clear, and whether one has effected TDS or not is only a secondary aspect for consideration in the communication addressed by the Income Tax Officer to the assessee. We are I.T.A. No.13/2021 -6- convinced that the questions now raised in an abstract way need not be considered. The findings recorded are justified by the scheme of the Income Tax Act and the reasoning of the authorities is correct. Appeal fails. Questions are answered against the assessee, in favour of the Revenue. No order as to costs. Sd/- S.V.BHATTI JUDGE Sd/- BASANT BALAJI JUDGE jjj I.T.A. No.13/2021 -7- APPENDIX OF ITA 13/2021 PETITIONER ANNEXURES ANNEXURE-I A TRUE COPY OF THE ORDER DATED 17/08/2016 ISSUED BY THE RESPONDENT. ANNEXURE-II A TRUE COPY OF THE ORDER DATED 17.02.2020 IN ITA NO.10186/CIT(A)/KTM/2016-17 OF THE COMMISSIONER OF INCOME TAX (APPEALS), KOTTAYAM. ANNEXURE-III CERTIFIED COPY OF THE ORDER DATED 05.11.2020 IN ITA NO.308/COCH/2020 OF THE INCOME TAX APPELLATE TRIBUNAL, COCHN SMC BENCH, COCHIN. "