Ramachandran Nair, J v. Commissioner Of Income Tax

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 & ---------------------------------------------------------- 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 WritPetitions are societies registered under the Kerala Co-operativeSocieties Act engaged in banking. Various Income tax authorities haveissued notices to the appellants/petitioners under Section 133(6) of the Income Tax Act, 1961, hereinafter called the "Act" calling forparticulars of cash transactions above Rs. 1 lakh with details of accountholder/deposit holder in the format prepared by the authority issuingthe notices. The societies challenged the validity of the notices beforethis Court by filing Writ Petitions. Two learned single Judges have written separate judgments upholding the validity of the notices issuedunder Section 133(6) of the Act, against which Writ Appeals are filed.In the connected Writ Petitions, the societies are challenging similarnotices issued to them under the same provision of the Act. 2. We have heard various counsel appearing for theappellants/petitioners and standing counsel appearing for therespondents. Same contentions raised by the appellants/petitionerswere first decided by one of us, (C.N.Ramachandran Nair, J.) videjudgment in M.V. RAJENDRAN V. I.T.O., 260 I.T.R. 442. Theprovision considered therein was Section 133(6) with amendmentsintroduced particularly after the inclusion of second proviso videFinance Act 1995 with effect from 1.7.1995. This Court held that thecontentions of the co-operative societies that they do not answer thedescription of "person" referred to in the Section and that details couldbe called for only pertaining to enquiry pending were turned downbased on the amendments. It was held that the powers conferred underthe Section are in the nature of survey by the department and the samecan be initiated against private banks, co-operative societies and evenagainst nationalised banks. The judgment was rendered by this Court without noticing the judgment of the Supreme Court in KARNATAKABANK LTD. V. SECRETARY, GOVT. OF INDIA, A.I.R. 2003 SC2096 wherein the Supreme Court has held that the power to call forinformation can be exercised under Section 133(6) of the Act even ifno proceeding is pending enquiry under any provisions of the Act. Allwhat the Supreme Court held is that in such cases, details could becalled for by the officer concerned with the approval of the Director, orthe Commissioner, as the case may be. Following this, the abovejudgment of the learned single Judge is confirmed by a Division Benchof 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, thequestions raised are no longer res integra. Even though counsel for theappellants/petitioners referred to judgment of the Bombay High Courtin D.B.S. FINANCIAL SERVICES P.LTD. v. I.T.O., 207 I.T.R. 1077and the judgment of the Calcutta High Court in GRINDLAYS BANKLTD. v. I.TO., 231 I.T.R. 612, we notice that those decisions arerendered on Section 133(6) prior to it's amendment in 1995. In anycase, in view of the consistent judgments of this Court and the decisionof the Supreme Court, we do not think there is any scope for interference with the judgments of the learned single Judges upholdingthe validity of notices after overruling the contentions raised by theappellants. 3. The only remaining issue worth considering is whether thegeneral notice calling for cash particulars including deposits of variousdepositors above Rs. 1 lakh is issued by the concerned officer with theprior approval of the Director or the Commissioner, as the case may be.Standing counsel appearing for the respondents referred to variousnotices and stated that the notice itself states that particulars are calledfor with the approval of the Commissioner or the Director, as the casemay 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 bythe same authority which obviously means that he has taken priorapproval from the Director or the Commissioner, as the case may be.In any case, if any of the appellants wants to get clarification they arefree to approach the Officer concerned who issued the notice and askfor clarification on this issue and if notice issued is without approval ofthe Commissioner of the Director, such authority on request by theappellant/petitioner concerned will verify the same and if no approval is obtained, he will recall the notice. However, the authority concernedcan issue fresh notice after getting approval from the Director or theCommissioner, as the case may be. Since all the issues raised arecovered by judgments above referred subject to the direction above, wehave to only dismiss the Writ Appeals and Writ Petitions upholding thejudgments of the learned single Judges and the impugned noticesissued and produced in the fresh Writ Petitions filed. 4. Counsel for the appellants/petitioners submitted before ustheir problems in regard to collection and furnishing of detailspertaining to three years within a short time. In the first place, we feelthat the notices do not pertain to loans advanced by societies and evenrenewals granted by them by closing the old loans against fresh loans.In our view, particulars of the transactions called for are cashtransactions above Rs. 1 lakh and deposit amount of Rs. 1 lakh andabove, the details of which the appellants/petitioners are liable tofurnish. We therefore extend the time for furnishing details called fortill 31st January, 2010. In view of the extension of time granted by us,we direct the respondents-Officers to recall the penalty proceedings, ifany, initiated under Section 272A of the Act after receipt of information. If any appellant/petitioner after collecting substantialdetails requires further time, such society is free to furnish the collecteddetails and then apply to the Officer for further extension of time, andwe are sure, the Officer concerned will grant reasonable time if there isbona fide in the request made by the society and if substantial detailsare already furnished. Subject to the direction contained in paragraph 3, the WritAppeals and Writ Petitions are dismissed, but by granting time asabove. (C.N.RAMACHANDRAN NAIR)Judge. (V.K. MOHANAN) Judge. kk