Kerala High Court
M/S. Chennithala Thripperumthura ... vs Income Tax Officer(Tds) on 12 March, 2025
2025:KER:20901
W.P(C) No.24497/2018 1
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR.JUSTICE MOHAMMED NIAS C.P.
WEDNESDAY, THE 12TH DAY OF MARCH 2025 / 21ST PHALGUNA, 1946
WP(C) NO. 24497 OF 2018
PETITIONER/S:
M/S. CHENNITHALA THRIPPERUMTHURA SERVICE CO-OPERATIVE
BANK LTD. NO.3553, CHENNITHALA, MAVELIKKARA, ALAPPUZHA
DISTRICT, KERALA-690 105, REPRESENTED BY ITS
SECRETARY, K.S. UNNIKRISHNAN.
BY ADVS.
SRI.S.ARUN RAJ
SMT.C.T.SUJA
RESPONDENT/S:
1 INCOME TAX OFFICER(TDS)
INCOME TAX OFFICE, ARATTUKULANGARA COMPLEX,
OPP. GENERAL HOSPITAL, AN PURAM,ALAPPUZHA-688 011.
2 THE JOINT COMMISSIONER OF INCOME TAX (TDS),
AAYAKAR BHAVAN, KOWDIAR,THIRUVANANTHAPRUAM-685 003.
3 THE COMMISSIONER OF INCOME TAX (TDS)
CENTRAL REVENUE BUILDING, I S PRESS ROAD,KOCHI-682 018.
BY ADVS.
SRI.CHRISTOPHER ABRAHAM, SC, R1 TO R3
SRI.K.M.V.PANDALAI, INCOME TAX DEPARTMENT
SRI.P.R.AJITH KUMAR(K/000708/1998)
THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON
15.01.2025, THE COURT ON 12.03.2025 DELIVERED THE FOLLOWING:
2025:KER:20901
W.P(C) No.24497/2018 2
"C.R."
MOHAMMED NIAS C.P., J.
......................................................
W.P(C) No.24497 of 2018
......................................................
Dated this the 12th day of March, 2025
JUDGMENT
The petitioner, a Primary Agricultural Credit Society registered under the Kerala Co-operative Societies Act, 1969, is an assessee under the Income Tax Act, 1961 (hereinafter referred to as 'the Act' for short). The Income Tax Officer (TDS), the 1st respondent, issued Ext.P1 notice dated 8.1.2016 under Section 133(6) of the Act, seeking information pertaining to AY 2015-16 regarding TDS/TCS compliance. The petitioner submitted objections on 21.01.2016, but the 1 st respondent insisted on furnishing details through a letter dated 04.03.2016. The petitioner sought additional time to prepare and submit the statements.
2. The petitioner contends that the 1 st respondent lacked jurisdiction to issue Ext.P1, as the 1st respondent is not the Assessing Officer. The Manual of Office Procedure clarifies that only the Assessing Officer, Additional/Joint Commissioner, or Commissioner (Appeals) can call for information under Section 133(6) of the Act. Despite this, the 2nd respondent, the Joint Commissioner of Income Tax (TDS), issued Ext.P6 notice, dated 21.03.2016, under Section 274 r/w Section 272A(2)(c), proposing a penalty for failure to furnish information. The petitioner objected on 2025:KER:20901 W.P(C) No.24497/2018 3 28.03.2016, but the 2nd respondent directed compliance by 25.07.2016, threatening the imposition of penalty.
3. The petitioner submitted the required details on 5.08.2016 (Ext.P9) and requested the dropping of proceedings (Ext.P10). However, the 2nd respondent imposed a penalty of Rs.20,200/- on 17.08.2016 (Exhibit P-11). The petitioner filed a waiver petition under Section 273A(4) before the Commissioner of Income Tax, Kottayam, which was transferred to the 3 rd respondent. Through Ext.P13 order dated 8.1.2018 the 3rd respondent dismissed the waiver petition. Ext. P13 is under challenge in this writ petition.
4. Sri. Arun Raj S., the learned counsel for the petitioner argues that the 1st respondent lacked jurisdiction under Section 133(6), rendering the notice illegal. The 2nd respondent erred in imposing the penalty, as the petitioner had furnished the required details. Additionally, the petitioner, being a Primary Agricultural Credit Society, is exempted from TDS under Section 194A(3)(viia), making the penalty unwarranted. The 2nd respondent's reliance on the failure to furnish details under Sections 192 to 195 is unjustified.
5. The issuance of a notice under Section 133(6) of the Act requires prior approval from the Director or Commissioner, which was obtained in this case, making the notice valid. However, the formation of an opinion by the relevant officer on the usefulness or relevance of the information is mandatory. An "enquiry" under the Act is a prerequisite for invoking Section 133(6), and the second proviso mandates prior approval for inquiries without pending 2025:KER:20901 W.P(C) No.24497/2018 4 proceedings. The existence of an enquiry and prior approval is essential to invoke Section 133(6) in cases without pending proceedings.
6. The learned counsel for the petitioner relied on the decisions in the Union of India (UOI) and Ors. v. Gopal Das Gupta reported in [(1987) 167 ITR 39 (SC)], G.M Breweries Ltd. & Another v. Union of India and Others (2000 (2) Bom CR 160) and Kathiroor Service Co-operative Bank Ltd v. Commissioner of Income Tax (CIB) (MANU/SC/1172/2013).
7. Sri. Christopher Abraham, the learned Standing Counsel for the respondents contends that notice under Section 133(6) was issued by the 1 st respondent strictly in accordance with the law to ensure that governmental revenue is not lost due to the non-deduction of tax at source. The 1 st respondent sought the necessary information from the petitioner after obtaining prior approval from the Commissioner of Income Tax (TDS), Kochi. Therefore, the 1 st respondent acted within the legal framework under Section 133 (6) of the Act. It is submitted that as per the second proviso to Section 133(6) if no proceedings are pending, the Income Tax Officer (ITO) can seek information with prior approval from the Commissioner of Income Tax. Thus, the officer's actions were within the prescribed limits of law, and no violation of the provisions of the Act occurred.
8. The respondents assert that the petitioner failed to provide full details of the information requested under Section 133(6). Specifically, in item No. 5 of Ext.P1, the 1 st respondent requested information regarding all payments under Sections 192 to 195 of the Act. Even if the petitioner is exempted under Section 2025:KER:20901 W.P(C) No.24497/2018 5 194A (3)(viia), they are still legally bound to furnish the required details. The respondents pointed out that in Ext.P1, the Assessing Officer had obtained prior approval from the Commissioner of Income Tax (TDS) before requesting the information, in accordance with statutory requirements. The Assessing Officer is to determine whether the exemption under Section 194A (3)(viia) applies to the petitioner. The respondents emphasize that for the Assessing Officer to ascertain the applicability of the exemption, it is necessary to verify if the interest payments were made to the petitioner's members as depositors. This requires the Assessing Officer to examine and reconcile the details of the depositors, their respective deposits, interest payments, and any TDS credits or payments. It is the further contention of the respondents that by withholding the required information, including the names and addresses of its members, the petitioner deliberately obstructed the Assessing Officer from fulfilling its statutory duties and responsibilities. The respondents further assert that the requisitioning of information under Section 133(6) and the determination of the exemption under Section 194A(3)(viia) are distinct and independent matters. Whether the petitioner is eligible for the exemption or has properly claimed it remains to be examined and determined.
9. Clause (6) of Section 133 of the I.T. Act is extracted below for reference:
"Power to call for information.
133. The Assessing Officer, the Deputy Commissioner (Appeals), the Joint 2025:KER:20901 W.P(C) No.24497/2018 6 Commissioner or the Commissioner (Appeals) may, for the purposes of this Act,--
xxxx xxxx xxxx xxxx (6) require any person, including a banking company or any officer thereof, to furnish information in relation to such points or matters, or to furnish statements of accounts and affairs verified in the manner specified by the Assessing Officer, the Deputy Commissioner (Appeals), the Joint Commissioner or the Commissioner (Appeals), giving information in relation to such points or matters as, in the opinion of the Assessing Officer, the Deputy Commissioner (Appeals), the Joint Commissioner or the Commissioner (Appeals), will be useful for, or relevant to, any enquiry or proceeding under this Act:
Provided that the powers referred to in Clause (6), may also be exercised by the Principal Director General or Director General, the Principal Chief Commissioner or, Chief Commissioner, the Principal Director or Director or the Principal Commissioner or Commissioner or the Joint Director or Deputy Director or Assistant Director.
Provided further that the power in respect of an inquiry, in a case where no proceeding is pending, shall not be exercised by any income-tax authority below the rank of Principal Director or Principal Commissioner or Commissioner other than the Joint Director or Deputy Director or Assistant Director without the prior approval of the Principal Director or Director or, as the case may be, the Principal Commissioner or Commissioner.
Provided also that for the purposes of an agreement referred to in Section 90 or Section 90A, an income tax authority notified under sub-section (2) section 131 may exercise all the powers conferred under this section, notwithstanding that no proceedings are pending before it or any other 2025:KER:20901 W.P(C) No.24497/2018 7 income tax authority."
10. Heard the learned counsel appearing for the petitioner and the learned Standing Counsel for the respondents.
11. The first contention of the petitioner is that the 1 st respondent has no jurisdiction to issue Ext.P1 notice as the 1st respondent is not the Assessing Officer or the prescribed authority under Section 133 (6) of the Act and, therefore, the issuance of notice invoking Section 133(6) of the said Act is illegal, arbitrary and without any jurisdiction. The terms "inquiry" and "enquiry" in the Income Tax Act, 1961, have distinct meanings relevant to different contexts. Under Section 133(6), information may be called for only if it pertains to an "enquiry" under the Act. The current inquiry under this section lacks a direct connection to any ongoing enquiry and is therefore considered legally invalid.
12. In Kathiroor Service Cooperative Bank Ltd. v. Commissioner of Income Tax (CIB) (MANU/SC/1172/2013), the Supreme Court clarified that "to enquire" means seeking information, while "enquiry" refers to gathering such information. The amendment introduced in 1995 expanded Section 133(6) from addressing only pending proceedings to allowing inquiries for general information necessary for identifying potential tax liabilities, provided prior approval from the Director or Commissioner is obtained. This position was reiterated in Kodur Service Co-operative Bank Ltd v. DIT [MANU/KE/1276/2014] and U.G Upadhya and others v. The Director of Income Tax [2001 SCC OnLine Kar. 725], where the decisions affirmed that inquiries could be initiated without a pending 2025:KER:20901 W.P(C) No.24497/2018 8 proceeding as long as proper approvals were secured beforehand. The Supreme Court's decision in Karnataka Bank Ltd. v. Secretary, Government of India and others [MANU/SC/0509/2002] emphasized that invoking Section 133(6) of the Act does not require an ongoing inquiry; it serves primarily to collect useful information relevant under the Act even when no proceedings are pending. In Enanalloor Service Co-operative Bank Ltd. v. ITO [MANU/KE/0709/2020], it was reaffirmed that powers under Section 133(6) facilitate surveys aimed at identifying individuals likely subject to taxation or verifying compliance with tax regulations. Finally, Pattambi Service Co-operative Bank Ltd. and others v. Union of India and others [MANU/KE/2406/2014] upheld the constitutional validity of Section 133(6), noting that challenges were limited solely to specific amendments rather than questioning its entirety or purpose.
13. On a perusal of Ext.P1 notice, it is noted that "the information is called for u/s 133(6) of the Act after getting necessary approval from the Commissioner of Income Tax (TDS), Kochi." In view of the principles of law above stated and the fact that the notice was issued after getting necessary approval from the higher authorities, the contention on lack of jurisdiction in the issuance of Ext.P5 notice is hereby rejected.
14. The petitioner, a Primary Agricultural Credit Society, claims exemption from tax deduction at source under Section 194A(3)(viia) I.T. Act, which states that no deduction is applicable on income credited or paid in respect of deposits with such societies. In M.V. Rajendran v. Income Tax Officer and others 2025:KER:20901 W.P(C) No.24497/2018 9 [MANU/KE/0647/2002], this Court held that while co-operative societies may enjoy exemption under Section 80P and immunity from income tax on interest received from other institutions, these provisions do not relate to the powers exercised under Section 133(6) as the co-operative societies are still subject to scrutiny by the Income Tax Department to prevent black money hoarding.
15. This Court further clarified that Section 133(6) allows income tax authorities to request information from any "person," including banking companies, indicating a broad interpretation of who can be included under this definition. In Kechery Service Co-operative Bank Ltd. v. The Commissioner of Income Tax [MANU/KE/0090/2003], it was held that notices issued under Section 133(6) can verify compliance with various statutory requirements without necessitating existing proceedings against an individual or entity.
16. The Assessing Officer (AO) has the responsibility to determine whether the exemption provided by Section 194A(3)(viia) applies and must gather relevant information regarding depositors and their transactions for this purpose. By failing to provide details about its members' deposits and associated interest payments, the society obstructed the AO's right to perform the statutory duties. Thus, while requisitioning information under Section 133(6) and evaluating eligibility for exemption under Section 194A(3)(viia) are distinct processes, proving entitlement to such exemptions remains crucial for proper assessment. It is to be noticed that the judgment of this Court in M.V. Rajendran (supra), which considered the exemption claim by Co-operative Societies was affirmed by the 2025:KER:20901 W.P(C) No.24497/2018 10 Division Bench of this Court in Kechery Service Co-operative Bank Ltd. v. The Commissioner of Income Tax [MANU/KE/0090/2003], and the Special Leave Petition (SLP) filed against the decision of this Court was dismissed.
17. In the instant case, the petitioner was bound to comply with the directions in the notice issued under Section 133(6) of the Income Tax Act. The reasons stated by the petitioner in the reply and also in the writ petition are all issues covered against him by the judgments noted above. Under such circumstances, the imposition of penalty cannot be said to be wrong in any manner, as the petitioner has failed to furnish the particulars sought under Section 133(6). Equally, as the petitioner has not cooperated and has not complied with the notice under Section 133(6), the request of the petitioner to waive the penalty was also rightly rejected as per the order impugned in the writ petition.
For the reasons stated above, no relief can be granted to the petitioner and accordingly, the writ petition is dismissed.
Sd/-
MOHAMMED NIAS C.P. JUDGE okb/ 2025:KER:20901 W.P(C) No.24497/2018 11 APPENDIX OF WP(C) 24497/2018 PETITIONER EXHIBITS EXHIBIT P1 TRUE COPY OF THE LETTER DATED 8-1-2016 ISSUED BY THE 1ST RESPONDENT TOT HE PETITIONER.
EXHIBIT P2 TRUE COPY OF THE LETTER DATED 11-1-2016 ISSUED TO THE PETITIONER BY THE 1ST RESPONDENT.
EXHIBIT P3 TRUE COPY OF THE OBJECTION DATED 21-1-2016 SUBMITTED BY THE PETITIONER TOT HE 1ST RESPONDENT.
EXHIBIT P4 TRUE COPY OF THE LETTER DATED 4-3-2016 SUBMITTED BY THE 1ST RESPONDENT TO THE PETITIONER.
EXHIBIT P5 TRUE COPY OF THE LETTER DATED 14-3-2016 SUBMITTED BY THE PETITIONER TO THE 1ST RESPONDENT.
EXHIBIT P6 TRUE COPY OF THE NOTICE DATED 21-3-2016 U/S 274 R.W.S 272A (2) (C) OF THE ACT ISSUED TO THE PETITIONER BY THE 2ND RESPONDENT.
EXHIBIT P7 TRUE COPY OF THE OBJECTION DATED 28-3-2016 TO EXHIBIT P-6 SUBMITTED BY THE PETITIONER TO THE 2ND RESPONDENT. EXHIBIT P8 TRUE COPY OF THE LETTER DATED 25-7-2016 ISSUED BY THE 2ND RESPONDENT TO THE PETITIONER.
EXHIBIT P9 TRUE COPY OF THE LETTER DATED 5-8-2016 FORWARDED TO THE 1ST RESPONDENT.
EXHIBIT P10 TRUE COPY OF THE LETTER DATED 5-8-2016 SUBMITTED BY THE PETITIONER TO THE 2ND RESPONDENT.
EXHIBIT P11 TRUE COPY OF THE PENALTY ORDER DATED 17-8-2016 IMPOSING PENALTY UNDER SECTION 272 A 92) (C) OF THE ACT FOR THE FAILURE TO FURNISH THE INFORMATION CALLED FOR UNDER SECTION 133 (6) OF THE ACT AND THE DEMAND NOTICE.
EXHIBIT P12 TRUE COPY OF THE PETITION UNDER SECTION 273A (4) OF THE ACT FILED BEFORE THE COMMISSIONER OF INCOME TAX, KOTTAYAM BY THE PETITIONER FOR THE WAIVER OF PENALTY.
EXHIBIT P13 TRUE COPY OF THE ORDER DATED 8-1-2018 PASSED BY THE 3RD RESPONDENT DISMISSING THE PETITION FOR WAIVER OF PENALTY IMPOSED UNDER SECTION 272 (2) (C) OF THE ACT.