§ Section 133(6) of the Income Tax Act enables the Income Tax Authorities to compel Banks and other Authorities to furnish such information which will be useful in connection with any pending proceeding or an enquiry.
§ When the information is obtained in connection with a pending proceeding, it would generally relate to a single person or an entity.
§ But when it is in connection with an inquiry, large amounts of data or voluminous information in respect of a number of persons could be obtained. Such large scale information can then be verified and utilized for initiating proceedings, wherever called for.
§ Assessing Officers can invoke this power during ongoing assessment proceedings when it becomes necessary for them to obtain information about the assessee from a Bank or any other Authority for verifying the facts presented before them. The Officers in the Central Information branches invoke this Power to Call for data on a large number of persons from Banks, Registrars of Property, Municipal Authorities, Registrar of Co-Operative Societies, Automobile Companies and various other Authorities and Agencies.
Legislative History
The provisions empowering Income Tax Authorities to collect information from any person, including banks was first introduced by the Finance Act, 1956, with effect from 01.04.1956, in section 38(5) of the Income-tax Act, 1922.
Text of Section 38(5) of the Income-tax Act, 1922
38. Power to call for information. - The Income-tax Officer or Assistant Commissioner may, for the purposes of this Act,-
(5) 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 Income-tax Officer or the Assistant Commissioner giving information in relation to such points or matters, as, in the opinion of the Income-tax officer or the Assistant Commissioner, will be useful for, or relevant to, any proceeding under this Act.
The corresponding section 133(6) of Income-tax Act, 1961 (“the Act”) requires any person, including a banking company or any officer thereof, to furnish information and/or statements of account, etc., to the authority concerned, if a demand is made in respect thereof by such authority. But prior to its amendment by the Finance Act, 1995, the power to collect information from any person was available if such information was useful for or relevant to any proceeding under the Act.
Text of Section 133(6) of the Income-tax Act, 1961
Power to call for information.
(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 [1][Assessing Officer], the [2][Deputy Commissioner (Appeals), [3][the [4][Joint Commissioner] or [5][the Joint Commissioner (Appeals) or] the Commissioner (Appeals)], giving information in relation to such points or matters as, in the opinion of the [1][Assessing Officer], the [2][Deputy Commissioner (Appeals), [3][the [4][Joint Commissioner] or [5][the Joint Commissioner (Appeals) or] the Commissioner (Appeals)], will be useful for, or relevant to, any [6][enquiry or] proceeding under this Act:
[7][PROVIDED that the powers referred to in clause (6), may also be exercised by the [8][Principal Director General or Director-General], the [9][Principal Chief Commissioner or Chief Commissioner], the [10][Principal Director or Director] [11][or the Principal Commissioner or Commissioner or the Joint Director or Deputy Director or Assistant Director]:
[12][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 [10][Principal Director or Director] or [13][Principal Commissioner or Commissioner], [14][other than the Joint Director or Deputy Director or Assistant Director,] without the prior approval of the [10][Principal Director or Director] or, as the case may be, the [15][Principal Commissioner or Commissioner]:]
[16][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) of section 131 may exercise all the powers conferred under this section, notwithstanding that no proceedings are pending before it or any other income-tax authority.]
KEY NOTE
1. Substituted for “Income-tax Officer” by Direct Tax laws (Amendment) Act, 1987, with effect from 01.04.1988.
2. Substituted for “Appellant Assistant Commissioner” by Direct Tax laws (Amendment) Act, 1987, with effect from 01.04.1988.
3. Substituted for “or the Inspecting Assistant Commissioner” by the Finance (No. 2) Act, 1977, with effect from 10.07.1978.
4. Substituted for “Deputy Commissioner” by the Finance (No. 2) Act, 1998, with effect from 01.10.1998.
5. Substituted for “the Commissioner (Appeals” by the Finance Act, 2023, with effect from 01.04.2023.
6. Inserted by the Finance Act, 1995, with effect from 01.07.1995.
7. Inserted by the Direct Tax laws (Amendment) Act, 1987, with effect from 01.04.1989.
8. Substituted for “Director General” by the Finance (No. 2) Act, 2014, with retrospective effect from 01.06.2013.
9. Substituted for “Chief Commissioner” by the Finance (No. 2) Act, 2014, with retrospective effect from 01.06.2013.
10. Substituted for “Director” by the Finance (No. 2) Act, 2014, with retrospective effect from 01.06.2013.
11. Substituted for “and the Principal Commissioner or Commissioner” by the Finance Act, 2017, with effect from 01.04.2017.
12. Inserted by the Finance Act, 1995, with effect from 01.07.1995.
13. Substituted for “Commissioner” by the Finance (No. 2) Act, 2014, with retrospective effect from 01.06.2013.
14. Inserted by the Finance Act, 2017, with effect from 01.04.2017.
15. Substituted for “Commissioner” by the Finance (No. 2) Act, 2014, with retrospective effect from 01.06.2013.
16. Inserted by the Finance Act, 2011, with effect from 01.06.2011.
Prior to amendment by the Finance Act, 1995, up to 30.06.1995
Prior to amendment by the Finance Act, 1995, the powers conferred by the provisions of section 133(6) of the Act could be exercised only in case of a proceeding pending under the Act.
After amendment by the Finance Act, 1995, with effect from 01.07.1995
But after its amendment, such powers can be exercised by any income-tax authority not below the specified rank for the purpose of a general enquiry, whether or not any proceeding is pending.
Prior approval of the Director/Commissioner necessary while seeking for information when no proceeding pending [Second proviso to section 133(6)]
It was stated that, by virtue of the stipulation under the '2nd proviso' to section 133(6) of the Act, prior approval of the Director/Commissioner was necessary while seeking for information when no proceeding was pending and, as such, there was an inbuilt mechanism/control with regard to the use of power. The objective was to get information for curbing the menace of black money and to stabilize the economic base of the country.
Penalty for failure to furnish in due time statements or particulars mentioned in section 133
[Section 272A(2)(c)]
Section 272A(2)(c) provides that if any person fails to furnish in due time returns, statements or particulars mentioned in section 133 (information), he shall pay, by way of penalty, a sum of Rs. 500/- for every day during which the failure continue.
CBDT Instruction No. 4/2017 [F. No. 225/100/2017-ITA. ii], Dated 03.03.2017
Subject : Issue of notice under section 133(6) for verification of cash deposits under operation clean money
Vide Instruction No. 3/2017 dated 21-2-2017, in file of even number, CBDT has issued a SOP to be followed by the Assessing Officer(s) for Online Verification of Cash Transactions pertaining to the demonetisation period. In continuation thereof, the Board hereby prescribes a Template, to be used for issue of notices under section133(6) of the Income-tax Act, 1961 (‘Act’) in appropriate cases, for Online Verification of Cash Deposits. The format is enclosed herewith as Annexure.
2. Following issues may kindly be kept into consideration while issuing notices under section133(6) of the Act, in applicable cases:
(i) Notice under section 133(6) of the Act is required to be issued, after obtaining prior approval of Pr. CIT/CIT/Pr. DIT/DIT as provided in the Act, in cases where the 'person under verification' fails to file Online response in a timely manner in spite of issue of reminder by the Assessing Officer. The approval would be taken Online once the facility in ITBA module gets operationalised;
(ii) Notice shall be generated through the ITD System only. Hence, no hand written/typed notice is required to be issued by the Assessing Officer in an individual case;
(iii) Response to notice under section 133(6) of the Act has to be furnished within the stipulated period by the 'person under verification' only through the Online mode;
(iv) It is re-iterated that verification under ‘Operation Clean Money’ is to be made through the Online Verification Portal only in accordance with SOP dated 21.02.2017;
(v) In case no response is furnished within the specified timeframe, Assessing Officer may form a view that ‘person under verification’ has no plausible explanation to offer regarding the cash deposits in his/her bank account(s) and consequentially, the case may be escalated as ‘Not-Acceptable’ for further action in accordance with the procedure prescribed in the SOP of CBDT vide Instruction No. 3/2017 dated 21.02.2017.
3. This may be brought to the notice of all for necessary compliance.
(ANNEXURE)
Subject: Furnishing information under section 133(6) of the Income-tax Act, 1961 (‘Act’) regarding cash transactions made during 09.11.2016 to 30.12.2016 - Regarding
Dear. . . . . . . . .
Income-tax Department has received. . . . . . . . . information record(s) showing total cash deposits of Rs. . . . . . . . relating to you. The information in respect of these transactions has already been made available in the online verification portal.
2. You are hereby required to furnish the requisite information/particulars in the matter above, under section 133(6) of the Act, within 5 days of receipt of this communication. The response has to be furnished online only and there is no need to visit the Income-tax office for submitting the same. The steps for furnishing the response are as under:
Step 1 : Login to e-filing portal at https://incometaxindiaefiling.gov.in. If you are not registered with the e-filing portal, use the 'Register Yourself' link to register.
Step 2 : Click on “Cash Transactions 2016” link under “Compliance” section.
Step 3 : The details of transaction(s) related to cash deposits during 09.11.2016 to 30.12.2016 will be displayed.
Step 4 : Submit your online response for each transaction and keep acknowledgement for record.
3. Non-compliance of this notice may lead to forming a view that there is no plausible explanation in respect of cash so deposited and the matter may be further dealt with in accordance with the relevant provisions under the Act. Please also note that non-compliance within the prescribed time may attract penal proceedings under section 272A of the Act.
4. This issues with prior approval of Pr. CIT/CIT/Pr. DIT/DIT.
Note:
§ Please refer to the User Guide and Frequently asked Questions (‘FAQs’) which is available in the help section of the e-filing portal home page.
§ Kindly verify and update the email address and mobile number on the e-filing portal to receive electronic communication.
§ Please ignore this notice, if response has already been furnished in the matter.
CBDT Instruction F. No. 414/126/2000-IT (Inv. I), Dated 13.02.2001
Subject : Section 133 of the Income-tax Act, 1961 - Income - tax Authorities - Power to call information collection of general information from banks under section 133(6)
It has come to the notice of the Board that general information of various kinds in being called from the Banks under section 133(6) of the Income-tax Act.
2. In this regard I am directed to reiterate the contents of the Board's letter F. No. 415/6/2000-IT (Inv. I), dated 08.06.2000 (copy enclosed) in the matter and to request that general information under section 133(6) may be called for from the Banks only regarding cash transactions of Rs. one lakh and above and declaration of assets for loan/overdraft facilities in cases where the loan/overdraft is Rs. 50 lakhs or above. This restriction, however, would not apply where information is called for the exercise of powers under section 131.
Assessee did not respond to notices under Section 133(6); Sustains addition involving transaction with commodity traders for non-fulfilment of Section 68 prerequisites
Mumbai ITAT upholds addition made for unexplained cash credits received from three creditors as Assessee failed to discharge the primary onus of prima facie establishing the identity of the creditors, creditworthiness and the genuineness of the transaction; Refers to the Investigation Wing report categorically holding that one of the creditors (A.N. Commodity Broking), is not a genuine entity, but a shell company involved in arrangement of fake profit/loss, opines that, “...pattern of assessee established without any doubt that these transactions were entered into to manipulate the real figure of income earned by the assessee with the help of broking firms”; Refers to Kailash Gupta fraud case, who was arrested for alleged multi-crore fraud for abusing his position to favour family-run companies and observes that whole set up of exchange itself is under clouds and is primarily promoted by group of traders to accommodate each other in terms of getting fictitious profit or loss as desired by the members; Assessee-Company, was subject to reassessment on the basis of information received from the Investigation Wing that the Assessee brought unaccounted money in its books of accounts by undertaking transactions with third party concerns, namely, Ganpati Trading Co., AN Commodity Broking (P) Ltd. and Plasma Delatrade (P) Ltd.; Revenue completed the reassessment proceedings and made addition of Rs. 25.39 Lacs, Rs. 7.23 Cr and Rs. 55 Lacs respectively, on account of transactions with Ganpati Trading Co., AN Commodity Broking and Plasma Delatrade, which was confirmed by the CIT(A); ITAT considers Assessee’s submission that the Assessee received advance of Rs. 25.39 Lacs from Ganpati Trading Co. as a trade advance, however points out that the Assessee nowhere mentioned the name of the commodity and the nature of transaction for which the advance was paid, which was returned after almost 3 years without undertaking any transaction; Opines that the aforementioned facts cannot be seen in isolation vis-à-vis the ground realities of the business, as no prudent businessmen will leave his funds idle for 3 years without any transaction and charging any interest, states that the Assessee simply furnished ledger account of Ganapati Trading Co. in its books, however failed to provide the contra legder copy, which strengthens Revenue’s argument that Ganapati trading co. did not respond to notices under Section 133(6), casting a doubt on the very existence and genuineness of the party; Finds that the Assessee did not submit any financials, bank statements and Income Tax Returns of Ganapati Trading Co. to establish the creditworthiness, identity and genuineness of the transaction, thus, Assessee failed to discharge the primary onus to prima facie establish the identity creditworthiness of the creditors and the genuineness of the transaction; Likewise, with respect to additions on account of transactions with A.N. Commodity Broking and Plasma Delatrade, ITAT observes no margin money was paid by the Assessee to its brokers for carrying the transactions of commodity hedging and Future & Options transactions, which is a standard practice; Opines that since the genuineness of transaction with the aforementioned parties cannot be established, the transactions with all the three aforementioned parties are not genuine. [In favour of revenue] – [Advantage Overseas (P) Ltd. v. DCIT (CC) [TS-342-ITAT-2023 (Mum)] - Date of Judgement : 12.06.2023 (ITAT Mumbai)
Apart from sending the notice under section 133(6), the Revenue did not undertake any other exercise to support his contention that purchases were bogus – Havells’ purchases of Rs. 40 Lacs vis-a-vis Rs. 1000 Cr. turnover, not bogus, absent cogent reasons
Delhi ITAT allows Havells' appeal, deletes the disallowance of purchases made by the Revenue holding the same to be not genuine and holds that the said purchases cannot be treated to be not genuine on account of allegedly being an accommodation entry, since it is not supported by any cogent reasons; Observes, “the disallowance of purchases being not genuine as it is an accommodation entry, is not supported by any cogent reasons and is more in the nature of surmises and conjectures”; Accepts Assessee’s argument that by entering into bogus purchases of Rs. 40 Lacs when the turnover of Assessee company is more than Rs.1000 crores, the Assessee would not gain significantly; Assessee-Company, engaged in business of manufacturing of switchgears, energy meters, cables and wires, electrical fans, compact fluorescent lamp and related components and trading of luminaries lighting fixtures and exhaust fans, was subject to scrutiny; Revenue, for Assessment year 2006-07, on the basis of the findings of the search operation on third parties accommodation entry providers concluded that the Assessee made bogus purchases and accordingly made addition Rs. 40 Lacs holding the purchases to be not genuine; Subsequently, the Assessee was issued notice under Section 148 and Revenue reassessed Assessee’s income at Rs. 38.41 Cr; CIT(A) granted partial relief to Assessee whereas ITAT notes that in order to prove the genuineness of the purchases, Assessee had placed on record copy of the bill displaying the bill number, vehicle number through which it was transported and the stamp of the check post and the Certificate issued by the Commercial Taxes Department; Remarks that Revenue failed to conduct any enquiry to justify the conclusion that the bills are not genuine and dismisses Revenue’s argument that that the Certificate issued by Commercial Tax Department is not based on any cogent evidence; Relies on co-ordinate bench ruling in Varun Beverages, wherein it was held that mere fact that certain parties did not respond to the enquiries made by Revenue under Section 133(6) would not by itself be sufficient to warrant addition of expenses and dismisses Revenue’s argument that the concerned parties did not respond to the notice issued under Section 133(6), by observing that apart from sending the notice, the Revenue did not undertake any other exercise to support his contention that purchases were bogus; Thus, holds that Revenue was not justified in making the impugned addition and deletes the same. [In favour of assessee] (Related Assessment year : 2012-13 & 2013-14) – [Havells India Ltd. v. DCIT (Large Tax Payer Unit) [TS-825-ITAT-2022(DEL)] – Date of Judgement : 20.10.2022 (ITAT Delhi)]
Assessing Officer sought to reopen assessment in case of assessee on ground that it was a beneficiary of entries from a transaction with two entry operators and their sister concerns, however assessee in response to notice under section 133(6) had informed that they had no transaction with both entry operators and were not aware of their sister concerns, re-opening of assessment was not justified
Assessee submitted that assessment was sought to be reopened by way of impugned notice in its case beyond a period of four years from end of relevant assessment year on ground that it was a beneficiary of entries of Rs. 50 lakhs from a transaction with two entry operators and their sister concerns. Assessing Officer had proceeded on basis that since no assessment had been made in instant case, only requirement to initiate proceedings under section 147 was reason to believe. It was further pointed out that Assessing Officer had recorded that though information was called for under section 133(6), assessee had not filed any supporting evidence. It was pointed out that in fact, assessee had responded to said notice under section 133(6) and had informed that they had not made any transaction with both entry operators and were not aware of their sister concerns. It was submitted that despite aforesaid position, Assessing Officer had recorded reasons and had sought to reopen assessment of assessee. However, in entire reasons recorded, there was not even a whisper regarding any failure on part of assessee to disclose fully and truly all material facts. Therefore, assumption of jurisdiction by Assessing Officer under section 147, without there being any failure on part of assessee to disclose fully and truly all material facts, was without authority of law and thus, by way of ad interim relief, further proceedings pursuant to impugned notice seeking to reopen assessment in case of assessee were to be stayed. [In favour of assessee] (Related Assessment year : 2012-13) – [Shreenathji Cotgin (P) Ltd. v. ITO (2020) 115 taxmann.com 292 (Guj.)]
Notice under section 133(6) was issued against a deceased person, wife of said deceased person would have to comply with said notice for furnishing requisite information under said section
A notice under section 133(6) was issued against one, TVS, a first division clerk. The wife of TVS furnished an initial reply to the said notice of the Income tax Officer, that her husband had unfortunately expired even prior to the receipt of the said notice and she was not aware of his Tax matters and details of bank entries. Thus, she had filed instant petition, challenging the impugned notice issued under section 133(6) calling upon the addressee, TVS to explain the credit entry in his bank account.
Held : From the reply filed by the petitioner, the wife of the deceased Government Servant, prima facie, it appears that a large sum of Rs. 95.83 lakh was found to be in the credit of the Bank Account of a First Division Clerk of the City Civil Court, Bangalore, which was bound to raise a doubt or a query in the mind of the Income-tax Officer and therefore, when the Information was called from the Noticee under Section 133 (6) of the Act, the fact of death of the Noticee may not have been in the knowledge of the concerned Income Tax Officer. There is nothing on record to show that the fact of death was within the knowledge of the Respondent. Income Tax Officer and he still issued the Notice to a deceased person. The Legal Representatives including the petitioner, wife of late Mr. T.V. Sathyanarayana before this Court cannot protest or deny the obligation to furnish such information including the Bank details and relevant vouchers to be obtained from the concerned Bank of the husband of the present petitioner. After all, the wife of a person cannot plead ignorance about a huge cash inflow in her husband's bank account. Cutting short of such inquiry by invoking the extraordinary jurisdiction of this Court is likely to defeat the very purpose for which the said salutary provision has been enacted in the Income-tax Act, 1961. Therefore, this Court does not find any merit in the present petition filed by the petitioner. The same is liable to be dismissed and accordingly it is dismissed. [In favour of revenue] – [Mrs. S. Savithri v. ITO (2018) 400 ITR 513 : 301 CTR 734 : 253 Taxman 186 : 89 taxmann.com 341 (Karn.)]
In order to prove genuineness of purchases, assessee had furnished copies of purchase bills, delivery challans, confirmation of ledger accounts of suppliers, sales tax returns and sales tax challans of suppliers and their income tax returns, merely returning of notices under section 133(6) sent to those suppliers could not be sufficient to make additions under section 69C
Section 69C of the Income-tax Act, 1961 - Unexplained expenditure (Bogus purchases) - Assessee was engaged in business of wholesale trading in ready made garments. Assessing Officer received information from Sales Tax Department and from Director General of Income-tax, Mumbai that assessee had received accommodation entries from several parties, from whom he made purchases of certain amount. He issued notices under section 133(6) to such parties, which were returned by postal authorities with remarks ‘not known’, ‘unclaimed’ etc. Thus, he treated expenditure on purchases as unexplained expenditure under section 69C and made additions to assessee’s income. It was noted that all payments to suppliers were made through banking channels. Cross examination of suppliers was not allowed. Assessee had furnished copies of purchase bills, recovery challans, bank statements showing payments made by parties, confirmation of ledger accounts of suppliers, sales tax returns and sales tax challans of suppliers and their income tax returns. On facts, assessee had discharged onus of proving genuiness of transactions and merely returning back of notices under section 133(6) was not sufficient to hold that purchases made were bogus, thus, impugned additions was to be deleted. [In favour of assessee] (Related Assessment years : 2010-11 and 2011-12) – [Fancy Wear v. ITO (2017) 87 taxmann.com 183 (ITAT Mumbai)]
Dismisses co-operative banks’ challenge to Section 133(6) amendment, rejects ‘privacy’ infringement plea
Kerala High Court Division bench upholds Single Judge order dismissing co-operative banks’ (petitioners’) challenge to the constitutional validity of amendment by Finance Act, 1995 to Section 133(6) whereby words ‘inquiry’ were added to expand power to call information even in cases where no proceedings were pending; The co-operative banks (petitioners) had challenged Assessing Officer's notices seeking information under section 133(6) with respect to deposits & interest paid, citing the ground of violation of ‘right to privacy’; Accepting Revenue’s contentions, High Court’s Division Bench holds that right to privacy, would be subject to the reasonable restrictions which could be imposed by the State in exercise of its legislative power; High Court observes that ‘When a legislation, especially one in the fiscal realm is being examined by courts to check whether it infringes the right of individuals to privacy in own affairs, it has to be borne in mind that the larger public and economic interest of nation is to be balanced against such right to privacy’; High Court further holds that ‘All decisions which have espoused the right to privacy have been cautious in pointing out that such rights would not extend to militate against right of the State to gather information under its fiscal administration’; High Court notes Single Judge’s observation that right to privacy cannot be pleaded as a ground to invalidate a provision of the Income Tax Act, especially where the avowed object of the provision was to get details of financial transactions which could be associated with black money; High Court concludes that there is no ground to interfere with the decision of the learned Single Judge in exercise of appellate jurisdiction. [In favour of revenue] – [Pattambi Service Co-operative Bank Ltd. v. Union of India (2015) 53 taxmann.com 453 : [TS-348-HC-2016(KER)] (Ker.)]
Finds no Constitutional challenge in Section 133(6); Revenue can call for Information
High Court finds no merit in assessee's challenge of constitutional validity of Section 133(6) as amended by Finance Act, 1995 whereby words enquiry or” were added to expand power to call information to even those cases where no proceedings were pending; Concludes assessee failed to establish any constitutional infirmity, to hold the statute/amendment as ultra vires to the Constitution; Rejects assessee's contention that there was violation of right to privacy” and hence violation of Art 19(1)(g) which stipulates right to practice any profession /trade/ business; Relies on Supreme Court in Govind v. State of Madhya Pradesh and another [AIR 1975 SC 1378] to hold that even assuming that the right to privacy is itself a fundamental right, such fundamental right must be subject to restriction, on the basis of compelling ‘public interest' and there is no prohibition on the State in gathering information for preventing tax evasion and curb black money ; Relies on Supreme Court Constitution bench ruling in Vivian Joseph Ferreira and another v. Municipal Corporation of Greater Bombay and others [(1972) 1 SCC 70)], Supreme Court ruling in R.K. Garg v. Union of India (1981) 4 SCC 675 (SC) and Punjab Distilling industries Ltd. v. CIT, Punjab [AIR 1965 SC 1862] while examining constitutional validity; Also rejects assessee's contention that there was no jurisdiction for invoking powers under section 133(6) and conferring absolute powers on Govt officers was arbitrary, relying on division bench ruling in P.K. Aboobacker & other v. State of Kerala [1979 (44) STC 250 Kerala; Also reiterates principle that the ‘taxation entry’ confers powers upon the legislature to legislate for matters ‘ancillary or incidental’, including the provisions for evasion of tax relying on Supreme Court ruling in Commissioner of Commercial Tax v. R. S. Jhavar [(67) 20 STC 453]; Distinguishes Supreme Court rulings in State of Punjab v. Khan Chand State of (1974) 1 SCC 549 (SC) and Maneka Gandhi v. Union of India (1978) 1 SCC 248 = AIR 1978 SC 597) [In favour of revenue] – [Pattambi Service Co-operative Bank Ltd. v. Union of India [TS-828-HC-2014(KER)] – Date of Judgement : 20.12.2014 (Ker.)]
Information enquiry under section 133(6) valid even if no proceedings pending
In view of provisions of section 133(6) as amended by Finance Act, 1995, assessing authority is empowered to issue notice calling for general information for purpose of any enquiry even in a case where proceeding is not pending against assessee after obtaining prior approval of Director or Commissioner, as the case may be, before issuance of such notice
Before the introduction of amendment to section 133(6) in year 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 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 may be 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.
The powers undersection 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 assessee’s customers which have cash transactions or deposits of Rs. 1 lakh 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. In light of the aforesaid, it is held 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 lakh.
Therefore, the Division Bench of the High Court was justified in its conclusion that for such enquiry undersection 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 favour of revenue] – [Kathiroor Service Cooperative Bank Ltd. v. CIT(CIB) (2014) 360 ITR 243 : 220 Taxman 41 : (2013) 263 CTR 129 : 39 taxmann.com 49 : [TS-564-SC-2013] (SC)]
Assessee in order to prove genuineness of transactions relating to receipt of booking amount of flats, supplied address and PAN of concerned persons, it had discharged its primary onus and, therefore, Assessing Officer could not make addition of said amount to assessee’s taxable income without making proper inquiries under section 133(6)
Assessee received certain amount from four persons on account of booking of flats. In order to establish genuineness of transactions, assessee supplied address and PAN of concerned persons to Assessing Officer. Assessing Officer, however, rejected assessee’s explanation and added said amount to its taxable income. Tribunal opined that since assessee had discharged primary onus cast on it, Assessing Officer should have made inquiry under section 133(6). In absence of any such enquiry, Tribunal deleted impugned addition.
Held : We are in complete agreement with CIT (A) and the Tribunal both, who have concurrently held that the onus which was required to be discharged on the part of the assessee respondent was duly done. Not only the identity of the persons concerned but also the PAN numbers were before the Assessing Officer. In the event of any further inquiry, it was open to the Assessing Officer to make inquiry under section 133(6) of the Act. On its choosing not to exercise such powers, it was erroneous on the part of the Assessing Officer to make addition of a sum of Rs. 23,00,000/-, despite such cogent evidences having been put-forth by the assessee. Both the authorities have concurrently held the issue in favour of the assessee and moreover, the entire issue is essentially in the realm of facts. No question of law, therefore, arises from Tribunal’s order and hence this issue deserves no further consideration. [In favour of assessee] – [CIT v. Chanakya Developers (2014) 222 Taxman 164 : 43 taxmann.com 91 (Guj.)]