M/S. Chennithala Thripperumthura ... vs Income Tax Officer(Tds)
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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

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

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

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

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

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

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

[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

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

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.