2002 (12) TMI 68 - HC - Income Tax

Income Tax Survey - co-operative banks and societies are challenging the validity of notices issued to each of them under section 133(6) of the Income-tax Act by various authorities under the Act. - I hold that the notices are within the powers of the officers who issued the same and the co-operative societies and co-operative banks are bound to furnish the particulars called for in the notices failing which the Department will be free to conduct search or take penal action permissible under the Act. However having regard to the pendency of these original petitions I grant the petitioners six weeks time to furnish the particulars to the concerned officers. Time for furnishing information called for under the impugned notices in these original petitions are extended by six weeks from today. The original petitions are devoid of any merit and are dismissed.

Summary

Issues Involved:
1. Validity of notices issued under section 133(6) of the Income-tax Act to co-operative societies and co-operative banks.
2. Jurisdiction and applicability of section 133(6) to co-operative societies and co-operative banks.
3. Alleged privileges and exemptions of co-operative societies under the Income-tax Act.
4. Alleged discrimination against co-operative societies compared to banking companies.

Detailed Analysis:

1. Validity of Notices Issued Under Section 133(6):
The co-operative societies and co-operative banks challenged the validity of the notices issued under section 133(6) of the Income-tax Act, which required them to furnish detailed information, including names and addresses of depositors with deposits above Rs. 50,000. The court examined whether such notices could be issued to these entities and concluded that section 133(6) applies to all persons, including co-operative societies and co-operative banks.

2. Jurisdiction and Applicability of Section 133(6):
The court analyzed the definition of "person" under section 2(31) of the Income-tax Act, which includes "every artificial juridical person." It was determined that co-operative societies and co-operative banks fall within this definition. Therefore, the court held that section 133(6) squarely applies to these entities, and they are not immune from proceedings under this section. The argument that the specific inclusion of banking companies implies the exclusion of co-operative societies was rejected.

3. Alleged Privileges and Exemptions:
The petitioners argued that co-operative societies enjoy certain privileges under the Income-tax Act, such as exemptions under section 80P and immunity from TDS on interest receipts. The court clarified that these provisions do not exempt co-operative societies from scrutiny under section 133(6). The exemption under section 80P and immunity from TDS are specific to certain incomes and do not imply a general exemption from the Income-tax Act's provisions. Therefore, the activities of co-operative societies are subject to scrutiny by the Income-tax Department.

4. Alleged Discrimination Against Co-operative Societies:
The petitioners contended that co-operative societies were being discriminated against compared to banking companies, which were allegedly not subjected to similar notices. The court rejected this argument, stating that no banking company, including nationalized banks, is immune from inquiries under section 133(6). The court emphasized that section 133(6) allows for the collection of general information and is not limited to inquiries about specific persons. Therefore, the petitioners' claim of discrimination was found to be baseless.

Conclusion:
The court held that the notices issued under section 133(6) were within the powers of the authorities and that co-operative societies and co-operative banks are required to furnish the requested information. The court granted the petitioners six weeks to comply with the notices and dismissed the original petitions as devoid of merit.