2010 (2) TMI 624 - HC - Income Tax

Enquiry notice to furnish particulars in connection with proceedings under section 201 and 271C Notice under section 131 Prior permission of Director/Commissioner not needed

Summary

Issues:
1. Sustainability of exhibit P1 notice issued by the first respondent seeking certain details from the petitioner societies.
2. Jurisdiction and competence of the issuing authority.
3. Compliance with the dictum laid down by the apex court.
4. Definition of "banking company" as per apex court rulings.
5. Definition of "person" under the Income-tax Act, 1961.
6. Constitutionality of section 2(31) of the Income-tax Act.

Analysis:
1. The sustainability of exhibit P1 notice issued by the first respondent was challenged on various grounds. The petitioners contended that the issuing authority lacked jurisdiction and competence to issue the notice. Additionally, concerns were raised regarding the notice's compliance with the dictum established by the apex court, specifically referencing cases related to banking companies and the definition of "person" under the Income-tax Act, 1961. Furthermore, the constitutionality of section 2(31) of the Income-tax Act was questioned.

2. The petitioners argued that the notice issued under exhibit P1 was not in accordance with the requirements of the Income-tax Act, specifically regarding the necessity of obtaining "prior permission" as per the "second proviso" to section 133(6). The respondents, however, contended that the notice was issued with reference to sections 201(1), 201(1A), and 271C, and not under section 133. The court considered previous judgments and appeals related to the interpretation of section 133(6) and the necessity of prior permission, highlighting the ongoing legal challenges and the interim stay granted by the apex court.

3. The court examined the contents of exhibit P1 notice and differentiated between the information sought under the first and second parts of the notice. It was emphasized that the notice was related to proceedings under sections 201(1), 201(1A), and 271C, rather than section 133. The court clarified that the authority had the power to seek information under section 131 and that the petitioners were obligated to provide the requested details, subject to appeal rights provided under the Income-tax Act.

4. Ultimately, the court dismissed the challenges against the impugned notices, ruling that no interference was warranted. The writ petitions were consequently dismissed, affirming the validity of the exhibit P1 notice and the authority's right to seek information in connection with the specified proceedings under the Income-tax Act.