1993 (8) TMI 58 - HC - Income Tax

Summary

Issues Involved:
1. Validity of notices issued u/s 133(6) of the Income-tax Act, 1961.
2. Interpretation of the term "any proceeding under this Act" in section 133(6).
3. Whether the information requested pertains to a class of persons under the Income-tax Act.

Summary:

1. Validity of Notices Issued u/s 133(6):
The petitioner, a private limited company operating a credit card business, challenged the validity of notices issued by the Income-tax Department demanding addresses of cardholders with annual expenditures over Rs. 5,000 and later, those who made payments exceeding Rs. 20,000. The petitioner argued that such blanket information requests were beyond the powers conferred u/s 133(6) of the Income-tax Act, 1961.

2. Interpretation of "Any Proceeding Under This Act":
The court examined Chapter XIII of the Income-tax Act, particularly section 133(6), which allows officers to require information useful for or relevant to any proceeding under the Act. The court held that the term "any proceeding under this Act" refers to an existing proceeding. The power to seek information u/s 133(6) is contingent upon its relevance to a current proceeding, not hypothetical future proceedings. The court cited the case of Jamnadas Madhavji and Co. v. J. B. Panchal, ITO [1986] 162 ITR 331, to support this interpretation, emphasizing that statutory powers must be exercised with reference to existing proceedings.

3. Class of Persons Under the Income-tax Act:
The respondents argued that individuals who paid Rs. 5,000 or Rs. 20,000 or more to the petitioner constituted a class of persons for whom information could be requested u/s 133(6). The court rejected this contention, stating that each cardholder is an individual assessee and does not form a class of persons for income-tax assessment purposes merely by holding a credit card from the petitioner.

Conclusion:
The court concluded that the requirements of section 133(6) were not satisfied as the respondents sought general information unrelated to any existing proceeding. The petition was allowed, and the rule was made absolute in terms of prayers (a) and (b), with costs awarded to the petitioners.