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2015 (1) TMI 1121 - HC - Income TaxConstitutional validity of section 133(6) of the Income Tax Act, 1961 to the extent the words "enquiry or" have been added thereto, also incorporating "second proviso" - Held that:- The fact that the petitioners' Bank is a society registered under the Kerala Co-operative Societies Act/Rules and that there is a separate procedure for incorporation/registration/functioning/control and regulation including auditing of funds etc., are not at all germane to the course and proceedings to be pursued in terms of Section 133(6) of the Income Tax Act. The provisions of the Co-operative Societies Act/Rules may be relevant in so far as the day-to day activities of the Society are concerned . But scope of the enquiry under the Income Tax Act is entirely different and so also is the object/purpose to be achieved . The said enquiry is not in relation to the particulars of loans given, but in relation to the particulars of the deposits made by the depositors or as to the extent of interest received by them, to the extent it is relevant under the provisions of the Income Tax Act. In so far as 'Explanation (2)' to Section 132 of the Income Tax Act, dealing with search and seizure, categorically states that the word 'proceeding' includes a future proceeding as well; the inclusion of the word 'enquiry or' under Section 133(6) of the Act, by the law makers as per the Finance Act, 1995, is having more significance and it is incidental to the scope and object to be achieved , which cannot be nullified. A Constitution Bench of the Apex Court has held in Vivian Joseph Ferreira and another v. Municipal Corporation of Greater Bombay and others [2002 (11) TMI 112 - SUPREME COURT OF INDIA) that, taxing statute will become valid, if it is within the legislative competence, if it is for public purpose and further, if it does not violate the fundamental right guaranteed under Part III of the Constitution of India. All the said three requirements are satisfied in the instant case and as such, the challenge raised by the petitioners cannot be held good; more so when the Apex Court has made it clear in R.K. Garg v. Union of India. [1981 (11) TMI 57 - SUPREME Court], that the laws relating to economic activities should be viewed with greater latitude, than the laws touching civil rights, such as freedom of speech or religion etc. Further, in view of the law declared by the Apex Court in Punjab Distilling industries Ltd. v. Commissioner of Income Tax, Punjab [ 1965 (2) TMI 6 - SUPREME Court], constitutional validity of an Act can be supported on the ground that it was enacted to prevent evasion of tax. The amendment brought about as per the Finance Act 1995, adding the words 'enquiry or' and also the 'second proviso' is quite incidental to the 'main provision' and hence beyond challenge. The apprehension expressed from the part of the petitioners that, if the information as sought for is given to the respondent Department, there is a chance for misuse/abuse, is without any basis. The confidentiality of the information gathered by the Income Tax Department is well taken care of by Section 138 of the Income Tax Act.It is well settled that the 'taxation entry' confers powers upon the legislature to legislate for matters 'ancillary or incidental', including the provisions for evasion of tax. This has been made clear by a Constitution Bench of the Apex Court in Commissioner of Commercial Tax v. R.S. Jhavar [1967 (8) TMI 37 - SUPREME Court]. This Court finds that the petitioners have not succeeded in establishing any constitutional infirmity, to hold the statute/amendment as ultra vires to the Constitution. Accordingly, interference is declined and all the writ petitions are dismissed. - Decided against assessee.
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