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M/s. Kakoor Service Co-operative Bank Ltd., M/s. Edathala Service Cooperative Bank Limited M/s. Panangad Service Co-op Bank Ltd., M/s. Muhamma Service Co-op Bank Ltd., M/s. Udayamperoor Service Coop Bank Ltd., M/s. Puthucode Service Co-op Bank Ltd. Versus The Joint Director of Income Tax, (Intelligence) , Kochi., The Joint Director of Income Tax (I&CI)

2018 (1) TMI 548 - ITAT COCHIN

Penalty u/s. 274 r.w.s.272(2)(c) - not furnishing the information called for u/s 133(6) - Held that:- The assessee has not offered any valid reason for not furnishing the information called for u/s 133(6) of the Act. Many of the notices issued by the ITO (Intelligence) were never responded to by the assessee. In many instances the Assessing Officer has mentioned that when they had approached, the assessee Society, for seeking information u/s 133(6) of the Act, there was total lack of co-operatio .....

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, 217 , 194 , 159 , 197 , 196 , 195 , 152 , 204 ,206 , 202/Coch/2017 - Dated:- 23-8-2017 - M/s. Elavally Service Co-op Bank Ltd. , M/s. Vallapuzha Service Co-op Bank Ltd., M/s. Orumanayur Service Co-op Bank Ltd., M/s. Athanavad Service Cooperative Bank Limited, M/s. Mullassery Service Cooperative Bank Ltd., M/s. Purathur Service Cooperative Bank Ltd., M/s. Triprangode Service Cooperative Bank Ltd., M/s. Tirunnavaya Service Cooperative Bank Ltd., M/s. Chavakkad Service Cooperative Bank Ltd., M/s. .....

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E K.,JUDICIAL MEMBER: These 21 appeals filed by different assessee s are directed against various orders of the CIT(A)-III, Kochi for different assessment years. 2. Since common issues and identical arguments were raised in all these appeals, they were heard together and are being disposed of by this consolidated order for the sake of convenience and brevity. 3. Identical grounds are raised in all these appeal and they read as follows: 1. On the facts and in the circumstances of the case and in .....

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section. 2. The Commissioner of Income-tax(Appeals) ought to have seen that the information u/s. 133(6) shall be called for only for the purpose of the Income Tax Act 1961 and no such purpose was mentioned in the notice issued by the Income Tax Officer (Intelligence), Kochi. 3. The Commissioner of Income-tax(Appeals) ought to have seen that the information called for u/s. 133(6) should be useful for, or relevant to any enquiry as instructed in para 4.3 of Chapter 4 of Manual of Office Procedure .....

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u/s. 133(6) and that there was no mention in the notice issued by Income Tax Officer (Intelligence) about any such enquiry under the Income Tax Act 1961. 5. The Commissioner of Income-tax(Appeals) ought to have seen that the imposition of penalty is time barred u/s. 275(1)(c) of The Income Tax Act 1961 in as much as the proceedings for imposition of penalty was initiated on 12-08-14, the date of notice issued by the Income Tax Officer (Intelligence), Kochi for the initiation of such proceedings. .....

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y be taken up for adjudication first and the decision rendered therein would have application in other appeals as well. 5. The facts in relation to I.T.A. No. 473/Coch/2015 are as follows: The assessee is a Primary Agricultural Co-operative Society. The Income Tax Officer(Intelligence), Kochi issued notice u/s. 133(6) of the I.T. Act vide letter dated 10/09/2013 to the Secretary of the assessee-Society wherein following information was sought for. Sl. No. Information Required 1 Details of deposi .....

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bove information was not furnished to the Department. Therefore, the Joint Director of Income Tax (Intelligence), Kochi initiated penalty proceedings u/s. 272A(2)(c) of the Act. Though the Secretary of the assessee-Society appeared before the officer, in the course of penalty proceedings, assessee did not furnish the required information. Therefore, the Joint Director of Income Tax(Intelligence), Kochi imposed penalty of ₹ 11,400/- u/s. 274 r.w.s. 272A(2)(c) of the I.T. Act for non furnish .....

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d the appeal of the assessee. The CIT(A) placed reliance on the judgment of the Hon ble Apex Court in the case of Kathiroor Service Co-operative Bank Ltd. and others vs. Commissioner of Income Tax and others (2013) 360 ITR 243 and held that the ITO(Intelligence) has the authority under the Income Tax Act to issue notice u/s. 133(6) of the Act. The CIT(A) also rejected the assessee s other contention that the penalty order is barred by limitation. 7. Aggrieved by the order of the CIT(A), the asse .....

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ific power is issued the in the section to the officers who are 1) Assessing Officer 2) The Deputy Commissioner (Appeals) 3) The Joint Commissioner or Commisisoner(Appeals) 4) Director General 5) Chief Commissioner and 6) The Director. There are other nomenclature officers similar or above the said authorities but they do not have the power u/s. 133(6). But the Notification NO. 77/2014 [F. NO. 187/37/2014(I.T.A. I)/SO 3125(E), DATED 10-12-2014 of CBDT authorizes the Director (I&CI) Kochi to .....

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dings itself is void abinitio. 2. By the Finance Act of 1987 (1998 amendment) the word income Tax Officer was replaced by the Assessing Officer . The implications of this amendment were: a) Before the 1988 amendment any Income Tax Officer had power u/s. 13(6) to call for information. After the amendment an Income Tax Officer who is also an Assessing Officer only has the power u/s. 133(6). The Income Tax Officer(Intelligence) is not an Assessing Officer or Jurisdictional Assessing Officer of the .....

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t the penalty order was issued by the Income Tax Officer(Intelligence) on 19.09.2014 before the delegation of Power. So the penalty order would not sustain 4. It is most respectfully submitted that penalty proceedings was initiated on the basis of notices issued by none of the authorities mentioned in Section 133(6) of the Income Tax Act 1961. Whether there is an authorization to Act and issue notice by Income Tax Officer(Intelligence) u/s. 2(7) a read with S.120? Here the Income Tax Officer(Int .....

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garding the account holder with cash transactions or deposits of more than ₹ 1,00,000/- . [Emphasis supplied]. So it is clear that the Hon ble Apex Court has find that the power to call for information u/s. 133(6) is vested with Assessing Authority and not anybody else. Approval of Commissioner/Director for conducting inquiry under Section 133(6) does not give the Income Tax Officer(Intelligence) power of an Assessing Officer u/s. 2(7)(A) and cannot be construed as an authorization under S .....

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e Courts and Authorities which upheld the notices u/s. 133(6) had no occasion to consider this aspect. The present inquiry u/s. 133(6) has no nexus with any enquiry under the Act and therefore is bad in law. Hon ble Supreme Court in Union of India (UOI) and Ors. Vs. Gopal Das Gupta reported in [1987] 167 ITR 39 (SC) has clearly differentiated the scope of enquiry in its ordinary parlance and enquiry under the Act . 6. There was no formation of opinion. Under Section 133(6) Information in relatio .....

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ntexts cannot be mere whims and fancies of the officer who exercises the power. We most respectfully submit that the notices issued u/s. 133(6) by the Income tax Officer(Intelligence), was not in order in the absence of such formation of opinion. 7. There was no mention of the purpose or usefulness or relevance of the information sought for, expressly or implied, at any sage of the proceedings and therefore the inquiry was against the provision of Section 133(6). As observed by Hon ble High Cour .....

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or questions to gather information either before the initiation of proceedings or during the pendency of proceedings; such information being useful for or relevant to the proceeding under the Act. We believe that the onus to substantiate the usefulness or relevance under the Act is on the Officer who called for the details. 8. The penalty was imposed after a lapse of 6 months from the date of issue of notice by the Income Tax Officer (Intelligence) giving warning of penalty and therefore order o .....

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e under bona fide belief that the issue was yet to be resolved. We understand that the dispute is still under consideration of the Division Bench of Hon ble High Court and remains Res Integra. Failure to furnish the information is not intentional as the subject matter is under judicial review. Therefore, the order of penalty u/s. 272(A)(c) is to be kept in abeyance till the decision come from the Hon ble High Court. 11. The information is sought for curbing Money laundering. The question is that .....

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nish the details called for by the Income Tax Officer. The Income Tax Officer (Intelligence) Alleppey again on 19/05/2014 request the society to furnish the details called for, informing the Society the failure to do so will attract penalty u/s. 272A(2). Even then no reply was filed. The Assessee has challenged the validity of notice u/s. 133(6) issued by the Income Tax Officer(Intelligence), Alleppey, stating that power to call for information u/s. 133(6) is vested with Assessing Officer, the D .....

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3 arising out of S.L.P.(C) No. 3976 of 2010 in the case of Kathiroor Service Co-op Bank Ltd. Vs Commissioner of Income Tax (CIB) (copy enclosed). In the present case notice was issued only after obtaining approval of the Director of Income Tax (Intelligence). Regarding the argument that the order is barred by limitation of time is not correct, as verified by the CIT(A) as notice u/s. 274 was issued on 12/8/2014 and the order imposing penalty as was passed on 19/9/2014 well with in the time limit .....

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Act; (ii) the order passed u/s 272A(2)(c) is barred by limitation; (iii) there was reasonable cause, as mentioned in section 273B of the Act for non furnishing information sought u/s 133(6); therefore, penalty u/s 272A(2) ( c) of the I T Act is to be quashed. 8.1 I shall take up for adjudication each of the above three contentions as under: i) ITO (Intelligence) does not have jurisdiction to issue notice u/s 133(6)of the I T Act; Section 133(6) of the I T Act 1961 is unambiguous and clear. The d .....

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id provision, with effect from 1. 7.1995. The effect of the said amendment is that, the power to call for information under the un-amended Act, which was confined only in relation to a 'pending proceeding' came to be widened, and even in a case where no proceeding was pending, such information could be called for as part of the enquiry, subject to the rider that, such power was not to be exercised by any income tax authority below the rank of Director or Commissioner without the prior ap .....

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, any proceeding under the Act which means that these provisions can be invoked only in cases where the proceedings are pending and not otherwise. This acts as a limitation or a restraint on the capability of the Department to tackle evasion effectively. It is, therefore, thought necessary to have the power to gather information which after proper enquiry, will result in initiation of proceedings under the Act. 41.3 With a view to having a clear legal sanction, the existing provisions to call fo .....

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s power in respect of an inquiry in a case where no proceeding is pending, only with the prior approval of the Director or the Commissioner." 8.2 In the instant case, notice u/s 133(6) of the Act was issued by the ITO (Intelligence) after obtaining necessary approval from the Director of Income Tax (Intelligence). The Hon ble Supreme Court in the case of Kathiroor Service Co-op Bank Ltd vs CIT (CIB) & others, reported in 360 ITR 243 have considered an identical case and decided that the .....

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ot;. Section 133(6) does not refer to any enquiry about any particular person or assessee, but pertains to information in relation to "such points or matters" which the assessing authority issuing notices requires. This clearly illustrates that the information of general nature can be called for and names and addresses of depositors who hold deposits above a particular sum is certainly permissible. 20. In the instant case, by the impugned notice the assessing authority sought for infor .....

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ial institution requiring it to furnish information regarding the account holder with cash transactions or deposits of more than ₹ 1,00,000. 21. Therefore, we hold that the Division Bench of the High Court was justified in its conclusion that for such enquiry under section 133(6) the notice could be validly issued by the assessing authority. 22. In view of the above, the appeal requires to be dismissed and accordingly, stands dismissed. 8.3 In the light of the judgment of the Hon ble Apex .....

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llip;………….. (c ) in any other case after the expiry of the financial year in which the proceedings, in the course of which action for the imposition of penalty has been initiated, are completed, or six months from the end of the month in which action for imposition of penalty is initiated, whichever period expires later. 8.5 Admittedly, penalty proceedings u/s 272A(2)(c) was initiated on 12.8.2014 by issuance of notice u/s 274 of the I T Act and the order imposing pen .....

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assed only on 30.9.2003 by which time, six months period mentioned u/s 275(1)(c ) had already expired. The contention of the ld AR that notice issued u/s 133(6) should be reckoned for considering the time limit u/s 275(1)( c) of the Act is de-void of any merits; because Section 275(1)( c) prescribes the time limit only from the date of initiation of penalty proceedings; namely issuance of notice u/s 274 of the Act. For the aforesaid reasons, I hold that the order passed by the Jt Director of Inc .....

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