| COURT: | |
| CORAM: | |
| SECTION(S): | |
| GENRE: | |
| CATCH WORDS: | |
| COUNSEL: | |
| DATE: | (Date of pronouncement) |
| DATE: | November 13, 2013 (Date of publication) |
| AY: | |
| FILE: | |
| CITATION: | |
| Click here to download the judgement (kathiroor_133_6_enquiry.pdf) |
S. 133(6): AO empowered to launch fishing and roving enquiry with a view to detect tax evasion
The ITO issued a issued a notice u/s 133(6) to the assessee-bank u/s 133(6) of the Act calling for general information regarding details of all persons who have made cash transactions and time deposits of Rs. 1,00,000/- and above for the period of three years between 01.04.2005 and 31.03.2008. The assessee claimed that s. 133(6) does not empower the ITO to conduct a roving or fishing enquiry into the affairs of the assessee or regarding the deposits made by its customers. It was also contended that the AO can only seek “case specific” or “area specific” information u/s 133(6). The High Court dismissed the Writ Petition. On appeal by the assessee to the Supreme Court HELD dismissing the appeal:
The legislative intention behind s. 133(6) was to give wide powers to the income-tax department to gather general particulars in the nature of survey and store those details in the computer so that the data so collected can be made use of for checking evasion of tax effectively. It would not fall under the restricted domains of being “area specific” or “case specific.” S. 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 (Karnataka Bank Ltd vs. Government of India (2002) 9 SCC 106 followed; M.V. Rajendran vs. ITO 260 ITR 442 (Ker) approved)
The power confirmed by the Supreme Court is related to the CIB wing of the Income Tax Department and not to Assessing Officer, therefore it cannot be said that the jurisdictional assesing officer have the same power without any limit particularly when the proviso clearly laid that the power in respect of an inquiry, in a case where no proceeding is pending, shall not be exercised by any income-tax authority below the rank of Director or Commissioner without the prior approval of the Director or, as the case may be, the Commissioner. In the case before Supreme Court information were called by the Income Tax Officer (CIB) and not by the Assessing Officer having jurisdiction over the noticee, but unfortunatly in the Judgement designation ‘Assessing Officer’ is cited more frequently, which may lead to misuse of the judgement by the Assessing Officer calling information without there any pendancy of the proceeding.
Further the ITO(CIB) in itself has no unlimited power to calling any informmation without prior approval from the Director/ Commissioner as in the case before Supreme Court notice was issued after obtaining approval from CIT(CIB).
The powers to collect information is inherent and unfettered for any tax administration. However, the AO has no power to seek information, unless there is some proceeding pending and the information is sought in connection with the same. In exceptional circumstances which are decided by the senior officer at the level of the Commissioner, general information can be called for even without any proceedings pending. There are therefore, checks and balances both legally and administratively to avoid misuse of information mongering by any authority, be it AO or ITO (CIB).
I have gone through the judgment.With due respect to the Hon court, I am of the opinion that the decision requires reconsideration. Section 133 nowhere grants power to inquire but only the power to collect information which in the opinion of the authority will be useful or relevant for any inquiry or proceeding under the Act. So inquiry means an inquiry as envisaged under the Act and in fact the Act contains several provisions for inquiry. It is to enable the authorities to collect the information relevant to such inquiry that the power is given under 133. The attention of the court has not been drawn to this very important aspect and it is clear that section 133 as such do not grant power of inquiry.