Section 133

Section 133 — the law in short

What the courts have decided on section 133, in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.

• Kathiroor Service Co-operative Bank Ltd v CIT (CIB) Supreme CourtHelps departmentJudgment not reachable
  The department has asked my bank for the names and addresses of every customer whose cash transactions or deposits crossed one lakh over the last three years. There is no assessment or enquiry pending against anybody. Can a notice under section 133(6) be issued at large like this?
  Yes. The Supreme Court held that the powers under section 133(6) are in the nature of survey and a general enquiry to identify persons who are likely to have taxable income and whether they are in compliance with the provisions of the Act, and that they do not fall under the restricted domains of being area specific or case specific. The section does not refer to an enquiry about any particular person or assessee but to information in relation to such points or matters as the authority issuing the notice requires, so information of a general nature can be called for and the names and addresses of depositors holding deposits above a particular sum are certainly permissible. On the facts, the notice had been issued after obtaining the approval of the Commissioner of Income-tax, Cochin, and the appeal was dismissed.
• Karnataka Bank Ltd v Secretary, Government of India Supreme CourtHelps department
  The bank has a s.133(6) notice asking for customer loan-repayment details and there is no assessment pending on anyone. Can the officer do that?
  Yes. After the second proviso was inserted in 1995, s.133(6) may be invoked when no proceeding is pending at all. The Supreme Court held that no enquiry need have commenced before the sub-section is used, and that the only safeguard is the prior approval of the Director or Commissioner. An omnibus notice to a bank about its customers is within the power.
• Chennithala Thripperumthura Service Co-op Bank Ltd v ITO (TDS) High CourtHelps departmentNo later treatment found
  We are exempt from deducting tax on these deposits. Does that also mean we need not give the information?
  No. The Court held that an exemption from deduction under s.194A(3)(viia) does not carry with it any exemption from furnishing information under s.133(6). It rejected the jurisdictional challenge because the notice had been issued after obtaining prior approval from the Commissioner, and dismissed the petition.
• Enanalloor Service Co-operative Bank Ltd v ITO (I & CI) High CourtHelps departmentNo later treatment found
  The notice came from an Income-tax Officer (Intelligence), not from my Assessing Officer. Does he have the power?
  Yes. A Division Bench held that the expression 'income-tax authorities' is of wide amplitude and also includes the Assessing Officer, that the s.133(6) procedure is akin to a survey, and that the powers are in the nature of a survey and a general enquiry to identify persons who are likely to have taxable income. On who may issue, the Bench adopted the Kerala High Court's earlier judgment in Kodur Service Co-operative Bank Ltd, which it reproduced within its reasons and which held that by virtue of the notification of 19 August 2011 and the documents under it the Income-tax Officer (Intelligence) is the authorised person. The appeals were dismissed and the penalties stood.
• Pattambi Service Co-operative Bank Ltd v Union of India High CourtHelps departmentNo later treatment found
  Can s.133(6) itself be challenged as an unreasonable invasion of privacy or an excessive delegation?
  Not on the grounds argued here. The Court held the petitioners had not established any constitutional infirmity in the sub-section or in the 1995 amendment, and declined interference. It treated the prior-approval requirement in the proviso as the in-built mechanism that keeps the power within bounds.
• Dr. V.S. Chauhan v Director of Income Tax (Investigation) High CourtHelps departmentNo later treatment found
  The letter from the Investigation wing cites a provision that does not exist. Is it void for that?
  No. The Court held that a notice issued under a wrongly cited or non-existent provision is not for that reason invalid if the authority had the power under an appropriate provision. A letter purporting to be under 'section 133(1A)' was sustained as referable to s.133(6) read with s.135. The petitions were dismissed, and also as barred by laches after a two-year delay.
• Kechery Service Co-operative Bank Ltd v CIT (CIB) High CourtHelps departmentNo later treatment found
  We accept we have to answer, but the notice asks for depositor details going back years and we cannot do it in the time given. What relief is there?
  Time, not exemption. A Division Bench applied the Supreme Court's construction of s.133(6) and upheld the notices calling for depositor names and addresses above a threshold, holding that no enquiry need have commenced before the power is used and that the approval of the Director or Commissioner is the only safeguard. It then granted the appellants two further months to comply.
• U.G. Upadhya v Director of Income-tax High CourtHelps department
  The notice asks for the names of every depositor over a threshold. Is that not a fishing enquiry?
  A Division Bench held it is not. The object of a s.133(6) notice is to collect information useful for or relevant to an enquiry for widening the tax base and unearthing undisclosed money, and a demand for depositor details is within that object. The approval required by the second proviso had been obtained, and the notices were upheld.
• Karnataka Bank Ltd v Secretary, Government of India (Karnataka High Court) High CourtHelps department
  The approval under the proviso was a single general approval covering a class of notices, and we already gave the department this information once. Are either of those answers?
  Neither. The Court held that an approval given in respect of the points or matters enumerated is good whether the information sought is specific or general - 'so long as that is so, the requirement of law is satisfied'. It also rejected the argument that information already available with the department need not be furnished again, and held that a bank's duty of secrecy yields to disclosure under compulsion of law.
• D.B.S. Financial Services Pvt Ltd v M. George, ITO High CourtHelps taxpayerSuperseded by amendment
  Our counsel wants to cite a Bombay case that says s.133(6) cannot be used for a fishing enquiry. Is it still good?
  No. This decision construed s.133(6) as it stood before the Finance Act 1995, when the sub-section spoke only of 'any proceeding' and had no second proviso. On that text the Court held the proceeding must be one in existence at the material time and that fishing information unrelated to any proceeding was not contemplated. The 1995 amendment inserted the words 'enquiry or' and the second proviso, and the Supreme Court has since construed the amended text the other way.
• Amrik Singh v ITO ITATHelps taxpayer
  The officer wrote to my bank for my account before any return or proceeding existed, and reopened on what came back. Was he allowed to?
  Not without the approval required by the second proviso. The Tribunal found that no proceeding was pending when the enquiry letter went out, that nothing on record showed the prior approval of the Director or Commissioner had been taken, and that the letter itself made no mention of any approval. Exercising the power in that state of affairs was held to be an illegal exercise of power, and the reassessment built on it was cancelled.
• Section 84 of the Black Money Act - the Income-tax Act provisions applied CBDT Circulars & InstructionsCuts both waysNo later treatment found
  Which provisions of the Income-tax Act apply to the Black Money Act, and can the officer borrow one that is not on the list?
  Section 84 applies a closed list: clauses (c) and (d) of s.90(1), clauses (c) and (d) of s.90A(1), ss.119, 133, 134, 135 and 138, the whole of Chapter XV, and ss.237, 240, 245, 280, 280A, 280B, 280D, 281, 281B and 284 of the Income-tax Act, with necessary modifications, as if they referred to undisclosed foreign income and asset instead of to income-tax. The list is expressed as an enumeration and the decided points located in this area turn on what is left out of it. Sections 234A, 234B and 234C are not on it, which is why the Chennai Bench in Pascal Postel held that the interest charge in s.40(2) has no advance-tax machinery to operate on; s.230 is not on it either, which is the omission on which Preetha Krishna (Madras High Court) is understood to turn, though no copy of that judgment was opened for this note.
• CIT v Idea Cellular Ltd High CourtHelps departmentOverruled
  I sell prepaid SIM cards and recharge coupons to my distributors at a discount. Is that discount commission on which I must deduct tax under section 194H?
  Yes, on the Delhi High Court's view. It set aside the Tribunal and held that the relationship between the cellular operator and its prepaid market associates was principal and agent, not principal to principal. The distributor never became the owner of the SIM card, which remained the operator's property and gave the ultimate subscriber access to the operator's network; what was being delivered was a service, and a service cannot be bought and sold. The distributor was a link in the chain by which the operator provided that service. The discount was therefore commission within section 194H, and the operator was rightly treated as in default under section 201(1) with interest under section 201(1A).

Listed strongest first: Supreme Court, then High Court, then Tribunal, then CBDT. Nothing here has yet been read in full by a chartered accountant — open an entry to see where it came from.