IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 26-03-2008 CORAM THE HON'BLE MR.JUSTICE M.JAICHANDREN Writ Petition Nos.20258 to 20279 of 2000 W.P.Nos.20280 to 20284 of 2000 and W.P.Nos.20288 and 20289 of 2000 The Karur Vysya Bank Limited, Registered and Central Office, Funds, Investments & Merchant Banking Cell, Post Box No.21, Karur-639 002. .. Petitioner in all the writ petitions. Versus 1.The Income Tax Officer, Central Information Branch-III, I Floor, 108, Uthamar Gandhi Salai, Nungambakkam, Chennai-600 034. 2.Union of India Represented by its Secretary, Ministry of Finance, Department of Revenue, Central Secretariat, North Block, New Delhi-110 001. .. Respondents in all the writ petitions. Prayer: Petitions filed under Article 226 of the Constitution of India praying for the issuance of a (1)Writ of Certiorarified Mandamus, calling for the records of the first respondent in (1) C.No.CIB\III\018\CASH\2000-01\454, dated 19.7.2000,(in WP 20258/2000), (2)C.No.CIB/III/018/CASH/2000-01/1022 dt. 19.7.2000 (in WP 20259/2000),(3) C.No.CIB/III/018/LOAN-ASST/2000-2001/1025, dt.19.7.2000 (in WP 20260/2000), (4) C.No.CIB/III/018/CASH/2000- 2001/781 dt.19.7.2000 (in WP 20261/2000), (5) C.No.CIB/III/018/LOAN- Asst/2000-01/780 dt.19.7.2000 (in WP 20262/2000),(6) C.No.CIB/III/018/CASH/2000-01/1023 dated 19.7.2000 (in WP 20263/2000), (7) C.No.CIB/III/018/LOAN/ASST/2000-01/87 dated 19.7.2000 (in WP 20264/2000),(8) C.No.CIB/III/018/LOAN/ASST/2000-01/1488 dated 10.8.2000 (in WP 20265/2000), (9)C.No.CIB/III/018/LOAN-ASST/2000- 01/1487 dated 10.8.2000 (in WP 20266/2000), 10.C.No.CIB/III/018/LOAN- ASST/2000-01/455 dated 19.7.2000, (in WP 20267/2000),(11) C.No.CIB/III/018/LOAN-ASST/2000-01/464 dated 19.7.2000 (in WP 20268/2000), (12) C.No.CIB/III/018/CASH/2000-01/458 dated 19.7.2000 in (WP 20269/2000),(13) C.No.CIB/III/018/LOAN-ASST/2000-01/886 dt. 19.7.2000 (in WP 20270/2000), (14) C.No.CIB/III/018/LOAN-ASST/2000- 01/1490 dated 10.8.2000 (in WP 20271/2000), (15) https://hcservices.ecourts.gov.in/hcservices/ C.No.CIB/III/018/CASH/2000-01/1487 dated 10.8.2000 (in WP 20272/2000), (16) C.No.CIB/III/018/CASH/2000-01/1490 dated 10.8.2000 (in WP 20273/2000), (17) C.No.CIB/III/018/CASH/2000-01/453 dated 19.7.2000 (in WP 20274/2000) , (18) C.No.CIB/III/018/CASH/2000-01/456 dated 19.7.2000 (in WP 20275/2000), (19) C.No.CIB/III/018/CASH/2000-01/884 dated 19.7.2000, (in WP 20276/2000), (20) C.No.CIB/III/018/LOAN- ASST/2000-01/1026, dated 19.7.2000 (in WP 20277/2000), (21) C.No.CBI/III/018/LOAN-ASST/2000-01/84 dated 19.7.2000 (in WP 20278/2000),(22) C.No.CIB/III/018/CASH/2000-01/1024 dated 19.7.2000 (in WP 20279/2000),(23) C.No.CIB/III/018/CASH/2000-01/85, dated 19.7.2000 (in WP 20280/2000), (24) C.No.CIB/III/018/CASH/2000- 01/466,dated 19.7.2000 (in WP 20281/2000),(25) C.No.CIB/III/018/LOAN- ASST/2000-01/453, dated 19.7.2000 (in WP 20282/2000), (26) C.No.CIB/III/018/LAN-ASST/2000-01/883, dated 19.7.2000 (in WP 20283/2000), (27) C.No.CIB/III/018/CASH/2000-01/1488 dated 10.8.2000 (in WP 20284/2000),(28) C.No.CIB/III/018/LOAN-ASST/2000-01/882, dated 19.7.2000 (in WP.20288/2000) respectively and quash the proceedings issued under Section 133(6) of the Act by the first respondent and further forbear the first respondent from demanding information or details from the petitioner in pursuance of the notices issued under Section 133(6) of the Act. WP No.20289/2000: Petition filed under Article 226 of the constitution of India praying for the issuance of a writ of Declaration declaring the part of Sec 133 (6) referring to "inquiry or proceeding" which was introduced by Finance Act, 1995 w.e.f.1.7.95 as ultra vires of Article 19(1)(g) of the constitution of India, and that the respondents have no jurisdiction to invoke the provisions of Sec.133(6) of the Act in the petitioner's case to seek general information from the petitioner. For petitioner : Mr.N.Quadir Hoseyn For respondents : Ms.Pushya Sitaraman O R D E R Heard Mr.N.Quadir Hoseyn, the learned counsel appearing on behalf of the petitioner and Ms.Pushya Sitaraman, the learned counsel appearing on behalf of the respondents. 2. The above writ petitions have been filed challenging the proceedings issued by the first respondent, under Section 133(6) of the Income Tax Act, 1961, and to forbear the respondents from demanding information or details from the petitioner in pursuance of the notices issued, under Section 133(6) of the Income Tax Act, 1961. 3. It is submitted that the notices had been issued to the petitioner under Section 133(6) of the Income Tax Act, 1961, to furnish the required information available in respect of persons who have cash transactions of over Rs.1 lakh or, who have offered security for available loan/O.D. of over Rs.50 lakhs 4. It is further stated that the power to call for information https://hcservices.ecourts.gov.in/hcservices/ has been conferred upon the authorities, under Section 133(6) of the Income Tax Act, 1961. Sub Section (6) of Section 133 of The Income Tax Act, 1961, as it stood originally, had provided for calling for information, which would be useful or relevant to any proceeding under the Act. It has been held by the Courts of law that unless a proceeding is pending, the powers under Section 133(6) of the Income Tax Act, 1961, cannot be exercised. In such circumstances, an amendment was made by the Finance Act, 1995, with effect from 01.07.1995, inserting the word "inquiry" before the word "proceeding" in Section 133(6) of the Income Tax Act, 1961. The effect of the amendment is that the powers conferred under Section 133(6) of the Income Tax Act, 1961, can be exercised to obtain information, if it would be useful or relevant for any enquiry or proceeding under the Income Tax Act, 1961. The provision had been explained by Circular No.717, dated 14.08.1995, issued by the Central Board of Direct Taxes, containing Explanatory Notes on the provisions relating to the Finance Act, 1995, which are applicable to Direct Taxes. Thus, it is clear that the authorised inquiry can only be "case specific" or "area specific". 5. The writ petitions have been filed stating that the proceedings under challenge and the notices issued, pursuant to the said proceedings are violative of Article 19(1)(g) of the Constitution of India. The impugned notices propose to commence a detailed enquiry, without reference to any proceeding or enquiry pending before any authority, and they have been issued in contravention of Section 133(6) of the Income Tax Act, 1961. Since the failure to furnish the information called for under Section 133(6) of the Income Tax Act, 1961, entails levy of penalty, under Section 272 (A)(2)(c) of the Act, the notices carry penal consequences. The second proviso to Section 133(6) of the Income Tax Act, 1961, provides 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. 6. Apart from challenging the validity of the impugned proceedings, the main contention of the learned counsel appearing for the petitioner is that the impugned notices, issued in pursuance to such proceedings, ought to have stated that prior approval had been obtained from the Director or the Commissioner or from such other higher authority, as provided under the second proviso to Section 133 (6) of the Income Tax Act, 1961. In the absence of such an information, the impugned notices cannot be held to be valid. 7. At this stage of hearing of the writ petitions, it was brought to the notice of this Court the decision rendered by the Supreme Court in Karnataka Bank Ltd Vs. Secretary, Government of India and others, reported in 255 ITR 508, wherein, it has been held that "it is clear from the mere reading of the said provision that it is not necessary that any inquiry should have commenced with the issuance of notice or otherwise before Section 133(6) could have been invoked. It is with the view to collect information that power is given under Section 133 https://hcservices.ecourts.gov.in/hcservices/ (6) to issue notice, inter alia, requiring a banking company to furnish information in respect of such points or matters as may be useful or relevant. The second proviso makes it clear that such information can be sought for even when no proceeding under the Act is pending, the only safeguard being that before this power can be invoked the approval of the Director or the Commissioner, as the case may be, has to be obtained. In the instant case, the notice dated July 7, 2000, indicates that it was at the instance of the Director of Income-tax (investigation) that the information was sought for." 8. It was also pointed out that a new provision has been introduced as Section 285 BA, in the Income Tax Act, 1961, with effect from 01.04.2005, creating an obligation to furnish annual information return. 9. It was submitted by the learned counsel Ms.Pushya Sitaraman, appearing on behalf of the respondents, that in view of the decision of the Supreme Court, reported in Karnataka Bank Ltd Vs. Secretary, Government of India and others (255 ITR 508), and in view of the insertion of Section 285 BA in the Income Tax, Act, 1961, the issues raised in the writ petitions have lost their relevance and any further discussion relating to the said issues would be a mere academic exercise. 10. In view of the submissions made by the learned counsels appearing for the parties concerned, this Court is of the view that no further orders are required to be passed in the above writ petitions. Hence, these writ petitions stand dismissed. No costs. Sd/ Asst.Registrar /true copy/ Sub Asst.Registrar csh To 1.The Income Tax Officer, Central Information Branch-III, I Floor, 108, Uthamar Gandhi Salai, Nungambakkam, Chennai-600 034. https://hcservices.ecourts.gov.in/hcservices/ 2. The Secretary, Union of India, Ministry of Finance, Department of Revenue, Central Secretariat, North Block, New Delhi-110 001. +1cc to Mr.Pushya Sitaraman,S.C.(IT Dept) Sr 17081 NM (CO) km/10.4. Writ Petition Nos.20258 to 20279 of 2000 and WP Nos. 20280 to 20284/2000 and W.P.Nos.20288 and 20289 of 2000 https://hcservices.ecourts.gov.in/hcservices/