Banking company wins appeal against Income-tax Act notices seeking foreign payment info The appellant, a banking company, challenged notices under section 133(6) of the Income-tax Act, 1961, requiring information on payments made outside ...
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Banking company wins appeal against Income-tax Act notices seeking foreign payment info
The appellant, a banking company, challenged notices under section 133(6) of the Income-tax Act, 1961, requiring information on payments made outside India. The court found that as no proceeding was pending, the Income-tax Officer had no power to seek such information. Relying on precedents and the 1995 amendment to the Act, the court allowed the writ petition, quashing the notices. The appeal was allowed, with no costs awarded, as both judges concurred with the decision.
Issues Involved: The issues involved in this case include the challenge to the impugned judgment of the learned single judge regarding the requirement of furnishing information under section 133(6) of the Income-tax Act, 1961, by a banking company for payments made outside India in specific financial years.
Judgment Details:
The appellant, a banking company, received letters from respondent No. 1 requiring information on payments made outside India for furlough pay in certain financial years. The appellant contended that as no proceeding was pending under the Act, they were not obligated to furnish the information under section 133(6) of the Act.
The appellant challenged the notices under section 133(6) through a writ petition under article 226 of the Constitution of India. The learned single judge found no merit in the petition, leading to the discharge of the rule and vacation of all interim orders.
The appellant cited decisions in their favor, including the Bombay High Court case of D. B. S. Financial Services Private Ltd. v. Sint. M. George, 2nd ITO [1994] 207 ITR 1077, and the case of Dwijendra Lal Brahmnachari v. New Central Jute Mills Co. Ltd. [1978] 112 ITR 568, which discussed the powers of the Income-tax Officer under section 131(1) and the amendment to section 133(6) in 1995.
Upon perusing the impugned order, it was noted that the Income-tax Officer had no power to seek information under section 133(6) when no proceeding was pending, as clarified by the amendment in 1995. As no proceeding was pending against the assessee when the notices were issued, the court allowed the prayers in the writ petition, quashing the notices issued under section 133(6) of the Act.
The appeal was allowed with no order as to costs, with both judges concurring with the decision.
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