Division Bench upholds validity of IT Act s. 133(6) notices to cooperative societies, clarifies approval not mandatory.

The Division Bench confirmed the validity of notices issued under s. 133(6) of the IT Act, 1961 to cooperative societies, emphasizing the power conferred under the section for survey purposes. It was established that approval by the Director or CIT was not mandatory for seeking information under s. 133(6). The judgment also addressed the approval requirement for notices calling for cash particulars above Rs. 1 lakh, allowing appellants to seek clarification and mandating the recall of notices issued without proper approval. The deadline for furnishing transaction details was extended, with clear directions provided for compliance with notice requirements and penalty proceedings.

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Issues:
1. Validity of notices issued under s. 133(6) of the IT Act, 1961 to cooperative societies engaged in banking.
2. Whether the general notice calling for cash particulars above Rs. 1 lakh is issued with the prior approval of the Director or the CIT.
3. Challenges faced by societies in collecting and furnishing transaction details within the specified time frame.

Issue 1: Validity of Notices under s. 133(6) of the IT Act:
The judgment addresses the challenge by cooperative societies against notices issued under s. 133(6) of the IT Act, 1961, by various IT authorities. The societies contended that the notices were invalid. Two learned Single Judges upheld the validity of the notices, citing the power conferred under the section as a survey by the Department, applicable to private banks, cooperative societies, and nationalized banks. The judgment overlooked a Supreme Court ruling stating that information can be sought under s. 133(6) even without pending proceedings, subject to approval by the Director or CIT. The Division Bench confirmed the Single Judge's decision, making the issue settled law. The judgments of other High Courts on the pre-amendment version of s. 133(6) were deemed irrelevant due to consistent rulings of the Kerala High Court and the Supreme Court.

Issue 2: Approval Requirement for Notices Calling for Cash Particulars:
The judgment deliberated on whether the general notice seeking cash particulars above Rs. 1 lakh was issued with the prior approval of the Director or CIT. The standing counsel for respondents clarified that some notices explicitly mentioned approval by the CIT or Director, rendering those challenges inadmissible. However, for other notices, it was evident that they were issued by the same authority, implying prior approval. The judgment allowed appellants to seek clarification from the issuing officer and mandated the recall of notices issued without proper approval. The officer could reissue notices after obtaining the necessary approval, ensuring compliance with procedural requirements.

Issue 3: Challenges in Collecting and Furnishing Transaction Details:
Concerns were raised by appellants regarding the collection and submission of transaction details within a short timeframe. The judgment extended the deadline for furnishing details till 31st Jan., 2010, acknowledging the nature of transactions sought and emphasizing the obligation of societies to provide the required information. Penalty proceedings initiated under s. 272A were to be recalled upon receipt of information. Societies needing additional time were permitted to submit collected details first and then request further extensions, which the concerned officer was expected to grant reasonably if the request was genuine and substantial details had been furnished.

In conclusion, the judgment dismissed the writ appeals and petitions while granting an extension for furnishing transaction details and providing clear directions for compliance with notice requirements and penalty proceedings.

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