Co-operative Societies Must Furnish Information for TDS Inquiry u/s 133(6) Even if it Exempt from TDS: Kerala HC [Read Order]

In a recent ruling, the Kerala High Court held that co-operative societies must furnish information for TDS inquiries under Section 133(6) of the Income Tax Act, even if they are exempt from TDS.

The case arose when the Income Tax Officer (TDS) issued a notice to a Chennithala Thripperumthura Service Co-Operative, a primary agricultural credit society under Section 133(6), seeking details of TDS compliance.

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The petitioner objected, arguing that as a co-operative society exempt from TDS, it was not obligated to provide such information. Despite this, the tax authorities insisted on compliance and subsequently imposed a penalty for failure to furnish the requested details.

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The petitioner challenged the penalty, asserting that its exemption from TDS meant it was not required to disclose such information. The petitioner’s counsel also argued that the tax authorities lacked jurisdiction to issue the notice under Section 133(6) of the Income Tax Act, as no pending proceedings justified the inquiry.

The Income Tax Department counsel argued that Section 133(6) of the Income Tax Act allows tax authorities to call for information even when no proceedings are pending, provided prior approval is obtained. The department argued that exemption from TDS does not exempt an entity from sharing financial details necessary for verifying compliance and preventing tax evasion.

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The Kerala High Court, relying on precedents from the Supreme Court and other High Courts, held that Section 133(6) is a tool for gathering relevant financial information and can be invoked even in the absence of pending proceedings. The court also ruled that exemption under Section 194A(3)(viia) does not shield co-operative societies from scrutiny under Section 133(6) of the Income Tax Act.

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The court clarified that these societies may enjoy exemptions under Section 194A(3)(viia) of the Income Tax Act, but they are still subject to scrutiny by tax authorities. Rejecting the petitioner’s arguments, the court upheld the validity of the notice issued by the Income Tax Department and confirmed the penalty imposed for non-compliance. The writ petition was dismissed.

To Read the full text of the Order CLICK HERE

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