D B S FINANCIAL SERVICES PRIVATE LIMITED Vs. M GEORGE 2ND INCOME TAX OFFICER SURVEY CIRCLE C B I II BOMBAY

JUDGEMENT

(1.) THE petitioner is a private limited company engaged in the business of operating and conducting an organised credit card business by issuing credit cards to its members. The petitioner has a list of various establishments engaged in providing goods and services which accept the credit cards of the petitioner. These establishments are also members of the petitioner. The petitioner has about 61000 card members and about 7000 establishment member. The petitioner has set out at length the procedure for collecting charges from its card members in respect of goods and services availed of by such members on the basis of credit cards supplied to them by the petitioner. Basically, the establishment members submit their bills to the petitioner along with the charge slips signed by the card holders. On the basis of such charge slips, the petitioner prepares a statement of account every month in respect of each of the card holders and forwards the same to the card holders. If the payment is received, it is credited to the account of the card holders. Otherwise, the amount is carried forward to the next month. The entire operation of the collection system has been computerised. The petitioner collects its commission from the establishment members.

(2.) THE ledgers which are maintained in respect of card holders are termed as `open item ledgers. A new ledger is prepared at the end of every month in respect of the account of a card holder, e. g. after the debit of purchases made by a card holder is squared off by payment in the next month, this amount will not appear in the ledger of the following month. In case the petitioner wants to collect details of the amounts paid to it by individual card holders during the year, it will have to collect the information from general ledgers used during the year for that card holder. The total number of accounts handled every month varies from 40,000 to 50,000.

(3.) IN January 1984 an Inspector from the Income-tax Department visited the petitioners office at Madras and demanded the addresses of all card holders whose accounts show an annual expenditure of over Rs. 5000/ -. The petitioner subsequently received notice dated 13th March 1985 from the Commissioner of Income-tax (Investigation), Madras, asking for the same information under section 133 (6) of the Income Tax Act. The notice stated that the information was required for the financial years 1982-83 and 1983-84 immediately and the data for 1984-85 could be sent in due course. A further notice to the same effect was sent by the Commissioner of Income-tax (Investigation), Madras, on 17th April 1985.