Home Income tax Individual Income Tax HC suggests additional provision audit of Co-operative Societies by Chartered Accountant [Read Order]

HC suggests additional provision audit of Co-operative Societies by Chartered Accountant [Read Order]

HC suggests additional provision audit of Co-operative Societies by Chartered Accountant [Read Order]

HC suggests extra provision audit of Co-operative Societies by Chartered Accountant [Read Order]

The Madras Excessive Courtroom within the matter of The Chennimalai Siragiri Murugan Main Handloom Vs. The Revenue Tax Officer advised extra provision of the audit of Co-operative Societies by Chartered Accountants.

Key Textual content of the Judgment:

The realized counsel for the petitioner would submit that the aforesaid impugned circulars had been issued underneath Sections 194A and 194N of the Revenue Tax Act (hereinafter known as as “IT Act”). So far as, the impugned round issued underneath Part 194A of the IT Act is worried, the identical was issued by the third respondent to the petitioners/ Co-operative Societies directing them to deduct the TDS for the curiosity earnings, which exceeds a sum of Rs.40,000. So far as the round pertaining to Part 194N of the IT Act is worried, the identical was with regard to the deduction of TDS as follows:

i) 2% for the money withdrawal, which exceeds a sum of Rs.20,00,000 as much as Rs.1 Crore; and

ii) 5% for the money withdrawal, which exceeds a sum of Rs.1 Crore.

Additional, the objects and causes for the introduction of Part 194N of IT Act are as follows:

(i) To go for a cashless financial system;

(ii) To discourage the dealings and funds of money;

(iii) To manage the circulation of unlawful cash within the financial system;

(iv) To trace the monetary transaction simply at any level of time;

(v) To hold on the official transactions simply at any level of time from anywhere;

Additional, within the cashless financial system, the cash will likely be protected, since as soon as the cash deposited or invested within the checking account, there’s nearly nil likelihood of being misplaced, stolen or broken except paper cash.

Additionally it is pertinent to notice that as a result of permission granted to the Co-operative Societies to cope with the money and to distribute the identical to the members underneath the totally different reliefs, there’s numerous malpractices and mishandling of the money. Even when this Courtroom posted a query to the realized counsel for the petitioner, since he had appeared on behalf of many delinquent officers of the Co-operative Societies, who’re all mentioned to be concerned in various kinds of malpractices, he had pretty accepted that within the cooperative societies, there are very brilliant possibilities for taking place of very many varieties of malpractices and mishandling of cash. Additional, he would submit that in lots of variety of circumstances, he had appeared earlier than this Courtroom for the delinquent officers to get reliefs from this Courtroom. This Courtroom had additionally got here throughout many circumstances, the place the officers of the cooperative societies viz., Secretary or different Officers, in collusion with different officers, had opened tons of of fictitious accounts and granted loans to these fictitious accounts. Thereafter, if there’s any mortgage waiver or curiosity waiver granted by the Authorities, the identical advantages will goes to the individuals, who’re all concerned within the creation of these fictitious accounts. Therefore, that is the place the Societies are functioning in an unregulated method. Additionally it is as a result of cause that the certified Auditors had not been mandated to audit the accounts of the Societies and solely the departmental audits have been performed, which might pave the best way for all form of malpractices in these cooperative societies. Beneath these circumstances, Part 194N of the IT Act can be one of many methods to curb the malpractices in distribution of money and encourage the cashless financial system.

Now-a-days, the Central Authorities is granting advantages to the poor individuals via their financial institution accounts. Therefore, whether it is potential for the land-less individuals to open their financial institution accounts, actually, the petitioners/ Co-operative Societies can not plead any excuse that its members, who’re all having lands, should not ready to open the financial institution accounts since it is vitally straightforward course of to open the checking account for anybody at current.

If any distribution of money for reliefs akin to Pongal enam, flood aid, covid aid, and so on., the identical may be rooted via the respective financial institution accounts straight, whereby unnecessarily the members needn’t strategy the Co-operative Societies for claiming the mentioned reliefs. Then again, it is going to be robotically credited to their respective financial institution accounts and message, intimating the mentioned deposit, may also be despatched to their telephones. In such case, the dear time of the farmers and different members of the societies will likely be saved and the work of the cooperative society may also get lowered.

Even within the ration store of the village, relations had bought solely the eligible sugar however they’d obtained an intimation via message as if they’d bought wheat, oil, and so on., and it isn’t solely taking place for them, however for a lot of individuals, in opposition to which the complaints had been additionally made. Even when the Authorities is intend to curb these kinds of fraud, nonetheless the individuals, who’re sitting and distributing the products, are at all times discovering the revolutionary methods to cheat the poor public. Therefore, preserving all these facets in thoughts, this Courtroom is of the thought of view that if there’s any aid, the identical needs to be distributed on to the members. In any other case, the individuals, who’re working within the Co-operative Societies will at all times discover some revolutionary strategies and swindle the cash from the poor farmers and different weavers, and so on. Due to this fact, in such view of the matter, this Courtroom is inclined to counsel and go the next orders:

(i) Any profit, akin to pongal enam, flood reliefs, and so on., shall be made solely via the financial institution accounts of the respective members or non-members of the Co-operative Societies. The mentioned act will save the dear time of the members of the mentioned Societies since if they’re known as for the fee of money, initially they must strategy the Society or ration store, and so on., to register their identify together with the deal with and thereafter, once more they must strategy the Society or ration store, and so on., to gather the cash, which might unnecessarily trigger hardship for the members in addition to most of the people. Then again, if the funds are transferred to the respective financial institution accounts of the beneficiaries, it might be hassle-free for the general public and there will likely be no query of mishandling of any money;

(ii) If there’s fee of money for all the advantages offered by Authorities, akin to pongal enam, flood reliefs, and so on., it might solely encourage and pave manner for the mishandling of cash and the identical may also result in the misappropriation of cash and corruption at a big extent. When a manner is accessible to utterly eradicate the corruption and mishandling of cash, and so on., essentially the Authorities/Societies, and so on., ought to comply with the identical and distribute all kinds of reliefs via their financial institution accounts, through which case, the query of TDS wouldn’t come up.

(iii) When the reliefs are credited to the respective financial institution accounts of the beneficiaries, the withdrawal of the identical needs to be allowed solely within the presence of the beneficiaries in particular person. At any price, the officers of the cooperative societies/ration retailers, and so on., shouldn’t be allowed for withdrawal of the mentioned reliefs by bringing the cheques from its members. Whether it is allowed, there are possibilities for malpractices and mishandling of money hereagain.

(iv) In an analogous manner, if any mortgage is granted to the members of the societies, the mentioned mortgage needs to be straight credited to the respective financial institution accounts of the members, through which case, the withdrawal needs to be permitted solely within the presence of respective members of the cooperative society since there’s a likelihood for accumulating of cheques by the Societies from its members and withdrawing the mortgage quantity underneath the guise of serving to the poor farmers, which once more result in mishandling of cash. Therefore, the identical shouldn’t be allowed. The aforesaid facets needs to be ensured by the respective banks and Co-operative Societies and different Authorities Businesses, who’re concerned within the distribution of money to public.

(v) Additional, this Courtroom would counsel to contemplate and make a provision to audit the Co-operative Societies via the Chartered Accountant along with the current technique of scrutinising the information by the Auditors.

(vi) The first respondent shall additionally take into account with regard to the issuance of applicable circulars for entertaining the cashless transactions by the Co-operative Societies by amending the IT Act. As soon as if the petitioners/Co-operative Societies have adopted the above strategies, there is no such thing as a want for them to deal with any money transaction any extra.

The order would additionally keep away from the distribution of reliefs within the fictitious identify, because the similar will occur fairly often on the cooperative societies, because of which, numerous circumstances had been additionally filed in opposition to the officers of the cooperative society and pending earlier than the Courts.

With all these observations and instructions, these writ petitions are disposed of. No price. Consequently, the linked miscellaneous petitions are additionally closed.

For Official Judgment Obtain the PDF Given Beneath:


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