Calicut City Service Co-operative Bank Ltd. V. National Faceless Assessment Centre, Income Tax Department and The Assessment Unit, Income Tax Department, National Faceless Assessment Centre

WP(C)/19023/2023

AI Insights

The case involves Calicut City Service Co-operative Bank Ltd., which filed a writ petition against the National Faceless Assessment Centre and its Assessment Unit, challenging the assessment order and a subsequent penalty notice. The petitioner sought to quash the assessment order and the penalty notice, requesting a fresh assessment with an opportunity to respond and be heard. The respondents acknowledged procedural errors in the assessment process, including incorrect email communication and failure to apply relevant deductions under Section 80P of the Income Tax Act, as supported by judicial precedents. The court's decision to remand the case for a new assessment was based on these admissions and the need to rectify the procedural lapses.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 814749 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 30-01-2024
• Assessment Year: misc
• Other Referred Cases: Mavilayi Service Co-operative Bank Ltd. & Others (431 ITRI), PCTT v. Peroorkada Service Co-operative Bank Ltd.
• Laws Referred To: Income Tax Act
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: CHRISTOPHER ABRAHAM
• Assessee Lawyers: A KUMAR P J ANILKUMAR G MINI
• Keywords: Assessment Order; Faceless assessment; Natural Justice; Writ of Certiorari; Writ of Mandamus
• Section: 143(3); 142(1); 270A; 80P(2)(d); 80P(2)(a)(i)

Judgement Text

"IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE DINESH KUMAR SINGH TUESDAY, THE 30TH DAY OF JANUARY 2024 / 10TH MAGHA, 1945 WP(C) NO. 19023 OF 2023 PETITIONER: CALICUT CITY SERVICE CO-OPERATIVE BANK LTD., 19/1180-B CITY BANK BUILDING, CHALLAPPURAM, CALICUT- 673002. REPRESENTED BY ITS GENERAL MANAGER,SHRI. SAJU JAMES. BY ADVS. A. KUMAR P. J. ANILKUMAR G. MINI(1748) P. S. SREE PRASAD RESPONDENTS: 1 NATIONAL FACELESS ASSESSMENT CENTRE, INCOME TAX DEPARTMENT, NORTH BLOCK, NEW DELHI, PIN – 110001. 2 THE ASSESSMENT UNIT, INCOME TAX DEPARTMENT, NATIONAL FACELESS ASSESSMENT CENTRE, NORTH BLOCK, NEW DELHI, PIN – 110001. BY ADV. SRI. CHRISTOPHER ABRAHAM – SC - INCOME TAX DEPARTMENT THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 30.01.2024, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C) NO. 19023 OF 2023 2 DINESH KUMAR SINGH, J. -------------------------- W.P.(C) No. 19023 of 2023 ------------------------- Dated this the 30th day of January, 2024 JUDGMENT 1. The present writ petition has been filed seeking the following reliefs; A. Issue a Writ of Certiorari or such other appropriate writ, order or direction quashing Exhibit P-7 assessment order. B. Issue a Writ of Mandamus or such other appropriate writ, order or direction directing the respondents to conduct an assessment de novo with adequate opportunity to file reply after serving show cause notice and also an opportunity of hearing. C. Issue a Writ of Certiorari or such other appropriate writ, order or direction quashing Exhibit P8 notice for penalty. D. Pass such other appropriate Writ, order or direction as this Honorable Court may deem just and fit in the circumstances of the case. 2. On notice, statement has been filed on behalf of the respondents. In paragraphs 4, 5, 6 and 7 of the statement it is mentioned as under; WP(C) NO. 19023 OF 2023 3 “4. 4. The Jurisdictional Assessing Officer, in his instructions given after examining the digital records, has confirmed that the Assessing Officer, NeFAC issued notice under section 142(1) dated 11.01.2023 to the assessee through the e-mail id [e-mail] which the assessee accepts as received. The assessee responded to this notice by submitting reply on 25.01.2023. It is considering this reply that the impugned assessment order has been passed as can be seen from a perusal of the assessment order. 5. However, it is reported by the Jurisdictional Assessing Officer that the show cause notice dated 21.03.2023 was issued to the assessee through the e-mail id “[e-mail]” which was the e-mail id of the petitioner at the time of filing of the return of income for AY 2017-18 and which the assessee claims to have changed. The order under section 143(3) dated 29.03.2023 was also sent to this e-mail id. The Jurisdictional Assessing officer also confirms the petitioner's claim that all other earlier communications prior to the show cause notice were also sent to the e-mail id [e-mail]. WP(C) NO. 19023 OF 2023 4 6 The impugned ex-parte assessment order also seems to be vitiated by the non-allowance of admissible deduction under section 80P. As per the ratio of the Supreme Court decision in the case of Mavilayi Service Co-operative Bank Ltd. & Others (431 ITRI) the entire business income derived from extending credit facilities to members is entitled for deduction under section 80P(2)(a)(i). However in the assessment order passed, the deduction u/s 80P(2)(a)(i) has been denied on the amount of Rs. 165293312 representing provisions for reserves and expenses disallowed in computing the business income. This appears to be contrary to the dictum laid down in Mavilay's case. Similar is the position with regard to the assessment of a sum of Rs. 131827800 representing interest income as income from ‘other sources' denying deduction claimed under section 80P(2)(d). As per the ratio of the jurisdictional High Court decision in the case of PCTT v. Peroorkada Service Co-operative Bank Ltd., the petitioner seems to be entitled to the deduction u/s 80P(2)(d) in respect of interest received from other co-operative societies. Based on the details furnished by the assessee and extracted in the assessment order the assessee seems to be entitled to claim deduction for the amounts of WP(C) NO. 19023 OF 2023 5 Rs.2200000 received as interest from Perumanna Service co-operative Bank and Rs. 122571978 received as interest from Kozhikode District Co- operative Bank Ltd. 7. In the light of the discussion as above, it is submitted that there is merit in the averment of the petitioner that Exhibit P7 assessment order has been passed in violation of the principles of natural justice. The assessment order also suffers from the vice of not following the binding judicial precedents. In the circumstances, it is submitted that this Hon'ble Court may be pleased to remand the impugned assessment order to the assessing officer for de-novo consideration in accordance with law.” 3. In view of the categorical stand taken by the respondents in the statement that there is merit in the averment of the petitioner that Exhibit P-7 assessment order is issued in violation of the principles of natural justice, the Exhibit P-7 order is hereby set aside and the matter is remanded back to the 1st respondent to pass a fresh order after issuing a fresh notice to the petitioner in the e-mail id as mentioned in paragraph 5 of the writ petition, which reads as under; WP(C) NO. 19023 OF 2023 6 “5. During the pendency of the matter before the Tribunal, the assessing authority issued notice dated 14.9.2022 proposing to conduct assessment under Section 144B in the faceless mode. True copy of the said notice dated 14.9.2022 issued by the 1st respondent is produced herewith and marked as Exhibit P3. The petitioner received notice dated 11/01/2023 in its e-mail address a [e-mail] . True copy of the notice dated 11/01/2023 is produced herewith and marked as Exhibit P4. Petitioner filed detailed reply explaining its various receipts of interests from the Cooperative Societies and the Cooperative Banks justifying its investment to the claim under Section 80P(2). True copy of the reply dated 14.1.2023 is produced herewith and marked as Exhibit P5.” All further communications to the petitioner shall be sent to the said e-mail i.e. a [e-mail] . With the above observations and directions, the present writ petition is hereby disposed of. Sd/- DINESH KUMAR SINGH JUDGE Svn WP(C) NO. 19023 OF 2023 7 APPENDIX OF WP(C) 19023/2023 PETITIONER’S EXHIBITS EXHIBIT P1 TRUE COPY OF THE ORDER OF THE PRINCIPAL COMMISSIONER OF INCOME TAX DATED 22.2.2022 EXHIBIT P2 TRUE COPY OF THE ORDER OF THE TRIBUNAL DATED 30.11.2022 EXHIBIT P3 TRUE COPY OF THE NOTICE ISSUED UNDER SECTION 144B OF THE INCOME TAX ACT DATED 14.9.2022 EXHIBIT P4 TRUE COPY OF THE NOTICE SECTION 142 OF THE INCOME TAX ACT DATED 11.01.2023 EXHIBIT P5 TRUE COPY OF THE REPLY FILED BY THE PETITIONER DATED 14.1.2023 EXHIBIT P6 TRUE COPY OF THE DETAILS DOWNLOADED IN THE 'VIEW GRIEVANCE' TOGETHER WITH THE GRIEVANCE DETAILS AND RESOLUTION DATED 31.3.2023 EXHIBIT P7 TRUE COPY OF THE ASSESSMENT ORDER DATED 29.3.2023 EXHIBIT P8 TRUE COPY OF THE NOTICE FOR THE PENALTY ISSUED UNDER SECTION 270A OF THE INCOME TAX ACT DATED 19.05.2023 "