CHENNITHALA TRIPERUNTHARA SERVICE CO-OPERATIVE BANK LTD. V. COMMISSIONER OF INCOME TAX (APPEALS),

WP(C)/10041/2020

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The case involves Chennithala Triperunthara Service Co-operative Bank Ltd., a primary Co-operative Agricultural Credit Society, which challenged an assessment order issued by the Income Tax Officer, Thiruvalla, under Section 144 of the Income Tax Act for the assessment year 2017-18. The assessment order claimed an unexplained investment of Rs.1,32,12,000 due to the non-production of Books of Account. The petitioner appealed against this order and was required to pay 20% of the assessed amount as a condition for the appeal, which they contested based on previous High Court judgments. The High Court of Kerala, referencing its earlier decisions, set aside the requirement for the 20% deposit and remitted the case back for a decision on merits.

• Counselvise Citation: [2020] 140 COUNSELVISE.COM (IT) 753392 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 21-05-2020
• Assessment Year: misc
• Other Referred Cases: Mavilayi Service Co-operative Bank Ltd. Vs. Commissioner of Income Tax
• Laws Referred To: Income Tax Act, Kerala Co-operative Societies Act
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: JOSE JOSEPH
• Assessee Lawyers: GEORGE VARGHESE PERUMPALLIKUTTIYIL
• Keywords: Agricultural Credit; Appeal; Assessment Order; Co-operative Bank; Stay Application; Unexplained investment; 20% Deposit
• Section: 144; 226

Judgement Text

" IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE AMIT RAWAL THURSDAY, THE 21ST DAY OF MAY, 2020/31ST VAISAKHA, 1942 W.P(C).NO.10041 OF 2020 PETITIONER : CHENNITHALA TRIPERUNTHARA SERVICE CO-OPERATIVE BANK LTD. REPRESENTED BY ITS SECRETARY, CHENNITHALA TRIPERUNTHARA SCB LTD. 3553, CHENNITHALA P.O., MAVELIKKARA, ALAPPUZHA, KERALA PIN- 690 105 BY ADV. SHRI.M/S GEORGE VARGHESE PERUMPALLIKUTTIYIL RESPONDENTS : 1. COMMISSIONER OF INCOME TAX (APPEALS), KOTTAYAM, PUBLIC LIBRARY BUILDING, SHASTRI ROAD, KOTTAYAM- 686 001 2. INCOME TAX OFFICER, WARD I & TPS, THIRUVALLA, INCOME TAX OFFICE, OFFICE OF THE ADDITIONAL COMMISSIONER OF INCOME TAX, THIRUVALLA RANGE, T.K.ROAD, THIRUVALLA- 689 101 BY SC ADV. SHRI.JOSE JOSEPH THIS WRIT PETITION HAVING COME UP FOR ADMISSION ON 21.05.2020, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: W.P.(C).No.10041/20 2 JUDGMENT Petitioner is a primary Co-operative Agricultural Credit Society registered under the Kerala Co-operative Societies Act. The principal object of the petitioner is to undertake the agricultural credit activities, including the disbursing of agricultural loans, support farming and agricultural operations etc. While so, the 2nd respondent issued a notice under Section 144 of the Income tax Act pertaining to the assessment year 2017-18, which was duly replied by the petitioner vide reply dated 17.9.2019. Noticing that the petitioner did not produce the Books of Account, 2nd respondent passed the assessment order for an amount of Rs.1,32,12,000 as unexplained investment. 2. Challenging the aforementioned assessment order petitioner preferred appeal before the 1st respondent along with a stay application. 3. Learned Counsel for the petitioner submits that petitioner vide impugned order Ext.P6, has been called upon W.P.(C).No.10041/20 3 to pay 20% of the assessed amount for the purpose of adjudication of the appeal on merits. In this regard he relied upon the judgment of the Division Bench of this Court in writ appeal No.1536/19 dated 1.7.2019 arising out of judgment dated 31.5.2019 W.P .(C)12843/19. The Division Bench after noticing the decision of the Full Bench of this Court in ITA No.97/16 and connected cases, decided on 19.3.2019 titled as Mavilayi Service Co-operative Bank Ltd. Vs. Commissioner of Income Tax 2019 (2) KHC 287, wherein for considering the appeal the demand of 20% as a condition precedent has been negated. It is contended that the aforementioned judgment was also referred to the appellate authority as evident from Ext.P7, but for the reason best known, no plausible explanation has been given. 4. Issue notice before admission. Sri.Jose Joseph accepts notice on behalf of the income tax authorities. He submits that the order is in consonance with the provisions of Section 144 of the Income T ax Act and the Circular dated 31.7.2017 mandating the appellate authorities to ask for W.P.(C).No.10041/20 4 deposit 20% of the amount for the purpose of entertaining the adjudication of the appeal and submits that there is no illegality or perversity in the order under challenge. 5. Having heard learned Counsel for the parties and appraised the paper book, I am of the view that the argument of the petitioner is in consonance with the judgment referred to above and reiterated by the Division Bench. The assessing officer or the appellate authority while exercising the power of appeal or stay of the assessment proceedings under section 226 of the Income aCT 1961 are enjoying the obligation to give regard and respect to the directions of the Hon'ble High Court. In other words, it would not necessary that the payment of 20% can be dispensed with only if there is an order of the high court. The judgment of the Full Bench followed by the Division Bench has an enuring effect on all the authorities. The assessing officer despite noticing the order of the High court did not even advert to the reasoning assigned by the Division Bench following the Full Bench decision. W.P.(C).No.10041/20 5 6. In view of the reason noticed above, the impugned order is set aside. The matter is remitted back to the 1st respondent to decide the appeal on merits within a period of six months, without asking for 20% of the demanded amount, after affording an opportunity of hearing to the petitioner, including revenue for passing a reasonable and speaking order. The writ petition is disposed of. Sd/- AMIT RAWAL, JUDGE jm/ APPENDIX W.P.(C).No.10041/20 6 EXHIBIT P1: A TRUE COPY OF CERTIFICATE OF REGISTRATION NO. 3553 DATED 10.04.1956 ISSUED BY THE REGISTRAR OF CO-OPERATIVE SOCIETIES AND TRANSLATION OF THE SAME EXHIBIT P2: A TRUE COPY OF SHOW CAUSE NOTICE NO. ITBA/AST/F/144(SCN)/2019-20/1022761493 (1) DATED 20.12.2019 EXHIBIT P3: A TRUE COPY OF EXPLANATION SUBMITTED BY THE PETITIONER ON 3.12.2019 EXHIBIT P4: A TRUE COPY OF ASSESSMENT ORDER NO.ITBA/AST/ S/ 144/ 2019-20/1023312497 (1) DATED 28.12.2019 EXHIBIT P5: A TRUE COPY OF APPEAL NO. 10475/CIT(A)/KTM/2019-20 SUBMITTED BY THE PETITIONER BEFORE THE 1ST RESPONDENT EXHIBIT P6: A TRUE COPY OF ORDER NO. ITBA/COM/F/17/2019- 20/1026770861(1) DATED 19.03.2020 EXHIBIT P7: A TRUE COPY OF JUDGMENT DATED 01.07.2019 IN W.A. NO. 1536/19 OF THE HONOURABLE HIGH COURT "