EDARIKODE SERVICE CO-OPERATIVE BANK LIMITED V. THE INCOME TAX OFFICER

WA/505/2020

AI Insights

The case involves Edarikode Service Co-operative Bank Limited, the appellant, who appealed against the judgment of a single judge concerning the stay of demand notices issued for tax dues. The appellant had previously filed rectification applications regarding tax assessments for the years 2008-09 and 2013-14, which were dismissed. Following this, demand notices were issued for the recovery of the assessed amounts. The appellant sought a stay on these notices until the rectification applications were decided. The single judge had directed the expeditious disposal of the rectification applications but imposed a condition requiring a bank guarantee for the entire demand amount, which was contested in this appeal.

• Counselvise Citation: [2020] 140 COUNSELVISE.COM (IT) 693901 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 12-03-2020
• Assessment Year: misc
• Laws Referred To: Article 226 of the Constitution of India
• Result in Favour of: Partly Allowed
• Court: HIGH COURT
• Department Lawyers: CHRISTOPHER ABRAHAM
• Assessee Lawyers: C A JOJO
• Keywords: Bank guarantee; Coercive Steps; Demand notice; Income Tax; Rectification Application
• Section: 147; 148; 143(3); 153A; 68

Judgement Text

" IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE C.K.ABDUL REHIM & THE HONOURABLE MR. JUSTICE T.R.RAVI THURSDAY, THE 12TH DAY OF MARCH 2020 / 22ND PHALGUNA, 1941 WA.No.505 OF 2020 AGAINST THE JUDGMENT IN WP(C) 4106/2020 OF HIGH COURT OF KERALA APPELLANT: EDARIKODE SERVICE CO-OPERATIVE BANK LIMITED NO.F 10739,EDARIKODE.P.O, MALAPPURAM DISTRICT, PIN-676501, REPRESENTED BY ITS SECRETARY-IN-CHARGE. BY ADV. SRI.C.A.JOJO RESPONDENTS: 1 THE INCOME TAX OFFICER WARD-3,TIRUR TOWN HALL ROAD, TIRUR.P.O,PIN-676101. 2 THE COMMISSIONER OF INCOME TAX(APPEALS), OFFICE OF THE COMMISSIONER OF INCOME TAX(APPEALS), AAYAKAR BHAVAN, MANANCHIRA.P.O, KOZHIKODE-673001. OTHER PRESENT: SC,IT DEPT. SRI.CHRISTOPHER ABRAHAM THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 12.03.2020, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: W.A. No. 505 of 2020 2 C.K. ABDUL REHIM & T.R. RAVI, JJ. ========================= W.A. No. 505 of 2020 ========================= Dated this the 12th day of March, 2020 J U D G M E N T C.K. ABDUL REHIM, J. Petitioner in W.P.(C).No. 4106 of 2020 is in appeal against the judgment of the single Judge, dated 13.02.2020. The respondents herein are the respondents in the writ petition. 2. The writ petitioner sought for a stay of operation of Exts.P11 & P12 Demand Notices issued, till the disposal of Exts.P9 & P10 applications for rectifications filed by him before the 2nd respondent. Inter alia, he sought for a direction to the 2nd respondent to consider and pass appropriate orders on Exts.P9 & P10 rectification petitions, on an early basis. Evidently, the assessments were completed against the petitioner with W.A. No. 505 of 2020 3 respect to the years 2008-09 and 2013-14, which orders were challenged in appeals before the 2nd respondent, as per Exts.P5 & P6. Those appeals were dismissed through the orders passed on 12.12.2019. According to the writ petitioner, the said orders (Exts.P7 & P8) were received by him only on 03.02.2020. Since it is felt that there occurred an apparent error on the face of the orders, the petitioner had chosen to file rectification applications before the Appellate Authority, as evidenced from Exts.P9 & P10, dated 08.02.2020. But the assessing authority had proceeded with coercive steps for realization of the amounts due; and Exts.P11 & P12 notices were issued. It is under such circumstances, the above writ petition was filed. 3. Before the learned Single Judge it was contended on behalf of the respondents that the rectification applications were filed only after receipt of the Demand Notices. However, the learned Single Judge observed that, the writ petition can be disposed of by W.A. No. 505 of 2020 4 directing the 2nd respondent to take a decision on Exts.P9 & P10 applications, as expeditiously as possible, at any rate, within a period of two months from the date of receipt of a copy of the judgment. It was further directed that, till such time Exts.P9 & P10 rectification applications were disposed of, Exts. P11 & P12 notices shall be kept in abeyance, subject to condition of the writ petitioner furnishing Bank Guarantee with respect to the entire demand. The condition imposed to the extent of insisting Bank Guarantee for the entire amount due, is the subject of challenge upon which the above writ appeal is filled. 4. Heard; learned counsel for the appellant and learned Standing Counsel appearing for the respondents. 5. We take note of the fact that, the appellant had chosen to exercise the remedy of rectification before the Appellate Authority himself. In other words, he has not chosen to avail the remedy of 2nd appeal before the Tribunal. Question now agitated is with respect to sustainability of the recovery steps initiated pending W.A. No. 505 of 2020 5 disposal of the rectification applications. We are of the considered opinion that, the appellant could have moved before the Appellate Authority himself, seeking stay of recovery of the amounts, pending disposal of the rectification applications. Having not done so, the approach made before this court by invoking powers vested under Article 226 of the Constitution of India, cannot be sustained. Whether the Appellant is entitled to get a stay against the recovery steps, pending disposal of the rectification applications, is a matter which ought to have been considered by the Appellate Authority, at the first instance. Therefore we are of the opinion that, liberty can be reserved to the appellant to approach the Appellate Authority seeking for stay of the recovery, pending disposal of the rectification applications. Hence we are inclined to modify the impugned judgment to that effect. 6. Hence, the above writ appeal is hereby allowed to the extent of modifying the impugned judgment in W.A. No. 505 of 2020 6 W.P.(C).No. 4106 of 2020. The appellant is permitted to move appropriate interim applications seeking stay of the recovery, pending disposal of Exts.P9 & P10 applications for rectification, before the 2nd respondent. If any such applications are filed, within one week from the date of receipt of a certified copy of this judgment, the 2nd respondent shall consider the same and shall pass appropriate orders thereon, within a period of two week of filing of such applications. Steps of recovery initiated based on the Demand and any further proceedings of recovery shall be proceeded only depending upon the outcome of the orders which will be passed by the Appellate Authority in the stay petitions. In order to facilitate the appellant to move such applications before the Appellate Authority, and the Appellate Authority to consider the same, further coercive steps for recovery pursuant to Exts.P11 & Ext. P12 Notices shall be kept in abeyance till the above direction is complied with. It is made clear that, the W.A. No. 505 of 2020 7 directions contained in the impugned judgment with respect to expeditious disposal of Exts.P9 & P10 would continue to survive. (Sd/-) C.K. ABDUL REHIM JUDGE (Sd/-) T.R. RAVI JUDGE LU W.A. No. 505 of 2020 8 APPENDIX APPELLANT'S/S EXHIBITS: ANNEXURE A A TRUE COPY OF THE JUDGMENT IN W.P.(C).NO. 4115 OF 2020 DATED 13.02.2020. ANNEXURE B A TRUE COPY OF THE JUDGMENT IN W.P.(C).NO. 601 OF 2020 DATED 22.01.2020. // True Copy // PA To Judge "