THE KADANNAMANNA SERVICE CO-OPERATIVE BANK LIMITED NO.10561, V. THE COMMISSIONER OF INCOME TAX,

WP(C)/592/2020

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The case involves the Kadannamanna Service Co-operative Bank Limited, which filed a writ petition against the Commissioner of Income Tax (Appeals) and the Income Tax Officer, Ward (4), Tirur. The petitioner contested the disallowance of a tax benefit claimed under Section 80P(4) of the Income Tax Act for the financial year 2017-2018, which resulted in a tax demand of Rs. 37,88,926. During the pendency of the appeal against this demand, the Income Tax Officer initiated coercive recovery steps. The petitioner sought a writ of mandamus to restrain these actions until the appeal was decided. The court referenced a Full Bench decision and a Division Bench order that supported the petitioner's position, leading to the suspension of coercive recovery actions pending the appeal's outcome.

• Counselvise Citation: [2020] 140 COUNSELVISE.COM (IT) 761065 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 10-01-2020
• Assessment Year: misc
• Other Referred Cases: The Mavilayi Service Cooperative Bank Ltd. v. Commissioner of Income Tax, Calicut [2019 (2) KHC 287]
• Laws Referred To: Income Tax Act
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: CHRISTOPHER ABRAHAM
• Assessee Lawyers: O D SIVADAS
• Keywords: Appeal; Co-operative Bank; Coercive Recovery; Income Tax; Mandamus
• Section: 80P(4)

Judgement Text

"IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE ALEXANDER THOMAS FRIDAY, THE 10TH DAY OF JANUARY 2020 / 20TH POUSHA, 1941 WP(C).No.592 OF 2020(Y) PETITIONER: THE KADANNAMANNA SERVICE CO-OPERATIVE BANK LIMITED NO.10561, KADANNAMANNA P.O., MANAKADA VIA, MALAPPURAM-679 324, REPRESENTED BY ITS SECRETARY. BY ADV. SRI.O.D.SIVADAS RESPONDENT/S: 1 THE COMMISSIONER OF INCOME TAX, (APPEALS), AYAKAR BHAVAN, KOZHIKODE-673 001. 2 THE INCOME TAX OFFICER, WARD (4), TIRUR-676 001. OTHER PRESENT: SRI.CHRISTOPHER ABRAHAM, SC THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 10.01.2020, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C).No.592 OF 2020(Y) 2 ALEXANDER THOMAS, J. ----------------------------------------- W.P.(C.) No. 592 of 2020 ----------------------------------------- Dated this the 10th day of January, 2020 JUDGMENT The averments in the above Writ Petition (Civil) are as follows: The petitioner Co-operative Bank furnished income tax returns for the period 2017-2018 and claimed the benefit under Sec. 80P(4) of the Income Tax Act. That the assessing authority disallowed the said claim and demanded tax for Rs. 37,88,926/-. The petitioner filed appeal in that regard before the 1st respondent, during the pendency of which appeal, the 2nd respondent has initiated coercive steps for recovery of the disputed amounts. It is in the above circumstances that the petitioner bank has filed the instant Writ Petition (Civil) with the following prayers: “1) Issue a writ of mandamus or other appropriate writ, order or direction to the 1st respondent to consider Ext.P2 appeal on merit and also restraining the respondents from initiating coercive proceedings against the petitioner society till orders are passed in Ext.P2 appeal on merit. 2) Grant such other reliefs which this Honourable court just and proper in the circumstances of the case.” 2. Heard Sri.O.D.Sivadas, learned counsel appearing for the petitioner society and Sri.Christopher Abraham, learned Standing Counsel for the Income Tax Department, Government of India, appearing for the respondents. 3. It is pointed by Sri.O.D.Sivadas, learned counsel appearing for WP(C).No.592 OF 2020(Y) 3 the petitioner that the question regarding the liability of the banks like the petitioner co-operative bank to pay income tax assessed is a matter, which was answered by a Full Bench of this Court in the judgment in Income Tax Appeal, I.T.A.Nos.97/2016 and connected cases on 19.3.2019 {The Mavilayi Service Cooperative Service Bank Ltd., v. Commissioner of Income Tax, Calicut [2019 (2) KHC 287]} Further that in view of the said dictum of the Full Bench of this Court, it is contended that the appellate authority can only remand the matter to the assessing authority for conducting fresh enquiry and hence it is urged that the insistence for making payment of any portion of the amount under demand, pending disposal of the appeal, may cause hardships and prejudices to the petitioner co-operative society concerned. Hence it is contended that, the insistence for making payment of any portion of the amount under demand, pending disposal of the appeal, may cause hardships and prejudices to the banks concerned. 4. Sri. Christopher Abraham, learned Standing Counsel for the Income Tax Department, Government of India, appearing for the respondents would, on the other hand, urge that part payment insisted for granting stay is a matter, which comes within the discretion of the appellate authority and this Court may not be justified in interfering with discretion of the appellate authority in exercising such discretion of the statutory appellate authority. WP(C).No.592 OF 2020(Y) 4 5. However, it is seen that in similar cases it has already been ordered by a Division Bench of this Court in the judgment dated 1.7.2019 in W.A.No.1529/2019 that in the light of the aspects mentioned in the said case, their Lordships of the Division Bench of this Court are of the opinion that the insistence for payment of a portion of the amount demanded, as a condition for granting stay, need not be insisted in the case at hand and hence the Division Bench has ordered that it is for the appellate authority to take a decision on the statutory appeal at the earliest and that until final decision is rendered by the appellate authority in the statutory appeal, coercive steps for recovery and collection of the impugned tax is to be kept in abeyance in the light of the dictum laid down by the Full Bench of this Court in Mavilayi Service Co-operative Bank Ltd.'s case supra. A copy of the abovesaid judgment dated 1.7.2019 rendered by the Division Bench of this Court in W.A.No. 1529/209 along with connected cases, has been made available for the perusal of this Court. Taking note of the said orders issued by the abovesaid Division Bench of this Court, it is ordered that the 1st appellate authority shall ensure final disposal of Ext.P-2 appeal after affording reasonable opportunity of being heard to the petitioner without much delay and within a reasonable time limit that may be fixed appropriately by the said appellate authority. However, in the interest of justice it is ordered that until final orders are passed disposing of Ext.P-2 appeal, all coercive steps for the enforcement of the assessment order WP(C).No.592 OF 2020(Y) 5 impugned in the abovesaid appeal shall be kept in abeyance. With these observations and directions, the Writ Petition (Civil) stands finally disposed of. sd/- ALEXANDER THOMAS, JUDGE SKS WP(C).No.592 OF 2020(Y) 6 APPENDIX PETITIONER'S/S EXHIBITS: EXHIBIT P1 COPY OF THE ASSESSMENT ORDER DATED 16.12.2019 ISSUED BY THE 2ND RESPONDENT FOR THE PERIOD 2017-18. EXHIBIT P2 COPY OF THE APPEAL FILED BY THE PETITIONER BEFORE THE 1ST RESPONDENT FOR THE PERIOD 2017-18. "