KARAKULAM SERVICE CO-OPERATIVE BANK LTD V. ADDITIONAL/JOINT/DEPUTY/ASSISTANT COMMISSIONER INCOME TAX /NATIONAL FACELESS ASSESSMENT CENTRE

WP(C)/12676/2022

AI Insights

The case involves M/s. Karakulam Service Co-operative Bank Ltd, which challenged an order imposing a penalty under Section 271(1)(c) of the Income Tax Act, 1961, for the assessment year 2014-15. The assessment had undergone multiple rounds of appeals and remands, with the latest being a remand to the First Appellate Authority by the Tribunal. The petitioner argued that the penalty order was premature as the assessment itself was under reconsideration. The respondents contended that the penalty proceedings were independent of the assessment proceedings. The court decided to set aside the penalty order, pending the outcome of the appellate proceedings, while leaving open the possibility of re-imposing the penalty based on future findings.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 685885 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 12-07-2022
• Assessment Year: misc
• Other Referred Cases: Mavilayi Service Co-operative Bank Ltd. v. Commissioner of Income Tax [2021 (1) KHC 303]
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: CHRISTOPHER ABRAHAM
• Assessee Lawyers: T M; NISHA ALAN; PRIYADARSHI V P NARAYANAN
• Keywords: Assessment; Exemption; Faceless assessment; Income Tax; Penalty; Remand
• Section: 271(1)(c); 80P

Judgement Text

"IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE GOPINATH P. TUESDAY, THE 12TH DAY OF JULY 2022 / 21ST ASHADHA, 1944 WP(C) NO. 12676 OF 2022 PETITIONER/S: M/S.KARAKULAM SERVICE CO-OPERATIVE BANK LTD KP-1.382M KARAKULAM-PO, NEDUMANGAD, TRIVANDRUM-695 564, REPRESENTED BY ITS SECRETARY.SHRI. B. BIJUKUMAR. BY ADVS. T.M.SREEDHARAN (SR.) NISHA JOHN ALAN PRIYADARSHI DEV V.P.NARAYANAN RESPONDENT/S: ADDITIONAL/JOINT/DEPUTY/ASSISTANT COMMISSIONER INCOME TAX /NATIONAL FACELESS ASSESSMENT CENTRE NORTH BLOCK, NEW DELHI-1110 001 SRI. CHRISTOPHER ABRAHAM SC THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 12.07.2022, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C) NO. 12676 OF 2022 2 JUDGMENT Petitioner has approached this Court, being aggrieved by Ext.P1 order, imposing penalty under Section 271(1)(c) of the Income Tax Act,1961. 2. The assessment against the petitioner for the year 2014-15 was completed on 27.12.2016. The matter finally reached the Tribunal from where it was remanded to the Assessing Officer for reconsideration. The Assessing Officer passed the same order which was confirmed by the First Appellate Authority and again, the matter went to the Tribunal. The Tribunal has, by order dated 19.05.2020, again remanded the matter for consideration of the First Appellate Authority. It is submission of the learned counsel appearing for the petitioner that Ext.P1 order imposing penalty essentially arises out of the proceedings finalized against the petitioner as above by the Assessing Officer which is now at large before the First Appellate Authority, following the order of remand by the Tribunal on 19.05.2020. It is submitted that, in the meanwhile, the issue has been also settled by the Judgment of the Hon’ble Supreme Court in Mavilayi Service Co-operative Bank Ltd. v. Commissioner of Income Tax WP(C) NO. 12676 OF 2022 3 [2021 (1) KHC 303]. It is submitted that the question as to whether any penalty can be imposed will depend on the orders to be passed by the First Appellate Authority following remand by the Tribunal. 3. Heard the learned Standing Counsel appearing for the respondents. Learned Standing Counsel points out that there is no ground for the petitioner to challenge Ext.P1 order of penalty before this Court directly under Article 226 of the Constitution of India. It is submitted that the petitioner has an effective alternative remedy against Ext.P1 and it is not necessary for this Court to examine the question as to whether the petitioner is liable for penalty under Section 271(1)(c) of the Income Tax Act, at this stage. It is submitted that the assessment and penalty are separate proceedings and merely because the assessment is now at large before the First Appellate Authority, that does not mean that the order of penalty is bad in any manner. 4. Having heard the learned counsel appearing for the petitioner and the learned Standing counsel appearing for the respondent Department, I am of the view that the question as to whether the petitioner is liable for any penalty will depend on the orders to be passed by the First Appellate Authority, WP(C) NO. 12676 OF 2022 4 following the remand by the Tribunal through order dated 19.05.2020. Still further, I note that the Hon’ble Supreme Court in Mavilayi (supra) has decided the question as to whether Societies like the petitioner are entitled to exemption under Section 80P of the Income Tax Act. That is also a matter which will have to be considered by the First Appellate Authority, following remand by the Tribunal. Taking all the above facts into consideration, I am of the view that Ext.P1 order can be set aside, making it clear that setting aside of Ext.P1 will not bar initiation of fresh proceedings for imposition of penalty, if the same is found necessary at a later stage. The Writ petition is allowed in the manner indicated above. sd/- GOPINATH P. JUDGE ajt WP(C) NO. 12676 OF 2022 5 APPENDIX OF WP(C) 12676/2022 PETITIONER EXHIBITS Exhibit P1 TRUE COPY OF THE ORDER UNDER SECTION 271(1) (C0 OF THE INCOME TAX ACT,1961 DATED 25.3.2022 FOR THE ASSESSMENT YEAR 2014-15 ISSUED BY THE RESPONDENT Exhibit P2 TRUE COPY OF THE ORDER DATED 4.10.2018 IN CIVIL APPEAL NO 7526/2011 OF THE HON'BLE SUPREME COURT OF INDIA. Exhibit P3 A TRUE COPY OF THE ORDER OF THE APPELLATE TRIBUNAL DATED 2.8.2018 IN NO 644/COCH/2017 FOR THE ASSESSMENT YEAR 2014-15 "