M/S.KARAKULAM SERVICE CO-OPERATIVE BANK LTD., V. THE INCOME TAX OFFICER

WP(C)/10371/2019

AI Insights

The case involves M/s. Karakulam Service Co-operative Bank Ltd., which challenged the orders of the Income Tax Officer and the Commissioner of Income Tax (Appeals) that refused to grant a stay of recovery pending appeals against the assessment orders for the years 2011-2012 and 2014-2015. The petitioner argued that the refusal was arbitrary and lacked proper reasoning, while the respondents maintained that the assessments were made following applicable provisions and that no prima facie case for stay was established. The court found that the reasons provided for the refusal touched upon the merits of the appeal and did not adequately consider the interlocutory nature of the stay application.

• Counselvise Citation: [2019] 140 COUNSELVISE.COM (IT) 765885 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 03-04-2019
• Assessment Year: misc
• Laws Referred To: Income Tax Act, Kerala Co-operative Societies Act
• Result in Favour of: Partly Allowed
• Court: HIGH COURT
• Department Lawyers: CHRISTOPHER ABRAHAM; O P WINSON
• Assessee Lawyers: T M SREEDHARAN; DIVYA RAVINDRAN; NISHA JOHN; R BHASKARA KRISHNAN; V P NARAYANAN
• Keywords: Appeal Pending; Assessment Order; Income Tax; Stay of recovery; Jurisdiction exercise
• Section: 147; 143(3); 80P

Judgement Text

"IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE S.V.BHATTI WEDNESDAY,THE 03RD DAY OF APRIL 2019 / 13TH CHAITHRA, 1941 WP(C).No. 10371 of 2019 PETITIONER/S: M/S.KARAKULAM SERVICE CO-OPERATIVE BANK LTD., KP-1/382, KARAKULAM-P.O, NEDUMANGAD, TRIVANDRUM- 695564, REPRESENTED BY ITS SECRETARY, SHRI.K. PADMAKUMAR. BY ADVS. SRI.T.M.SREEDHARAN (SR.) SMT.DIVYA RAVINDRAN SMT.NISHA JOHN SRI.R.BHASKARA KRISHNAN SRI.V.P.NARAYANAN RESPONDENT/S: 1 THE INCOME TAX OFFICER WARD 2(3), THIRUVANANTHAPURAM-695003. 2 THE COMMISSIONER OF INCOME TAX(APPEALS) 2ND FLOOR, AAYAKAR BHAVAN, KOWDIAR, THIRUVANANTHAPURAM-695003. SR. CHRISTOPHER ABRAHAM-SC, SRI. O.P. JOS WINSON THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 03.04.2019, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: W.P.(C)No.10371/19 2 JUDGMENT Heard Sri.V.P.Narayanan, the learned counsel for the petitioner and Sri.Christopher Abraham, the learned Standing Counsel for the respondents. 2. The petitioner challenges the orders refusing to grant stay pending appeal in Exts.P6 and P10 as completely illegal and the orders did not record reasons for denying the relief of stay of recovery pending appeals. Ext.P5 appeal is filed aggreived by the Assessment Order dated 27.11.2018. Ext.P5 deals with the assessment year 2011-2012. Ext.P9 appeal is filed challenging order of assessment for the year 2014-2015. The orders impugned in the writ petition are identical for convenience the order in Ext.P6 is excerpted hereunder:- “ The Appellant had filed a stay petition along with Appeal for Ay 2011-12. The Appellant's petition for stay of demand of Rs.1,12,81,740 was posted for hearing on 14.03.2019. In response to the notice the Authorized Representative of the Appellant attended the case and discussed. The appeal has been filed against the order giving effect to the CIT(A)'s order dated 27.11.2018. The learned AR has argued that the Assessing Officer has wrongly denied exemption u/s 80P. On perusal of the records, prima facie, it appears that the Assessing Officer has correctly followed the directions given by appellate authorities in this order giving effect to the said order. Therefore, there is no prima facie case for stay of demand. W.P.(C)No.10371/19 3 Hence, no stay is granted on the demand raised by the Assessing Officer.” 3. Sri.V.P.Narayanan, contends that the reasons assigned in Ext.P6 show the arbitrary manner in which the jurisdiction is exercised by the 2nd respondent. The petitioner has made out substantial grounds in appeals against the respective orders of assessment and also sufficient grounds for granting stay pending appeal. For the assessment year 2014- 2015 as per Ext.P5 the petitioner has already deposited 20% of the tax demanded and there is no reason why the request for stay made in the appeal pending in Ext.P9 is also refused. He prays for stay of recovery pending Exts.P5 and P9 appeals. 4. The learned Standing Counsel contends that the order of assessment is made by following the applicable provisions in this behalf and the appellate authority since satisfied that no case is made out for granting stay declined to exercise the jurisdiction rightly, he prays for dismissing the writ petition. He alternatively submits that the assessee if could deposit 20% of the tax demanded by the respective assessment orders, this Court can consider granting stay of recovery pending appeals and direct disposal of Exts.P5 and P9 appeals. 5. The reasons given by the 2nd respondent for refusing the prayer for stay and touch the merits of the appeal. Thus, the petition for stay is W.P.(C)No.10371/19 4 not given due consideration while disposing of interlocutory applications. The appeals in Exts.P5 and P9 since are pending and to balance the claims of assessee on one hand and the revenue on another hand and also to ensure timely disposal of the appeals the writ petition is disposed of by this order:- (a) there shall be stay of recovery of amount demanded for the Assessment Year 2011-2012 subject to the petitioner depositing 20 % of the tax demanded i.e, Rs.1,12,81,740/- within four weeks from today. In default of complying with the condition the stay granted by this order ceases to be effective. (b) for the assessment year 2014-2015, the petitioner has paid 20% of the tax demanded therefore by granting stay of further recovery of the tax demanded for the assessment year 2014-2015, the appeal is directed to be disposed of. (c) the appeals in Exts.P5 and P9, hence are disposed of as expeditiously as possible preferably within three months from today. Sd/- S.V.BHATTI JUDGE Ac W.P.(C)No.10371/19 5 APPENDIX PETITIONER'S/S EXHIBITS: EXHIBIT P1 TRUE COPY OF THE CERTIFICATE OF REGISTRATION NO.E 17/2013 DATED 14.02.2013 GRANTED BY THE ASSISTANT REGISTRAR (GENERAL)NEDUMANGAD, UNDER THE KERALA CO- OPERATIVE SOCIETIES ACT. EXHIBIT P2 A TRUE COPY OF THE ASST.ORDER 23.10.2016 ALONG WITH DEMAND NOTICE AND COMPUTATION OF INCOME PASSED BY THE 1ST RESPONDENT U/S.143(3) R.W.S. 147 OF THE INCOME TAX ACT. EXHIBIT P3 TRUE COPY OF THE ORDER OF THE SECOND RESPONDENT IN ITA NO.91/EF/TVM/CIT(A)/TVM/2017-18 DATED 27.11.2018. EXHIBIT P4 TRUE COPY OF MODIFIED ORDER DATED 18.12.2018 FOR THE ASST. YEAR 2011-12 ALONG WITH DEMAND NOTICE. EXHIBIT P5 TRUE COPY MEMORANDUM OF APPEAL E-FILED ON 22.2.2019 BY THE PETITIONER BEFORE THE 2ND RESPONDENT. EXHIBIT P5 A TRUE COPY STAY PETITION DATED 22.2.2019 FILED BY THE PETITIONER BEFORE THE 2ND RESPONDENT. EXHIBIT P5 B TRUE COPY PETITION FOR CONDONATION OF DELAY DATED 22.2.2019 FILED BY THE PETITIONER BEFORE THE 2ND RESPONDENT. EXHIBIT P6 TRUE COPY OF STAY ORDER IN ITA NO.684/EF/TVM/2018-19 DATED 25.03.2019 PASSED BY THE 2ND RESPONDENT FOR THE ASST. YEAR 2011-12. EXHIBIT P7 TRUE COPY OF OFFICE MEMORANDUM F.NO.404/72/93-ITCC DATED 31.7.2017 ISSUED BY CENTRAL BOARD OD DIRECT TAXES. EXHIBIT P8 TRUE COPY OF MODIFIED ORDER DATED 14.11.2018 ALONG WITH DEMAND NOTICE AND COMPUTATION FROM PASSED BY THE 1ST RESPONDENT FOR THE ASST.YEAR 2014-15. W.P.(C)No.10371/19 6 EXHIBIT P9 TRUE COPY OF MEMORANDUM OF APPEAL E-FILED ON 7.1.2019 BY THE PETITIONER BEFORE THE 2ND RESPONDENT FOR THE ASST. YEAR 2014-15. EXHIBIT P9 A TRUE COPY OF STAY PETITION DATED 7.12.2018 FILED BY THE PETITIONER BEFORE THE 2ND RESPONDENT FOR THE ASST.YEAR 2014-15. EXHIBIT P10 TRUE COPY OF STAY ORDER IN ITA NO.314/EF/TVM/2018-19 DATED 25.03.2019 PASSED BY THE 2ND RESPONDENT FOR THE ASST.YEAR 2014-15. RESPONDENT'S/S EXHIBITS: NIL //TRUE COPY// Sd/- PA TO JUDGE "