KARUVANNUR SERVICE CO-OPERATIVE BANK LTD. V. INCOME TAX OFFICER

WP(C)/16614/2022

AI Insights

The case involves the Karuvannur Service Co-operative Bank Limited, which contested an assessment order rejecting its claim for deduction under Section 80P of the Income Tax Act. The assessment order, issued by the Income Tax Officer, was challenged on the grounds that it did not consider a relevant Supreme Court judgment (Mavilayi Service Co-operative Bank Ltd. v. Commissioner of Income Tax) that was binding and had overruled the Full Bench judgment of the Kerala High Court previously relied upon by the Assessing Officer. The petitioner had already filed an appeal against the assessment order, which was pending before the Commissioner of Income Tax (Appeals). The High Court, while directing the appellate authority to expedite the appeal process, also expressed concern over the Assessing Officers' disregard for Supreme Court judgments, leading to the imposition of costs on the respondents.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 751398 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 25-05-2022
• Assessment Year: misc
• Other Referred Cases: Mavilayi Service Co-operative Bank Ltd. v. Commissioner of Income Tax [2021 (1) KLT 485], ITA No.97/2016 [(2019) 2 KLT 597]
• Laws Referred To: Kerala Co-operative Societies Act, 1969, Section 80P
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: JOSE JOSEPH
• Assessee Lawyers: K S NAIR; G REMADEVI; P F JOY; RAJATH NATH; HARIMA HARIHARAN
• Keywords: Assessment Order; Deduction; Income Tax; Primary Agricultural Credit Society; Supreme Court judgment; Mavilayi Service Co-operative Bank Ltd. v. Commissioner of Income Tax
• Section: 80P

Judgement Text

"IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE BECHU KURIAN THOMAS WEDNESDAY, THE 25TH DAY OF MAY 2022 / 4TH JYAISHTA, 1944 W.P.(C) NO.16614 OF 2022 PETIT IONER: KARUVANNUR SERVICE CO-OPERATIVE BANK LIMITED, KARUVANNUR P.O., THRISSUR-680 711 REPRESENTED BY ITS SECRETARY-IN-CHARGE SMT. SREEKALA E.S. BY ADVS. K.S.HARIHARAN NAIR G.REMADEVI P.F.JOY RAJATH R NATH HARIMA HARIHARAN RESPONDENTS: 1 THE INCOME TAX OFFICER, WARD 2(2), AAYAKAR BHAVAN, SAKTHAN THAMPURAN NAGAR, THRISSSUR, PIN-680 001. 2 THE ADDITIONAL /JOINT/DEPUTY/ASST. COMMISSIONER OF INCOME TAX/INCOME TAX OFFICER, NATIONAL FACELESS ASSESSMENT CENTRE, DELHI-110 001. 3 COMMISSIONER OF INCOME TAX (APPEALS), NATIONAL FACELESS APPEAL CENTRE, DELHI-110 001. SRI. JOSE JOSEPH, STANDING COUNSEL THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 25.05.2022, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: W.P.(C) No.16614/22 -:2:- BECHU KURIAN THOMAS, J. ----------------------------------- W.P.(C) No.16614 of 2022 ----------------------------------- Dated this the 25th day of May, 2022 JUDGMENT Petitioner is a Primary Agricultural Credit Society registered under the Kerala Co-operative Societies Act, 1969. Ext.P1 order of assessment was issued against the petitioner on 28.03.2022. In the assessment order, petitioner's claim for deduction under Section 80P was rejected on the ground that there was no evidence to show that petitioner satisfied the ingredients of the Primary Agricultural Credit Society as contemplated under the Kerala Co-operative Societies Act. 2. While assailing the assessment order before the 3rd respondent, petitioner has sought to canvass that the judgment of the Supreme Court in Mavilayi Service Co- operative Bank Ltd. v. Commissioner of Income Tax [2021 (1) KLT 485] was not considered by the assessing officer, though the assessment order was rendered subsequent to the Supreme Court Judgment. W.P.(C) No.16614/22 -:3:- 3. Since petitioner has already preferred an appeal as Ext.P2 and the same is pending consideration before the 3rd respondent, I deem it fit that this writ petition be disposed of directing the Appellate Authority to consider the appeal in a time-bound manner. 4. Before parting with this case, this Court is compelled to observe and comment upon a disturbing practice being adopted by the Assessing Officers as can be seen in the Assessment order under consideration in this case. The Assessing Officers have been repeatedly ignoring the judgment of the Supreme Court in Mavilayi's case (supra). 5. In fact, a perusal of the assessment order reveals that the judgment of the Full Bench of this Court in ITA No.97/2016 dated 19.03.2019 [(2019) 2 KLT 597] has been relied upon by the Assessing Officer to impose liability on the assessee ignoring the Supreme Court Judgment in Mavilayi's case. The Supreme Court judgment in Mavilayi's case had overruled the Full Bench judgment of this Court. It does not augur well in the interest of the rule W.P.(C) No.16614/22 -:4:- of law that Assessing Officers continue to ignore binding judgments of the Supreme Court and instead rely upon overruled judgments. Hence, I am of the view that the respondents must be imposed with a minimal cost. 6. After indicating the need and the inclination of the Court to impose costs on the respondents in five separate writ petitions, at the request of the learned Standing Counsel, the case was posted today for further consideration. 7. The learned Standing Counsel pleaded to avoid the imposition of costs and informed that the department has taken note of the apprehensions expressed by this Court on the last posting date. It was also pointed out that communications have been issued from the office of the Standing Counsel to the Senior Officers of the department intimating the intention of the Court to impose costs for disrespecting binding judgments of the Supreme Court and that necessary steps have been taken by the Department to avoid recurrence of such instances. It was pointed out that the impugned assessment orders failed to advert to the W.P.(C) No.16614/22 -:5:- binding judgment solely on account of the failure of the assessees to file replies to the show-cause notices issued by the assessing officer in the case. 8. Though the above submissions of the learned Standing Counsel were impressive and to a large extent persuasive, still taking note of the fact that the decision in Mavilayi's case was rendered on 12.01.2021, the assessing officers could not have omitted or feigned ignorance of the said binding judgment, notwithstanding the same having not been brought to its notice by the respective assessees. To preserve the majesty of law, it is therefore essential to impose costs, in one case atleast, instead of the five cases, as a token reminder to the department, to always abide by the rule of law. I reiterate that the imposition of costs is a token and shall not be treated as a precedent for other assessment orders already issued. 9. Accordingly, there will be a direction to the 3rd respondent to dispose of Ext.P2 appeal, as expeditiously as possible, at any rate, within a period of six months from the date of receipt of a copy of this judgment, after granting an W.P.(C) No.16614/22 -:6:- opportunity of hearing to the petitioner. Till then, all coercive proceedings against the petitioner pursuant to Ext.P1 shall be kept in abeyance. The writ petition is disposed of as above with a cost of Rs.1,000/- on the respondents, payable to the Kerala State Legal Services Authority, High Court of Kerala. The cost shall be paid within four weeks from the date of receipt of a copy of this judgment. Sd/- BECHU KURIAN THOMAS JUDGE bpr W.P.(C) No.16614/22 -:7:- APPENDIX PETITIONER'S EXHIBITS EXHIBIT P1 COPY OF ASSESSMENT ORDER DATED 28-03-2022 ISSUED BY THE 2ND RESPONDENT FOR THE ASSESSMENT YEAR 2013-14. EXHIBIT P2 COPY OF APPEAL MEMORANDUM FILED BY THE PETITIONER BEFORE THE 3RD RE DATED 26-04-2022 AGAINST EXT.P1. EXHIBIT P3 COPY OF THE STAY PETITION FILED BY THE PETITIONER BEFORE THE 3RD RESPONDENT DATED 26-04-2022 IN EXT.P2 APPEAL. "