KUNNAMKULAM CO-OPERATIVE URBAN BANK LTD NO. 698, V. THE COMMISSIONER OF INCOME TAX APPEALS,

WP(C)/34530/2018

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The case involves Kunnamkulam Co-operative Urban Bank, which faced an adverse income tax assessment and appealed against the condition imposed by the Commissioner of Income Tax Appeals requiring a 30% deposit of the demand for the appeal to be considered. The bank argued that due to financial losses, it could not meet this condition. The Principal Commissioner of Income Tax and the Income Tax Officer supported the initial decision, leading the bank to file a writ petition. The High Court of Kerala, while reluctant to interfere with the discretion of the tax authorities, decided to mitigate the financial burden on the cooperative bank by reducing the required deposit to 20%.

• Counselvise Citation: [2018] 140 COUNSELVISE.COM (IT) 768833 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 29-10-2018
• Assessment Year: misc
• Other Referred Cases: WPC.NO.25262/2016 AND CONNECTED CASES
• Result in Favour of: Partly Allowed
• Court: HIGH COURT
• Department Lawyers: JOSE JOSEPH
• Assessee Lawyers: P C SASIDHARAN
• Keywords: Cooperative Bank; Financial loss; Income tax assessment; Interim order; Appeal Condition

Judgement Text

"IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE DAMA SESHADRI NAIDU MONDAY ,THE 29TH DAY OF OCTOBER 2018 / 7TH KARTHIKA, 1940 WP(C).No. 34530 of 2018 PETITIONER/S: KUNNAMKULAM CO-OPERATIVE URBAN BANK LTD NO. 698, KUNNAMKULAM, THRISSUR - 680503, REPRESENTED BY ITS SECRETARY. BY ADV. SRI.P.C.SASIDHARAN RESPONDENT/S: 1 THE COMMISSIONER OF INCOME TAX APPEALS, AAYAKAR BHAVAN, SHAKTAN NAGAR, THRISSUR- 680001. 2 THE PRINCIPAL COMMISSIONER OF INCOME TAX, AAYAKAR BHAVAN, SHAKTAN NAGAR, THRISSUR - 680001. 3 THE INCOME TAX OFFICER, WARD I, GURUVAYOOR - 680101. OTHER PRESENT: SC. SRI. JOSE JOSEPH THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 29.10.2018, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: -2- W.P.(C). No. 34530 of 2018 JUDGMENT The petitioner, a Cooperative Bank, suffered an adverse income tax assessment. In appeal, the first respondent imposed a precondition of the petitioner's depositing 30% of the demand to have the proceedings stayed before the appeal could be considered. The Bank complains that it has been in loss and it could not comply with the condition. So it approached the second respondent, who through Ext.P7, rejected the petitioner's request. The authority has held that since a parallel authority has already passed an order, it is inappropriate for him to interfere. In that context, assailing both the Exts.P5 and P7, the petitioner has filed this writ petition. 2. The Standing Counsel for the Cooperative Bank has taken me through the record and contended that the Bank has been incurring huge losses and it is almost impossible for it to comply with the precondition as set out in the Ext.P5. According to him, the demand is for 18 lakhs rupees, and 30% comes to substantial amount, which given the Bank's financial position, could not be complied with. In this regard, he has drawn my attention to the Ext.P8 judgment of -3- W.P.(C). No. 34530 of 2018 this Court. 3. The Standing Counsel for the Income Tax Department has, however, submitted that there is no method of carrying forward the losses. And for this assessment year, the petitioner cannot have the excuse of the previous losses. 4. As I reckon, this Court has been consistently following the policy of not interfering with the discretion exercised by the judicial and quasi judicial authorities. 5. Indeed, this Court has always been averse to interfering with the Tribunal's discretion. The law is well settled that unless any order of discretion suffers from well recognised legal infirmities— arbitrariness, unreasonableness, or lacking its very source—the courts at higher échelons would not interfere. Here, the Tribunal has acted well within its powers. 6. At any rate, the assessee is an institution and its affairs involve public interest. So the Court finds mitigating the circumstances to scale down the rigor of the interim direction. 7. Here, to reiterate, the petitioner is a Cooperative Bank -4- W.P.(C). No. 34530 of 2018 working for the welfare of its members. And admittedly, it has been in losses. I, therefore, hold that if the petitioner pays 20% of the demand, in two months, the first respondent will consider the petitioners appeal, on merits. Sd/- DAMA SESHADRI NAIDU JUDGE das APPENDIX PETITIONER'S/S EXHIBITS: EXHIBIT P1 TRUE COPY OF THE ASSESSMENT ORDER DATED 16.3.2016. EXHIBIT P2 TRUE COPY OF THE DEMAND NOTICE DATED 16.3.2016. EXHIBIT P3 TRUE COPY OF THE MEMORANDUM OF APPEAL PREFERRED BEFORE THE COMMISSIONER OF INCOME TAX APPEALS DATED 1.4.2016. EXHIBIT P4 TRUE COPY OF THE APPLICATION DATED 1.4.2016. EXHIBIT P5 TRUE COPY OF THE INTERIM ORDER DATED 24.5.2017. -5- W.P.(C). No. 34530 of 2018 EXHIBIT P6 TRUE COPY OF THE APPEAL PETITION. EXHIBIT P7 TRUE COPY OF THE ORDER DATED 25.6.2018. EXHIBIT P8 TRUE COPY OF THE JUDGMENT IN WPC.NO.25262/2016 AND CONNECTED CASES DATED 7.4.2017. "