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

WP(C)/36113/2022

AI Insights

The case involves M/s. Mugu Service Co-operative Bank Ltd., which challenged the rectification and penalty orders issued by the Income Tax Officer under the Income Tax Act, 1961. The petitioner argued that the rectification and penalty were imposed without providing any opportunity to object, rendering the orders illegal and arbitrary. The High Court of Kerala at Ernakulam, considering the submissions and the circumstances, decided to keep the recovery proceedings in abeyance until the appeal is resolved and directed the appellate authority to hear the petitioner's case.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 750496 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 11-11-2022
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: CHRISTOPHER ABRAHAM
• Assessee Lawyers: ALAN DEV; V P NARAYANAN; T M SREEDHARAN
• Keywords: Assessment; Faceless Appeal; Faceless assessment; Income Tax; Penalty; Rectification; Stay Petition
• Section: 154; 270A

Judgement Text

"IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE GOPINATH P. FRIDAY, THE 11TH DAY OF NOVEMBER 2022 / 20TH KARTHIKA, 1944 WP(C) NO. 36113 OF 2022 PETITIONER: M/S.MUGU SERVICE CO-OPERATIVE BANK LTD., MUGU P.O.,KASARAGOD – 671 321, REPRESENTED BY ITS SECRETARY IN CHARGE, SMT. UMALATHA A. BY ADVS. ALAN PRIYADARSHI DEV V.P.NARAYANAN T.M.SREEDHARAN (SR.) RESPONDENTS: 1 THE INCOME TAX OFFICER, WARD 1 & TPS, AAYAKAR BHAVAN, VIDYA NAGAR, KASARAGOD – 671 123, KERALA STATE. 2 ADDITIONAL/JOINT/DEPUTY/ASSISTANT COMMISSIONER OF INCOME TAX, INCOME TAX OFFICER, NATIONAL FACELESS ASSESSMENT CENTRE, INCOME TAX DEPARTMENT, MINISTRY OF FINANCE, ROOM NO.401, 2ND FLOOR, E-RAMP, JAWAHARLAL STADIUM, DELHI – 110 003. 3 THE COMMISSIONER OF INCOME TAX (APPEALS), NATIONAL FACELESS APPEAL CENTRE, INCOME TAX DEPARTMENT, MINISTRY OF FINANCE,JAWAHARLAL STADIUM,DELHI – 110 003. ADV. CHRISTOPHER ABRAHAM (SC) THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 11.11.2022, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C) NO. 36113 OF 2022 2 JUDGMENT The assessment of the petitioner under the provisions of the Income Tax Act for the assessment year 2017-18 was originally completed by Ext.P3 order dated 27.03.2022. The assessing officer (the 1st respondent herein) thereafter issued Ext.P4 order rectifying the assessment in exercise of jurisdiction under Section 154 of the Income Tax Act, against which the petitioner has filed Ext.P5 appeal along with Ext.P6 stay petition before the National Faceless Appeal Centre (3rd respondent). Pending consideration of the stay petition, the 1st respondent has also issued an order imposing penalty under Section 270A of the Income Tax Act, 1961 through Ext.P7 order dated 23.09.2022. It is the case of the petitioner that Ext.P4 order of rectification is completely illegal and unsustainable as the rectification was made without affording to the petitioner any sort of opportunity to object. It is submitted that Ext.P7 order imposing penalty has also been issued without affording any opportunity to the petitioner. It is submitted that the orders are, therefore, illegal and arbitrary. The petitioner apprehends that recovery proceedings may be WP(C) NO. 36113 OF 2022 3 initiated to recover amounts due under Exts.P4 and P7 pending consideration of the appeal by the appellate authority. 2. Having regard to the facts and circumstances of the case and taking into consideration of the submission of the learned counsel appearing for the petitioner that both Exts.P4 and P7 orders have been issued without affording to the petitioner any opportunity, I am of the opinion that the demands, if any, pursuant to Exts.P4 and P7 shall be kept in abeyance till the appeal is disposed of by the 3rd respondent. Accordingly, this writ petition is disposed of directing the 3rd respondent to consider and pass orders on Ext.P5 appeal after affording to the petitioner an opportunity of hearing, within a period of six months from the date of receipt of a certified copy of this judgment. Till such time as orders are passed, any proceedings for recovery of amounts due under Exts.P4 and P7 shall be kept in abeyance. Sd/- GOPINATH P. JUDGE DK WP(C) NO. 36113 OF 2022 4 APPENDIX OF WP(C) 36113/2022 PETITIONER EXHIBITS Exhibit P1 TRUE COPY OF THE ASSESSMENT ORDER PASSED BY THE 1ST RESPONDENT DATED 13.12.2019 FOR THE ASSESSMENT YEAR 2017-18 Exhibit P2 TRUE COPY OF THE ORDER OF ITAT COCHIN BENCH IN LTA NO.355/COCH/2020 DATED 21.10.2020. Exhibit P3 TRUE COPY OF THE ASSESSMENT ORDER PASSED BY THE 2ND RESPONDENT ALONG WITH DEMAND NOTICE DATED 27.03.2022. Exhibit P4 TRUE COPY OF THE RECTIFICATION ORDER PASSED BY THE 1ST RESPONDENT DATED 22.09.2022 Exhibit P5 TRUE COPY OF THE APPEAL MEMORANDUM SUBMITTED BEFORE THE 3RD RESPONDENT DATED 22.10.2022 Exhibit P6 TRUE COPY OF THE STAY PETITION DATED 13/10/2022 SUBMITTED BEFORE THE 3RD RESPONDENT Exhibit P7 TRUE COPY OF THE PENALTY ORDER ISSUED BY THE 1ST RESPONDENT DATED 23.09.2022 "