M/S. THE ANDHRA BANK FARMERS SERVICE CO-OP SOCIETY LTD V. UNION OF INDIA

WP/1860/2024

AI Insights

The case involves M/S. The Andhra Bank Farmers Service-Co-operative Ltd, a primary agricultural co-operative credit society, challenging a notice under Section 226(3) of the IT Act, 1961, which aimed to attach their bank account. The petitioner argued that as a cooperative credit society, they are entitled to complete income/profit exemptions under Section 80(P)(2) of the Income Tax Act, 1961, and that the notice was issued arbitrarily and without following natural justice. The Income Tax Department contended that the matter was already under consideration by the relevant authorities, and thus, the High Court should not intervene at this stage. The court, referencing a Supreme Court decision, recognized the petitioner's entitlement to exemption and directed the lower authority to expedite the decision on the interim protection sought by the petitioner.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 724144 (HC-TELANGANA)
• Appeal Type: Others
• Pronouncement Date: 05-02-2024
• Assessment Year: misc
• Other Referred Cases: Pr. Commissioner of Income Tax 17, Mumbai v. Annasaheb Patil Mathadi Mamgar Sahakari Pathpedit
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: GADI PRAVEEN KUMAR; J V PRASAD
• Assessee Lawyers: ALMAS BEGUM MOHAMMED
• Keywords: Assessment proceedings; Co-operative Credit Society; Income tax exemption; Interim protection; Writ of Mandamus; Notice to Attach Bank Account
• Section: 144B; 226(3); 80-P(2); 747

Judgement Text

"[337e ] HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD (SPecial Original Jurisdiction) MONDAY,THE FIFTH DAY OF FEBRUARY TWO THOUSAND AND TWENTY FOUR PRESENT THE HONOURABLE SRI JUSTICE P.SAM KOSHY AND THE HONOURABLE SRt JUSTICE N.TUKARAMJI WRIT PETITION NO: 1 8600F 2024 Between: AND M/S. THE ANDHRA BANK FARMERS SERVICE-CO-O! soclEw LTD' A dbtreti \"iiEcb.' uNoeii \" iHE'- s-otieites. nc-r 1e64 HAVING HEdiSiineo orrrct ni n.Nb. -q'z-aog,.K.ry 1APURAH HAVELI' iiFiiiXo-nn-c o lo r'r v, wvnn nciAo, nolAn! lllc1tB' KHA'tvl MAM' r' s' R'di,iiEXenr-e-'o-6V iis cnter oFEFiArloN oFFlcER B ASHoK ...PETITIONER 1. UNION OF INDIA, REPRESENTED BY IT.S_ P.RINCIPLE SECRETARY' ' tr'ririsinV oF'-FriirnubE,'-lNcoME rAx DEPARTMENT' NEW DELHI' INDIA. TAX, TELANGANA tiiE' i;nrrucrpnl cH tEF coMMlssloNER oF lNcoM.E, Ai'i-D' ; b;'CA Fiubesn,\"'iott- rioon, INCoME rAX rowERS' ilclc uni{oii'ivtnsnb lAtl r, HYD ERABAD - 500- 9q1. - ?nt\"Xb'bEdsir.rc' AuiHoiiriV, ruArtotlnl FACELESS ASSESSMENT CENTRE, DELHI, INDIA. YriL'i;arircrpAl'i'oMrr,trssror.rER oF INCoME---41 !'YING - A1?ryq.F-LogFir rNb?r'i|E ili'ibwEiis, n.b'GUAn-os' Mnsne rANK, HYDERABAD - 500 oo4 Y[t rNcortre rAX oFFrcER, TELANGANA AND-.ANDHRA PRADESH' orFr#b} i-nE inboMi= fA{wnRo t, RAJIv cHowK, KHAMMAM ...RESPONDENTS Petition under Article 226 of the Constitution of lndia praying that in the circumstances stated in the affidavit filed therewith' the High Court may be pleased to issue an appropriate Writ, Order or Direction' more particularly in the natureofWritofMandamusoranyotherappropriateWritdeclaringthatthesth Respondents Notice U/s' 226(3) of lT Act 1961 daled 18-12-2023 vide reference No. ITBA,/RCV/ 5t226(3)1tN23-241105883254:{1)', lrlotice to attach Bank account as being illegal, arbit(ary, unilateral' uniust and against the procedures of natural justice as the Petitioner is being a prin'lary agricultural co-operative credit society 3 4 2 5 is entitled to exemptionibenefit of entire income/profits under section 80 (P) (2) of the lncome Tax Act 1961 and subsequently quash the same as the orders of 2nd Respondent as the petitioners income/profits are exempted from ldvy of income tax since exempted under section 80 (P) of lT Act, 1961 lA NO: 't OF 24 Petition under Section 1 51 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased to direct the 4th Respondent to stay further all proceeding with respect to the Notice U/s. 226(3) of lT Act 196 1 dated 18-12-2023 vide reference No. ITBA/RCV/S/226(3)112O23- 2411058832543(1), Notice to attach Bank account and pass Counsel for the Petitioner: M/s. ALMAS BEGUM MOHAMMED Counsel for the Respondent No.1: SRI GADI PRAVEEN KUMAR Dy. SOLICITOR GEN. OF INDIA Counsel for the Respondent Nos. 2to5: SRI J.V. PRASAD, SC FOR ]NCOME TAX DEPARTMENT The Court made the following: ORDER ry v THE HON'BLE SRI JUSTICE P.SAM KOSHY AND THE HON'BLE SRI JUSTICE N.TUKARAMJI WRIT PETITION No.186O of 20.24 ORDER: (per Hofl'bte Sri Justice P.sA.a KosEY) The present Writ Petition has been filed seeking the following relief: \"...to issue a Writ, Order or Direction, more particularly in the nature of Writ of Mandamus or any other appropriate Writ declaring that the 5th Respondent's \"Notice U /s. 226(3) of IT Act 1961 dated 18-72-2023 vide reference No. ITBA/ RCV/ S / 2 26 (3) *r I 2023'24 / to sa832543( 1 )\", \"Notice to attach Bank account\" as illegal, arbitrary, unilateral, unjust and against the procedures of natural justice as the PeLitioner is being a primary agricultural co-operative credit society is entitled to exemption /benefit of entire income/profits under section 80 (P) (2) of the Income Tax Act 1961 and subsequently quash the same as the orders of 2nd Respondent as the petiLioner's income/prohts are exempted frorn levy of income tax since exempted under section 8O (P) of IT Act, 1961 .. .\" 2. Heard Ms. Almas Begum Mohammed, learned counsel for the petitioner and Mr. J.V. Prasad, learned Standing Counsel for Income Tax Department appearing for the respondents. 3. The contention of the learned counsel for the petitioner is that the petitioner is primarily an agricultural co-operative credit society which is entitled for exemption/ benefit of entire income/profits under Section 80(PX2) of the Income Tax Act, 1961 (for short 'the ActJ' 2 X 4. According to the learned counsel for the petitioner, they were entitled for exemption under Section S0(pX2) of the Act. But respondent No.3 has initiated assessment proceedings against the petitioner under Section 747 read, with Section L44B of the Act for the assessment years 2O13-14, 2Ol4-15,2015-16, 2016-17 and 2O2O-21 uide orders dated 3O.03.2022, 23.09.2022 and further have also imposed penalty uide orders dated 20.O9.2022 and 15.02.2023. 5. Being aggrieved by the said order of assessment, the petitioner immediately preferred an appeal before the Appellate Authorigr on O8.O8.2O23. Along with the appeal, the petitioner had also hled an application seeking grant of interim protection before respondent No.4 on 18.72.2023. 6. It is the contention of the learned counsel for the petitioner that though the appeal as well as the application for grant of interim protection both of which are pending consideration before the Appellate Authority and the respondent No.4 respectively, a notice of attachment now has been issued. That once when the petitioner is exempted under Section 8O(p)(2) of the Act, the very initiation of assessment proceedings is bad and the respondent authorities ought to have before issuance of the order of attachment, have waited till the outcome of the appea.l or the interim application that they have filed. However, to frustrate the very purpose of liling the ap*peEl and the 3 interim application, the present order of attachment has been passed. As a consequence the bank account of the petitioner which is otherwise used for daily operations stands frozen leading to great inconvenience to the society as also to the members dependent on the society. 7. Learned counsel for the petitioner further submits that the amounts for disbursement of loan to the members of society are also deposited in the society's account which has to be immediately disbursed, but now they stand restrained from operating the same. The said attachment therefore is detrimental in the interest of the farmers at large. Learned counsel for the petitioner in this regard relied upon recent decision of the Hon'ble Supreme Court in the case of Pr. Commissioner of Income Tax 17, Mumbai v. Annasaheb Patil Mathadi Mamgar Sahakari Pathpedit wherein the Honble Supreme Court has distinguished between the co-operative credit society and co-operative bank and have categorically held that a co- operative credit society would be entitled for exemption under Section 80 (PX2) of the Act. 8. Learned Standing Counsel for Income Tax Department on the other hand submits that since the matter is already pending t 2023 SCC Online SC 800 e 4 eH Y consideration before the authorities concerned, the petitioner could have particularly insisted before the authorities concerned for its early disposal and could have pressed upon their application of interim protection. According to the learned Standing Counsel there was no occasion for the petitioner to have approached the High Court simultaneously when their appeal and the interim application are pending consideration before the authorities concerned. 9. Having heard the contentions put forth on either side and on perusal of records, once when the petitioner has challenged the order of assessment before the ,Appellate Authority who is seized of the matter, furttrer the petitioner having already approached respondent No.4 seeking for an interim protection. In alr fairness, the authorities concerned ought to have decided the same rather than pursuing the coercion method of attaching the bank guarantee of the petitioner and in the process paralyzing the entire functioning of the co_operative society itself. lo. In the teeth of both, the appeal and application for interim relief being pending, we are of the considered opinion that ends of justice would meet if the writ petition is disposed of directing the respondent No.4 to consider and decide the interim application in accordance with law at the earliest particularty keeping in view thc decision of the Flonble Supreme Court in the case og R5. Commissioner of Income c) 5 Tax L7, Mumbai (supra) where the Hon'ble Supreme Court has held that co-operative credit societies would be entitled for exemption under Section 80 (PX2) of the Act. The respondent No.4 is directed to ensure that the application for interim protection hled by the petiti,oner on 18.L2.2O23 is considered and decided at the earliest within a period of ten (10) days. Meanwhile the petitioner is also at liberty to approach the Appellate Authority for an early disposal of the appeal as well. 1 1. With the above observations, the present Writ Petition stands disposed of. However, there shall be no order as to costs. Consequently, miscellaneous petitions pending if any, shall stand closed. SD/- AV.S. PRASAT) ASSISTANT IST /ITRUE COPY// SECTION OFFICER To, 1. The Principal Secretary, UNION OF lNDlA, MINISTRY OF FINANCE' ' rN'corvtfinx orpRRftuEur, NEW DELHI' INDIA' . z iir-e-pnrr,jcicAr_ cHrer c-orr,,lMtssroruqR oi INC_oli,lE rAx, TELANGANA - Ai'i-D ANbF{RA FnnoEsi, ioiH f!qg1,. ryc9l4E rAX rowERS' n.c.cilh-nos MASAB TANK, HYDERABAD 15q0-9q4 e.?FtE\"A\"SSriSSri,rcAuft ronrtV,r.r-nJroru+FACELESSASSESSIVIENT CENTRE, DELHI, INDIA. 4. iFE'ijRT.rclpAl'corrarurssoNER oF lNCo-ME - 4,.wlNG - A, 2 q !Lo-98' - rNb:ijME iAx'rowEns,\"n:e-cUAnos, MASAB rANK, HYDERABAD - 500 004 s. ii-E INCoME rAX oFFlcER, TELANGANA ANg AryDHRA PRADESH' ^trE|.:tr OF THE INCOMEJIU,-WACO T, RR.IIV CHOWK' KHAMMAM 6 il ; EE ti' r,ilJ -alri'is s ec u rv' r',r oH nn'i n'l e D-, Ad.v^ocate to P u cl i. 6llE 6d I sii GADi pii..GEr.i iiur'aAC ov doLlcrroR-GEN. oF INDIA IOPUCI a b\"i.\"c? to SRt. J.V. PRASAD, sc FoR INCoME TAx DEPARTMENT loPUCl 9. Two CD CoPies BM ta 1il HIGH COURT DATED:0510212024 ORDER 6 5T416- o WP.No.1860 of 2024 DISPOSING OF THE WRIT PETITTON WITHOUT COSTS o o J 1? FtB 2[2[ () L + t DFjSp^1C ]- ad{\" { "