RAGHAVAN AND OTHERS V. UNION OF INDIA & OTHERS

WP(C)/22209/2009

AI Insights

The case involves a group of employees from the Eramam-Kuttur Service Co-operative Bank Ltd., who filed writ petitions challenging the orders issued by the Income Tax Officer (TDS) under Sections 201 and 201(1A) of the Income Tax Act, 1961. These orders were directed against their employer, the Co-operative Bank, for not making adequate tax deductions at source from the employees' payments, specifically concerning contributions to a provident fund which was not recognized under the IT Act for deductions under Section 80C. The court consolidated the petitions and dismissed them, stating that the employees lacked the standing to challenge the orders that affected their employer.

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 678358 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 19-12-2014
• Assessment Year: misc
• Other Referred Cases: W.P.(C). No. 34479 of 2009
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: JOSE JOSEPH; K T LILLY
• Assessee Lawyers: KALEESWARAM RAJ
• Keywords: Co-operative Banks; Income Tax; Provident fund; Recognised provident fund; Tax deduction at source
• Section: 201; 80C; 201(1A)

Judgement Text

"IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR. JUSTICE A.K.JAYASANKARAN NAMBIAR FRIDAY, THE 19TH DAY OF DECEMBER 2014/28TH AGRAHAYANA, 1936 WP(C).No. 22209 of 2009 (U) ---------------------------- PETITIONER(S): --------------- 1. RAGHAVAN A., SECRETARY, ERAMAM-KUTTUR SERVICE CO-OPERATIVE BANK LTD., P.O. M.M.BAZAR KANNUR DIST. 2. KUNHIKANNAN T.O. ASSISTANT SECRETARY, ERAMAM-KUTTUR SERVICE CO-OPERATIVE BANK, LTD P.O. M.M. BAZAR, KANNUR DIST. 3. KUNHAPPAN K., CHIEF ACCOUNTANT, ERAMAM-KUTTUR SERVICE CO-OPERATIVE BANK LTD. P.O.M.M.BAZAR, KANNUR DISTRICT. 4. BALAKRISHNAN A BRANCH MANAGER, ERAMAM-KUTTUR SERVICE CO-OPERATIVE, BANK LTD. P.O.M.M. BAZAR, KANNUR DISTRICT. 5. RAJAN T.K. INTERNAL AUDITOR, ERAMAM-KUTTUR SERVICE CO-OPERATIVE BANK, LTD. P.O. M.M. BAZAR, KANNUR DISTRICT. 6. RAJMOHAN K.,BRANCH MANAGER, ERAMAM-KUTTUR SERVICE CO-OPERATIVE BANK, LTD. P.O. M.M.BAZAR, KANNUR DISTRICT 7. GANGADHARAN P. SENIOR CLERK, ERAMAM-KUTTUR SERVICE CO-OPERATIVE BANK LTD. P.O.M.M. BAZAR, KANNUR DISTRICT. 8. DAMODARAN C.K. SENIOR CLERK, ERAMAM- KUTTUR SERVICE CO-OPERATIVE BANK LTD., P.O.M.M.BAZAR KANNUR DIST. 9. MURALEEDHARAN M.E. ACCOUNTANT, ERAMAM- KUTTUR SERVICE CO-OPERATIVE BANK LTD., P.O.M.M.BAZAR KANNUR DIST. 10. KUMARAN K.,ACCOUNTANT, ERAMAM-KUTTUR SERVICE CO-OPERATIVE BANK LTD, P.O.M.M.BAZAR KANNUR DIST. 11. POOMANI M.V. BRANCH MANAGER, ERAMAM- KUTTUR SERVICE CO-OPERATIVE BANK LTD. P.O. M.M. BAZAR, KANNUR DIST. 12. RAMACHANDRAN T.R. BRANCH MANAGER, ERAMAM -KUTTUR SERVICE CO-OPERATIVE BANK, LTD. P.O.M.M. BAZAR, KANNUR DIST. WP(C).No. 22209 of 2009 (U) 13. JANARDHANAN K., ACCOUNTANT ERAMAM- KUTTUR SERVICE CO-OPERATIVE BANK LTD. P.O.M.M. BAZAR, KANNUR DIST. BY ADV. SRI.KALEESWARAM RAJ RESPONDENT(S): -------------- 1. UNION OF INDIA, REPRESENTED BY THE SECRETARY TO GOVERNMENT MINISTRY OF FINANCE NEW DELHI. 2. THE JOINT COMMISSIONER OF INCOME TAX (TDS) C.R.BUILDING, I.S. PRESS ROAD, KOCHI. 3. THE INCOME TAX OFFICER (TDS) AAYAKAR BHAVAN, KANNOTHUMCHAL, KANNUR. 4. STATE OF KERALA, REPRESENTED BY THE SECRETARY TO GOVERNMENT DEPARTMENT OF CO-OPERATION SECRETARIAT, THIRUVANANTHAPURAM. BY ADV. SRI.JOSE JOSEPH, SC, FOR INCOME TAX BY GOVERNMENT PLEADER SMT.K.T.LILLY THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 19-12-2014, ALONG WITH W.P.(C).NO.34479 OF 2009 THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C).No. 22209 of 2009 (U) APPENDIX PETITIONER'S EXHIBITS: EXT.P1: TRUE COPY OF THE ORDER DATED 18.6.2009 TOGETHER WITH DEMAND NOTICE DATED 18.6.2009 ISSUED BY THE INCOME TAX OFFICER(TDS) KANNUR. EXT.P2: TRUE COPY OF THE ORDER DATED 23.7.2009 IN W.P.(C). NO.20711/2009 RESPONDENTS' EXHIBITS: NIL //TRUE COPY// P A TO JUDGE A.K.JAYASANKARAN NAMBIAR, J. ............................................................. W.P.(C).Nos.22209 and 34479 of 2009 ............................................................. Dated this the 19th day of December, 2014 J U D G M E N T As these writ petitions involve a common issue, they are taken up together for consideration and disposed by this common judgment. 2. The petitioners in both the writ petitions are employees of Co- operative Banks and they are stated to be aggrieved by orders passed by the Income Tax Officer (TDS) under Sections 201 and 201 (1A) of the Income Tax Act, 1961, hereinafter referred to as the “IT Act”. The facts in both the writ petitions would indicate that, in respect of deductions claimed under Section 80C of the IT Act, the respondent authorities under the IT Act had taken a stand that contributions made to the provident fund in terms of the Co-operative Societies Act, would not qualify for exemption under Section 80C of the IT Act since the said provident fund was not a recognised provident fund for the purposes of the IT Act. The orders that were passed by the Income Tax Officer, against the employer Co-operative Banks, were essentially orders that treat the employer Bank as an assessee in default for not effecting adequate deduction of tax at source from payments that were made to W.P.(C).Nos.22209 and 34479 of 2009 2 the employees. In that view of the matter, the orders passed were against the employer Co-operative Banks, and not against the employees thereof. The employees of the said Banks are not persons who have the locus standi to challenge the said orders through writ petitions preferred under Article 226 of the Constitution of India. 3. It is also clear from the statement filed on behalf of the Income Tax authorities, that the contributions made were to unrecognised provident funds and therefore, would not qualify for the deductions contemplated under Section 80C of the IT Act. The stand of the Income Tax authorities, being in accordance with the provisions of the IT Act, cannot be said to be illegal. If the orders are to be challenged, it is the employer banks who have to impugn the orders passed against them under the IT Act, since the orders have the effect of treating them as assessees in default for the purposes of the IT Act. The petitioners are not affected by the orders passed against the employer bank and, at any rate, even if any tax is deducted from payments made to them by the employer, credit of the same would be given to them in their individual assessments under the IT Act. It would also be open to the petitioners to claim, in their assessment proceedings, that their W.P.(C).Nos.22209 and 34479 of 2009 3 contributions to the provident fund would qualify for deduction from taxable income under the IT Act. In the light of the above observations, the writ petitions, in their challenge against the orders passed against the employers of the petitioners, are dismissed as not maintainable. A.K.JAYASANKARAN NAMBIAR JUDGE mns W.P.(C).Nos.22209 and 34479 of 2009 4 "