THE KOLLAD SERVICE CO-OPERATIVE BANK LTD.NO.1830, V. THE INCOME TAX OFFICER,

WP(C)/6769/2020

AI Insights

The Kollad Service Co-operative Bank Ltd. approached the High Court of Kerala seeking to quash a demand notice issued by the Income Tax Officer under Section 156 of the Income Tax Act. The bank had previously filed an appeal against the assessment order and a stay application, both of which were rejected. The bank argued that there was an error apparent on record due to non-adherence to certain circulars regarding the stay of recovery until the appeal's pendency. However, the court found that the bank had already complied with the demand by depositing the required amount and did not sufficiently prove the alleged errors in the issuance of the demand notice.

• Counselvise Citation: [2020] 140 COUNSELVISE.COM (IT) 753812 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 09-03-2020
• Assessment Year: misc
• Laws Referred To: Article 226 of the Constitution of India, Section 156 of the Income Tax Act
• Result in Favour of: Partly Allowed
• Court: HIGH COURT
• Department Lawyers: P K RAVINDRANATHA MENON; JOSE JOSEPH
• Assessee Lawyers: C A JOJO; MATHEWS JOSEPH
• Keywords: Demand notice; Income Tax; Rectification Application; Stay of demand; Writ of Certiorari
• Section: 156

Judgement Text

"IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE AMIT RAWAL MONDAY, THE 09TH DAY OF MARCH 2020 / 19TH PHALGUNA, 1941 WP(C).No.6769 OF 2020(U) PETITIONER: THE KOLLAD SERVICE CO-OPERATIVE BANK LTD.NO.1830, KOLLAD.P.O, PIN-686 004 REPRESENTED BY ITS SECRETARY. BY ADVS. SRI.C.A.JOJO SRI.MATHEWS JOSEPH RESPONDENTS: 1 THE INCOME TAX OFFICER, WARD-2, SHASTRI ROAD, KOTTAYAM.P.O, PIN-686 001. 2 COMMISSIONER OF INCOME TAX (APPEALS) OFFICE OF THE COMMISSIONER OF INCOME TAX, CENTRAL REVENUE TOWER, KOTTAYAM.P.O, PIN-686 001. 3 THE PRINCIPAL OFFICER DISTRICT CO-OPERATIVE BANK KOTTAYAM, SHASTRI ROAD, KOTTAYAM.P.O, PIN-686 001. R1-2 BY ADV. SRI.P.K.RAVINDRANATHA MENON (SR.) R1-2 BY SRI.JOSE JOSEPH, SC, FOR INCOME TAX THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 09.03.2020, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: W.P.(c). No. 6769 of 2020 2 J U D G M E N T Petitioner, a Co-operative Bank Ltd has approached this Court under Article 226 of the Constitution of India, for issuance of writ in the nature of certiorari quashing Ext. P2 demand notice under Section 156 dated 21.12.2019 issued by the 1st respondent. 2. The learned counsel appearing on behalf of the petitioner submits that against the assessment order, the petitioner preferred Ext. P3 appeal dated 16.01.2020. Another demand notice dated 30.01.2020, for seeking the stay of the demand by deposit of 20%, was issued vide Ext. P4. Thereafter, vide Ext. P5 dated 04.03.2020 Income Tax Department has realised the amount by issuing garnishee notice to the banker of the petitioner. By way of additional documents, it is evident that despite having filed the rectification application, there was an error apparent on record, owing to non-adherence of the clearance of the directions contained in the circular dated 21.08.1969 and 05.07.2013 with regard to the stay of the W.P.(c). No. 6769 of 2020 3 recovery till the pendency of the appeal realizing it to be an error apparant on record preferred a rectification application Ext. P8 dated 29.01.2020. The petitioner had also preferred stay application along with appeal before the 1st respondent, which has been rejected vide Ext. P7 dated 24.01.2020. 3. The petitioner preferred a rectification application before the 1st respondent on 29.01.2020 and the same has been rejected vide Ext. P9 dated 30.01.2020. Another rectification application was filed as Ext. P11, which has been dismissed by Ext. P2 without assigning any reasons. Therefore, the order being without jurisdiction is liable to be quashed. 4. Per contra, learned counsel for the petitioner submits that the bank has already realised the outstanding amount a sum of Rs. 13 lakhs and odd vide Ext. P5. Petitioner is not justified in moving perpetual applications for rectification and there was no error apparent on record. The demand of 20% was in accordance with the prevailing instructions and therefore, W.P.(c). No. 6769 of 2020 4 the old instructions were not of having any binding effect. The judgment of this court in not imposing a condition of 20% for grant of stay is not in rem but in persona and urges this Court for dismissal of this writ petition. 5. Having heard the learned counsel for the parties and apprised the paper book, the grievances of the petitioner at this stage of the matter in view of the facts as narrated above, can be vindicated by the issuance of direction to the 2nd respondent to decide the appeal Ext. P3 dated 16.01.2020 as expeditiously as possible within a period of 45 days from the date of production of certified copy of this order. In case the petitioner succeeds in Ext. P3 appeal the amount so deposited, as under taken by Mr. Jose Joseph, would be refunded. If otherwise, the petitioner would have a grievance to seek the litigation in accordance with law. With these observations and directions, the above Writ Petition (Civil) will stand dismissed. (Sd/-) AMIT RAWAL LU JUDGE W.P.(c). No. 6769 of 2020 5 APPENDIX PETITIONER'S/S EXHIBITS: EXHIBIT P1 A TRUE COPY OF THE ASSESSMENT ORDER FOR AY 2017-18 DATED 21.12.2019 ISSUED BY THE FIRST RESPONDENT. EXHIBIT P2 A TRUE COPY OF THE DEMAND NOTICE U/S 156 DATED 21.12.2019 ISSUED BY THE FIRST RESPONDENT. EXHIBIT P3 A TRUE COPY OF THE APPEAL FOR AY 2017-18 BEFORE THE 2ND RESPONDENT DATED 16.01.2020. EXHIBIT P4 A TRUE COPY OF THE DEMAND NOTICE FOR 20% DATED 30.01.2020 ISSUED BY THE FIRST RESPONDENT. EXHIBIT P5 A TRUE COPY OF THE NOTICE U/S 226(3) FOR AY 2017-18 DATED 04.03.2020 ISSUED BY THE 1ST RESPONDENT. EXHIBIT P6 A TRUE COPY OF THE STAY PETITION BEFORE THE 1ST RESPONDENT DATED 16.01.2020. EXHIBIT P7 A TRUE COPY OF THE NOTICE OF REJECTION OF STAY PETITION BY THE 1ST RESPONDENT DATED 24.01.2020. EXHIBIT P8 A TRUE COPY OF THE RECTIFICATION PETITION FILED BEFORE THE 1ST RESPONDENT DATED 29.01.2020. EXHIBIT P9 A TRUE COPY OF THE NOTICE OF REJECTION OF STAY PETITION BY THE 1ST RESPONDENT DATED 30.01.2020. EXHIBIT P10 A TRUE COPY OF THE ORDER OF REJECTION OF THE RECTIFICATION PETITION BY THE 1ST RESPONDENT DATED 06.02.2020. EXHIBIT P11 A TRUE COPY OF THE SECOND RECTIFICATION PETITION FILED BEFORE THE 1ST RESPONDENT DATED 20.02.2020. EXHIBIT P12 A TRUE COPY OF THE LETTER ISSUED BY 1ST RESPONDENT DATED 04.03.2020. W.P.(c). No. 6769 of 2020 6 RESPONDENTS'S/S EXHIBITS: EXHIBIT R2(A) TRUE COPY OF THE ORDER DATED 30.01.2020. EXHIBIT R2(B) TRUE COPY OF THE PROCEEDINGS DATED 06.02.2020. EXHIBIT R2(C) TRUE COPY OF THE LETTER DATED 11.02.2020. // True Copy // PA To Judge "