The Malanad Service Co-operative Bank Ltd V. Income Tax Officer, Ward-1 and Income Tax Officer, National Faceless Assessment Centre and The Principal Commissioner of Income Tax

WP(C)/13498/2022

AI Insights

The case involves the Malanad Service Co-operative Bank Ltd, which challenged the income tax assessment order for the year 2017-18, specifically the denial of income exemption under Section 80P of the Income Tax Act, 1961. The assessing authority had rejected the exemption claim on grounds that the petitioner was engaged in banking business without necessary clearances from the Reserve Bank of India and was not a Primary Agricultural Credit Society as claimed. The petitioner argued that their case was similar to a precedent set by the Supreme Court in Mavilayi Service Co-operative Bank Ltd. v. Commissioner of Income Tax. The Revenue acknowledged that the Supreme Court's judgment had not been considered in the initial assessment.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 817172 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 27-09-2023
• Assessment Year: misc
• Other Referred Cases: Mavilayi Service Co-operative Bank Ltd. v. Commissioner of Income Tax [2021 (1) KLT 485]
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Assessee Lawyers: S RAJ
• Keywords: Assessment Order; Banking Business; Faceless assessment; Income tax exemption; Reserve Bank of India
• Section: 147; 148; 143(3); 142(1); 80P; 144B

Judgement Text

"IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE DINESH KUMAR SINGH WEDNESDAY, THE 27TH DAY OF SEPTEMBER 2023 / 5TH ASWINA, 1945 WP(C) NO. 13498 OF 2022 PETITIONER: THE MALANAD SERVICE CO-OPERATIVE BANK LTD NO. K 340, MALANAD SCB BUILDING, VAGAMON P. O., ELAPPARA, IDUKKI- 685503,REPRESENTED BY ITS SECRETARY JAIN XAVIER. BY ADV. SRI. S. ARUN RAJ RESPONDENTS: 1 INCOME TAX OFFICER, WARD-1, PUBLIC LIBRARY BUILDING, SHASTRI ROAD, KOTTAYAM-686001. 2 INCOME TAX OFFICER, NATIONAL FACELESS ASSESSMENT CENTRE, INCOME TAX DEPARTMENT, 2ND FLOOR, E-RAMP, JAWAHARLAL NEHRU STADIUM, NEW DELHI-110003. 3 THE PRINCIPAL COMMISSIONER OF INCOME TAX, PUBLIC LIBRARY BUILDING, SHASTRI ROAD, KOTTAYAM-686001. THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 27.09.2023, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C) NO. 13498 OF 2022 2 DINESH KUMAR SINGH, J. -------------------------- W.P.(C) No.13498 of 2022 ------------------------- Dated this the 27th day of September, 2023 JUDGMENT 1. The present writ petition has been filed by the petitioner impugning Exhibit P-10 order regarding the assessment of the income of the petitioner for the assessment year 2017-18. The assessing authority has rejected the claim of the petitioner for exemption of his income under Section 80P of the Income Tax Act, 1961 on the ground that the petitioner is in fact carrying banking business without having relevant clearances and permissions from the Reserve Bank of India, and the petitioner is not a Primary Agricultural Credit Society as claimed by the petitioner. In fact the petitioner is in banking business. 2. Learned Counsel for the petitioner submits that the case of the petitioner is squarely covered by the Judgment of the Supreme Court in the case of Mavilayi Service Co-operative Bank Ltd. v. Commissioner of Income Tax [2021 (1) KLT 485]. WP(C) NO. 13498 OF 2022 3 3. Mr. Jose Joseph, Learned Standing Counsel for the Revenue fairly submits that the assessing authority has not taken into consideration of the Supreme Court Judgment in Mavilayi Service Co-operative Bank Ltd. (supra). 4. Considering the aforesaid fact that the Supreme Court Judgment in Mavilayi Service Co-operative Bank Ltd. (supra) is on the issue, it will be appropriate to set aside the assessment order and remand the matter back to the assessing authority for fresh assessment after taking into consideration of the Supreme Court Judgment in Mavilayi Service Co-operative Bank Ltd. (supra). Let the petitioner appear before the assessing authority and the petitioner may be afforded an opportunity of hearing before finalising the fresh assessment. After finalising the fresh assessment, if the petitioner is dissatisfied, he can avail the statutory remedy of appeal before the concerned authority. With the above directions, this writ petition stands finally disposed of. Sd/- DINESH KUMAR SINGH JUDGE Svn WP(C) NO. 13498 OF 2022 4 APPENDIX OF WP(C) 13498/2022 PETITIONER’S EXHIBITS EXHIBIT P1 TRUE COPY OF THE ASSESSMENT ORDER DATED 23-12-2019 UNDER SECTION 143(3) OF THE ACT PASSED BY THE INCOME TAX OFFICER, WARD-3, KOTTAYAM FOR THE AY 2017-18 EXHIBIT P2 TRUE COPY OF THE APPEAL FILED BY THE PETITIONER BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS), KOTTAYAM CHALLENGING EXHIBIT P-1 ORIGINAL ASSESSMENT EXHIBIT P3 TRUE COPY OF THE NOTICE U/S 148 OF THE ACT DATED 23-3-2021 ISSUED BY THE 1ST RESPONDENT EXHIBIT P4 TRUE COPY OF THE NOTICE U/S 142(1) OF THE ACT ISSUED BY THE 2ND RESPONDENT FOR THE AY 2017-18 EXHIBIT P5 TRUE COPY OF THE LETTER DATED 27.12.2021 FILED IN RESPONSE TO THE NOTICE UNDER SECTION 142(1) OF THE ACT FOR THE AY 2017-18 EXHIBIT P6 TRUE COPY OF THE NOTICE DATED 22-3-2022 ISSUED BY THE 2ND RESPONDENT TO THE PETITIONER FOR THE AY 2017-18 EXHIBIT P7 TRUE COPY OF THE REPLY DATED 23-3-2022 E-FILED BY THE PETITIONER ALONG WITH THE ACKNOWLEDGMENT RECEIPT EXHIBIT P8 TRUE COPY OF THE SHOW CAUSE NOTICE DATED 25-3-2022 WITH THE DRAFT ASSESSMENT ORDER ISSUED BY THE 2ND RESPONDENT TO THE PETITIONER FOR THE AY 2017-18 EXHIBIT P9 TRUE COPY OF THE REPLY DATED 26-3-2022 FILED BY THE PETITIONER IN RESPONSE TO THE SHOW CAUSE NOTICE ISSUED BY THE 2ND RESPONDENT AND THE E- ACKNOWLEDGMENT RECEIPT EXHIBIT P10 TRUE COPY OF THE ASSESSMENT ORDER DATED 28-3-2022 PASSED BY THE 1ST RESPONDENT UNDER SECTION 147 R.W. 144B OF THE ACT FOR THE YEAR 2017-18 EXHIBIT P11 TRUE COPY OF THE JUDGMENT DATED 28-6-2021 PASSED BY THE DIVISION BENCH OF THIS HONOURABLE COURT IN W.A. NO.753 OF 2021 "