THE MALAPPURAM SERVICE CO-OP.BANK V. INCOME TAX OFFICER

WP(C)/14/2010

AI Insights

The case involves the Malappuram Service Co-operative Bank Ltd, which challenged the notice issued by the Income Tax authorities under Section 133(6) of the Income Tax Act, questioning its status as a 'person' under Section 2(31) of the Act. The High Court of Kerala referred to a previous judgment (Ext. P3) and the Supreme Court's decision in Karnataka Bank Ltd. vs. Secretary, Govt. of India, which clarified the need for 'prior sanction' from the Director or Commissioner in such cases. The court found that the notice did not include 'prior approval' and thus extended the compliance deadline, allowing the petitioner to address the issue with the tax authorities.

• Counselvise Citation: [2010] 140 COUNSELVISE.COM (IT) 701036 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 07-01-2010
• Assessment Year: misc
• Other Referred Cases: Karnataka Bank Ltd. vs. Secretary, Govt. of India and others (AIR 2003 SC 2096)
• Laws Referred To: Income Tax Act, Kerala Co-operative Societies Act
• Result in Favour of: Partly Allowed
• Court: HIGH COURT
• Department Lawyers: JOSE JOSEPH
• Assessee Lawyers: V G ARUN; T R HARIKUMAR
• Keywords: Co-operative Bank; Income Tax; Notice Compliance; Penalty proceedings; Prior approval
• Section: 133(6); 272A; 2(31)

Judgement Text

" IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE P.R.RAMACHANDRA MENON THURSDAY, THE 7TH JANUARY 2010 / 17TH POUSHA 1931 WP(C).No. 14 of 2010(B) ----------------------- PETITIONER: --------------- THE MALAPPURAM SERVICE CO-OPERATIVE BANK LTD,NO.F.1829,REPRESENTED BY ITS SECRETARY, UP.HILL.P.O,MALAPPURAM,MALAPPURAM DISTRICT. BY ADV. SRI.V.G.ARUN SRI.T.R.HARIKUMAR RESPONDENTS: --------------- 1. THE INCOME TAX OFFICER(CIB), OFFICE OF ASSISTANT DIRECTOR OF INCOME TAX(INV), KOZHIKODE. 2. THE ASSISTANT DIRECTOR OF INCOME TAX (INV),KOZHIKODE. 3. THE COMMISSIONER OF INCOME TAX(CIB), COCHIN,ERNAKULAM. 4. UNION OF INDIA REPRESENTED BY THE SECRETARY TO THE GOVERNMENT OF INDIA,MINISTRY OF FINANCE,NEW DELHI. BY ADV. MR. JOSE JOSEPH, SC. THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 07/01/2010, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: P.R. RAMACHANDRA MENON, J. .............................................................................. W.P.(C) No. 14 OF 2010 ......................................................................... Dated this the 7th January , 2010 J U D G M E N T The issue involved in this case is whether the petitioner , a Co-operative Bank registered under the relevant provisions of Kerala Co-operative Societies Act, is a 'person' as defined under the provisions of Section 2(31) of the Income Tax Act and is liable to satisfy the requirement in response to the notice issued under Section 133(6) of the Income Tax Act 2. The issue had come up for consideration before this Court earlier and it was answered in favour of the Revenue; which however was taken up in appeal by the concerned petitioner, leading to Ext. P3 judgment. Obviously, as per Ext. P3 judgment, referring to the position of law as declared by the Apex Court in Karnataka Bank Ltd.vs. Secretary, Govt. of India and others (AIR 2003 SC 2096) and the decision rendered by a Division Bench of this Court, interference was declined, holding that the only requirement to be satisfied with regard to compliance of Section 133 (6) is that, in a case where W.P.(C) No. 14 OF 2010 2 no enquiry is pending, the 'prior sanction' of the Director or the Commissioner, as the case may be, is to be obtained. 3. The only observation made by the Division Bench as revealed from paragraph No.3 of Ext.P3 judgment is that, if notice issued in this regard does not reveal 'prior approval' of the Director, it will be for the parties to approach the authority who issued the notice seeking for clarification, on which event, the said authority shall be bound to verify the position and if no such 'prior approval' is obtained, it will be open to the said authority to issue a fresh notice after obtaining such approval and to proceed with further steps. Observing that some of the notices issued in the above cases considered together by the Division Bench did not reveal the true state of affairs as to the 'prior approval', the penalty proceedings initiated under Section 272A were directed to be kept in abeyance and the time for satisfying the requirement by furnishing the relevant details by the petitioner/appellant was extended till 31.01.2010. 4. The learned Counsel for the petitioner submits that notice issued in most of the above cases dealt with by the W.P.(C) No. 14 OF 2010 3 Division Bench was much prior to the date of notice involved in the present case i.e., 18.09.2009 as shown in Ext. P1. The learned Counsel further submits that since Ext.P1 notice does not reflect any 'prior approval' from the Director, the matter has to be agitated further, in tune with the specific directions contained in Ext. P3 judgment. The learned Standing Counsel appearing for the respondents submits that, taking note of the facts and events, time might be granted up to 28.02.2010. 5. In the above facts and circumstances, challenge in the Writ Petition is declared as unsustainable, however, making it clear that time for complying with the directions in respect of Ext. P1 notice, in the light of Ext. P3 judgment will stand extended till 28.02.2010. The Writ Petition is disposed of as above. P.R. RAMACHANDRA MENON, JUDGE. lk "