THE PUTHENCHIRA SERVICE CO-OPERATIVE BANK LTD NO. 2264 V. THE INCOME TAX OFFICER

WP(C)/8516/2020

AI Insights

The case involves the Puthenchira Service Co-operative Bank Ltd, which faced substantial income tax assessments for several years, leading to demands for tax payments amounting to over INR 8 crore. The bank, after unsuccessful appeals to the Commissioner of Income Tax (Appeals), sought relief from the High Court to stay the recovery process and allow time to appeal to the Income Tax Appellate Tribunal. The court had previously directed the Commissioner to decide on the appeals within six months but found that the recovery actions had severely disrupted the bank's operations. The court's decision aimed to balance the bank's operational needs with the revenue's interest by allowing a partial deposit of the tax demanded and setting a timeline for the Tribunal to decide on the appeals.

• Counselvise Citation: [2020] 140 COUNSELVISE.COM (IT) 760902 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 18-03-2020
• Assessment Year: misc
• Other Referred Cases: W.P(C) No.28170/2019
• Laws Referred To: Kerala Co-operative Societies Act
• Result in Favour of: Partly Allowed
• Court: HIGH COURT
• Assessee Lawyers: P C SASIDHARAN
• Keywords: Appeal; Co-operative Bank; Garnishee notice; Income tax assessment; Stay Petition
• Section: 226

Judgement Text

"IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE AMIT RAWAL WEDNESDAY, THE 18TH DAY OF MARCH 2020 / 28TH PHALGUNA, 1941 WP(C).No.8516 OF 2020(L) PETITIONER: THE PUTHENCHIRA SERVICE CO-OPERATIVE BANK LTD NO. 2264 PUTHENCHIRA, MALA, THRISSUR-680682, REPRESENTED BY ITS SECRETARY. BY ADV. SRI.P.C.SASIDHARAN RESPONDENTS: 1 THE INCOME TAX OFFICER WARD 2(4), THRISSUR, OFFICE OF THE INCOME TAX OFFICER, SHAKTHANTHAMPURAN NAGAR, THRISSUR-680001. 2 THE COMMISSIONER OF INCOME TAX (APPEALS), AAYAKAR BHAVAN, S.T.NAGAR, THRISSUR-680001. 3 THE INCOME TAX APPELLATE TRIBUNAL, COCHIN BENCH, ERNAKULAM-682001. THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 18.03.2020, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: W.P.(C) No.8516/2020 2 JUDGMENT The petitioner is a primary Agricultural Co-operative Credit Society registered under the provisions of Kerala Co- operative Societies Act and Rules framed thereunder. 2. The first respondent completed the assessment of the income tax pertaining to the following assessment years, which reads as under : Assessment Years Income Assessed Tax demanded 2008-2009 45,23,837 39,61,210 2009-2010 54,91,020 33,70,300 2010-2011 71,93,914 Please fill up from the order 2012-2013 56,32,450 xxxxxx 2013-2014 1,38,59,736 xxxxxxx 2014-2015 99,09,185 44,04,770 2015-2016 2,73,19,780 1,37,38,240 2016-2017 2,89,27,170 1,50,11,454 2016-2018 8,00,77,250 1,42,66,942 3. The petitioner against the aforementioned assessment orders preferred nine appeals before the Commissioner of Income Tax (Appeals) along with the stay W.P.(C) No.8516/2020 3 petitions. Since the stay was declined, the petitioner approached this Court vide Writ Petition (C) No.28170 of 2019 dated 23.10.2019. This Court disposed of the Writ Petition directing the second respondent to consider and pass orders on the appeals within the limit of six months from the date of receipt of the certified copy of the judgment and in the meantime, coercive steps for recovery of the amount was ordered to be kept in abeyance. 4. Sri.P .C.Sasidharan, the learned counsel appearing on behalf of the petitioner, submits that the Commissioner of Income Tax (Appeals) dismissed the appeals vide order dated 18.2.2020. The aforementioned orders of the Commissioner of Income Tax (Appeals) were communicated to the petitioner on 26th February, 2020 and 8th March, 2020 respectively. The petitioner immediately took steps to prepare appeals and file the same in accordance with law before the Income Tax Appellate Tribunal as 60 days is available to prefer such appeal. The recovery officer without adhering to the provisions of sub section (3)(iii) of Section 226 issued a notice of W.P.(C) No.8516/2020 4 garnishee to the Bank to obtain Rs.36,83,875/- and 7,88,73,094/-. The petitioner was not given any breathing time to file the appeals. A meeting was held in the office of the Principal Commissioner and it was ordered that the drafts would be kept in the safe custody of the Bank. But for running the business of the Society working capital is required and in view of the garnishee notice and preparation of the demand drafts, the petitioner Co-operative Society is unable to transact any business or carry out its daily activities. There are about 14 employees on the roll of the Society. The petitioner though have preferred Ext.P8 to Ext.P8(h) appeals before the Income Tax Appellate Tribunal and Ext.P9 to P(h) stay applications dated 16.3.2020, but, in the absence of any interdiction, a very anomalous situation, has arisen in the fair working of the Society. The petitioner is willing to deposit 15% of the demanded amount in case the draft prepared by the Bank in favour of the income tax authorities are ordered to be not encashed and account is regularised. 5. The learned counsel appearing for the petitioner W.P.(C) No.8516/2020 5 submits that he do not dispute the orders passed by the Commissioner of Income Tax (Appeals) and filing of the appeal much less the preparation of the demand drafts. The learned counsel also submits that no doubt that the petitioner had preferred appeals, an appropriate direction can be in the peculiar facts and circumstances issued to the Tribunal to decide the appeals within some time, provided the petitioner expresses bonafides in depositing a substantial amount of tax at least to the extent of 15% in order to secure the interest of the revenue. 6. Having heard the learned counsel for the parties and perused the paper book, the grievances as noticed above has some force. The appeals were preferred on 16th March, 2020. Though the period of limitation had not expired, but going through the circumstances resulting into preparation of the demand drafts as noticed above, the working of the Co- operative Society has come to a halt. Instead of directing the Tribunal to decide the application firstly, I deem it appropriate to issue directions to the Tribunal to decide the appeals within W.P.(C) No.8516/2020 6 some time line and in order to enable the petitioner it seems appropriate to direct the income tax officer not to press for the encashment of the demand drafts, provided the petitioner deposits at least 30% of the demanded tax within a period of one week from today. On receipt of the aforementioned tax, the demand drafts would be cancelled. The petitioner shall be permitted to transact the Bank account maintained with the Bank. The Tribunal in such circumstances shall endeavour to decide the appeals within a period of six months. Till such time this arrangement will continue. This Writ Petition is disposed of. Sd/- AMIT RAWAL JUDGE csl W.P.(C) No.8516/2020 7 APPENDIX PETITIONER'S EXHIBITS: EXHIBIT P1 TRUE COPY OF THE ASSESSMENT ORDER FOR THE YEAR 2008-2009. EXHIBIT P2 TRUE COPY OF THE JUDGMENT IN W.P(C)NO.28170/2019. EXHIBIT P3 TRUE COPY OF THE ORDER PASSED BY THE 2ND RESPONDENT DATED 18.02.2020. EXHIBIT P4 TRUE COPY OF THE ORDER PASSED BY THE 2ND RESPONDENT DATED 18.02.2020. EXHIBIT P5 TRUE COPY OF THE NOTES OF SUBMISSION SUBMITTED BY THE PETITIONER. EXHIBIT P6 TRUE COPY OF THE MINUTES. EXHIBIT P7 TRUE COPY OF THE NOTICE. EXHIBIT P8 TRUE COPY OF THE APPEAL MEMORANDUM YEAR 2008-09. EXHIBIT P8(a) TRUE COPY OF THE APPEAL MEMORANDUM YEAR 2009-10. EXHIBIT P8(b) TRUE COPY OF THE APPEAL MEMORANDUM YEAR 2010-11. EXHIBIT P8(c) TRUE COPY OF THE APPEAL MEMORANDUM YEAR 2012-13. EXHIBIT P8(d) TRUE COPY OF THE APPEAL MEMORANDUM YEAR 2013-14. EXHIBIT P8(e) TRUE COPY OF THE APPEAL MEMORANDUM YEAR 2014-15. EXHIBIT P8(f) TRUE COPY OF THE APPEAL MEMORANDUM YEAR 2015-16. EXHIBIT P8(g) TRUE COPY OF THE APPEAL MEMORANDUM YEAR 2016-17. W.P.(C) No.8516/2020 8 EXHIBIT P8(h) TRUE COPY OF THE APPEAL MEMORANDUM YEAR 2017-18. EXHIBIT P9 TRUE COPY OF THE STAY PETITION YEAR 2008- 09. EXHIBIT P9(a) TRUE COPY OF THE STAY PETITION YEAR 2009- 10. EXHIBIT P9(b) TRUE COPY OF THE STAY PETITION YEAR 2010- 11. EXHIBIT P9(c) TRUE COPY OF THE STAY PETITION YEAR 2012- 13. EXHIBIT P9(d) TRUE COPY OF THE STAY PETITION YEAR 2013- 14. EXHIBIT P9(e) TRUE COPY OF THE STAY PETITION YEAR 2014- 15. EXHIBIT P9(f) TRUE COPY OF THE STAY PETITION YEAR 2015- 16. EXHIBIT P9(g) TRUE COPY OF THE STAY PETITION YEAR 2016- 17. EXHIBIT P9(h) TRUE COPY OF THE STAY PETITION YEAR 2017- 18. "