M/S RAMANTHALI SERVICE CO-OPERATIVE BANK LTD vs. INCOME TAX OFFICER, WARD-4, KANNUR

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WP(C)/30488/2023HC KeralaKLHC01067269202318 September 2023Author: HONOURABLE MR. JUSTICE D. K. SINGH5 pages
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What did the High Court hold?

The High Court held that the application filed by the Department seeking rectification of the ITAT's order dated 14.03.2017 was not maintainable. The Court found that the application was filed significantly beyond the six months' period of limitation prescribed under Section 254(2) of the Income Tax Act, 1961. Consequently, the writ petition was allowed, and the impugned order of the ITAT dated 16.09.2022, which allowed the rectification application, was set aside. The Court did not decide on the merits of the original appeal or the applicability of Section 80P(2) deduction, focusing solely on the procedural defect of limitation in the rectification proceedings.

What were the facts?

The petitioner, M/s Ramanthali Service Co-operative Bank Ltd, is challenging an order dated 16.09.2022 passed by the Income Tax Appellate Tribunal (ITAT), Cochin Bench, in an application for rectification under Section 254(2) of the Income Tax Act, 1961. The original assessment for assessment years 2009-2010 resulted in a tax liability of Rs. 10,64,549/- and penalty proceedings. The petitioner's appeal was dismissed by the first appellate authority. The ITAT, in its order dated 14.03.2017, partly allowed the petitioner's appeal, granting deduction under Section 80P(2) as the petitioner is a co-operative society. Subsequently, the Department filed a rectification application under Section 254(2) of the Act, citing a contrary Full Bench judgment of the High Court. The petitioner contends this application was filed beyond the prescribed limitation period of six months.

What were the issues?

1. Whether the rectification application filed by the Revenue under Section 254(2) of the Income Tax Act, 1961, was maintainable given it was filed beyond the prescribed limitation period of six months. Assessee's Contentions: - The rectification application filed by the Department was beyond the limitation period of six months prescribed under Section 254(2) of the Act, 1961, and therefore not maintainable. - The Full Bench judgment of the High Court, which formed the basis for the rectification application, has been set aside by the Apex Court. - The Department was seeking a review of the ITAT's order, and there is no provision in the Act for reviewing an ITAT order. - The very ground on which the impugned rectification order was passed does not survive due to the Apex Court's judgment. Revenue's Contentions: - The judgment records no specific contentions for the Revenue regarding the maintainability of the rectification application or the limitation period.

Which sections of the Income-tax Act were involved?

Section 254(2),Section 80P(2),Section 271F,Section 271B,Section 271(1)(b),Section 271(1)(c)

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
W.P.(C) No. 30488/2023 : 1 : IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE DINESH KUMAR SINGH MONDAY, THE 18TH DAY OF SEPTEMBER 2023 / 27TH BHADRA, 1945 WP(C) NO. 30488 OF 2023 PETITIONER: M/S RAMANTHALI SERVICE CO-OPERATIVE BANK LTD RAMANTHALI, PAYYANNUR, REPRESENTED BY ITS SECRETARY SURENDRAN K.V, PIN – 670 364. BY ADV S.ARUN RAJ RESPONDENTS: 1 INCOME TAX OFFICER, WARD-4, KANNUR AAYAKAR BHAVAN, KONNOTHUMCHAL, CHOVVA P.O, KANNUR, PIN – 670 006. 2 INCOME TAX APPELLATE TRIBUNAL, COCHIN BENCH KENDRIYA BHAVAN, KAKKANAD, COCHIN, PIN – 682 037. SRI. CHRISTOPHER ABRAHAM, SC THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 18.09.2023, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: W.P.(C) No. 30488/2023 : 2 : DINESH KUMAR SINGH, J. --------------------------------------------------------- W.P.(C). No. 30488 of 2023 --------------------------------------------------------- Dated this the 18th day of September, 2023.

JUDGMENT The present writ petition has been filed impugning Exhibit P5 order dated 16.09.2022 passed by the Income Tax Appellate Tribunal, Cochin Bench in M.P. No. 242/Coch/2021, filed under Section 254(2) of the Income Tax Act, 1961 ('Act, 1961' for short) seeking rectification of Exhibit P3 order dated 14.03.2017 in ITA No. 361/Coch/2012 in respect of the assessment years 2009-2010. 2. The petitioner claims to be a co-operative society. The assessing officer has passed Exhibit P1 order dated 22.12.2011 for the assessment years 2009-2010 assessing the tax liability at Rs. 10,64,549/- and initiating penalty proceedings under Sections 271F, 271B, 271(1)(b) and 271(1)(c) separately against the petitioner. Challenging the same, the petitioner has filed an appeal before the first appellate authority, who as per Exhibit P2 order dated 21.09.2012, dismissed the same. Against the said order, the petitioner has filed a second appeal before the Income Tax Appellate Tribunal, Cochin Bench and the Tribunal, as per Exhibit P3 order dated 14.03.2017, allowed the appeal in part holding that the petitioner, being a co-operative society, is eligible for deduction : 3 : under Section 80P(2) of the Act, 1961 and the assessing officer was directed to grant the deduction claimed by the petitioner.

3.

It appears that after the said order was passed, a Full Bench of this Court, in the judgment dated 19.03.2019 in ITA No. 97 of 2016 has taken a contrary view as that of the view taken by the Tribunal. Accordingly, the Department has filed various Miscellaneous Petitions in respect of different assessees, including Ext. P4 petition against the petitioner, under Section 254(2) of the Act, 1961 before the Income Tax Appellate Tribunal seeking rectification of Ext. P3 order. It is submitted that those applications were filed beyond the limitation period prescribed under Section 254(2) of the Act, 1961 and therefore, the same were not maintainable under law. The application for rectification in respect of the petitioner is dated 30.09.2019, which is much beyond the period of limitation of six months provided for filing such an application.

4.

The learned counsel for the petitioner also submits that the aforesaid Full Bench judgment has been set aside by the Apex Court and therefore, the application filed by the Department seeking rectification of the order dated 14.03.2017 was barred by limitation. Even otherwise, the Department was seeking review of the order of the Income Tax Appellate Tribunal and there is no : 4 : provision in the Act, 1961 to review the order passed by the Income Tax Appellate Tribunal. It is also submitted that the very ground on the basis of which the impugned order was passed does not survive, in view of the judgment of the Apex Court setting aside the Full Bench judgment dated 19.03.2019. 5. In view of the above, I find that the application filed by the Department seeking rectification of the order dated 14.03.2017 in respect of the petitioner was not maintainable and it was filed much beyond the six months’ period of limitation prescribed under Section 254(2) of the Act, 1961. Accordingly, the present writ petition is allowed and Exhibit P5 order dated 16.09.2022 is set aside. DINESH KUMAR SINGH, JUDGE.

Rv : 5 :

Appendix — schedule of exhibits
APPENDIX OF WP(C) 30488/2023 PETITIONER’S EXHIBITS: Exhibit P1 A TRUE COPY OF THE ASSESSMENT ORDER DATED 22- 12-2011 UNDER SECTION 144 OF THE ACT PASSED BY THE 1ST RESPONDENT FOR THE AY 2009-10 Exhibit P2 A TRUE COPY OF THE ORDER DATED 21-9-2012 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS), KOZHIKODE FOR THE AY 2009-10 Exhibit P3 A TRUE COPY OF THE ORDER DATED 14-3-2017 PASSED BY THE 2ND RESPONDENT IN ITA NO. 361/COCH/ 2012 FOR THE AY 2009-10 Exhibit P4 A TRUE COPY OF THE MISCELLANEOUS PETITION NO. 242/COCH/2021 DATED 30-9-2019 FILED BY THE 1ST RESPONDENT BEFORE THE 2ND RESPONDENT Exhibit P5 A TRUE COPY OF THE ORDER DATED 16-9-2022 IN MISCELLANEOUS PETITION NO. 242/COCH/2021 (ITA NO. 361/COCH/ 2012) PASSED BY THE 2ND RESPONDENT FOR THE AY 2009-10 Exhibit P6 A TRUE COPY OF THE COMMON ORDER DATED 31-7- 2023 PASSED BY THE 2ND RESPONDENT IN MISCELLANEOUS PETITIONS FILED BY THE INCOME TAX DEPARTMENT IN SIMILAR CASES RESPONDENTS’ EXHIBITS: NIL True Copy PS To Judge. rv

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