CORPORATION OF COCHIN EMPLOYEES CO-OPERATIVE SOCIETY LTD NO.331, vs. THE INCOME TAX OFFICER,

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WP(C)/24210/2023HC KeralaKLHC01053053202317 January 2024Author: HONOURABLE MR. JUSTICE D. K. SINGH6 pages
AI SummaryDismissed

What did the High Court hold?

The High Court dismissed the writ petition. The Court found no grounds to entertain the petition. The reasoning was based on the assessing authority's view that the petitioner, a co-operative society, could not claim deductions under Section 80P for assessment years 2018-19 and 2019-20 without first filing returns of income under Section 139(1) of the Income Tax Act, 1961. The Court noted that the petitioner had subsequently filed returns under Section 148 for the relevant assessment years, and final orders were pending. The principle derived is that compliance with the procedural requirement of filing returns under Section 139(1) is a prerequisite for claiming deductions like Section 80P, and the writ petition was premature as final orders were yet to be passed. No issue was expressly left undecided.

What were the facts?

The petitioner, Corporation of Cochin Employees Co-operative Society Ltd, filed a writ petition challenging orders dated 28.4.2022 and 23.2.2023, issued under Section 148A(d) of the Income Tax Act, 1961, for assessment years 2018-19 and 2019-20. The society had not filed income tax returns for these years. The Income Tax Department's 'INSIGHT' module indicated significant cash transactions. Proceedings under Section 148A were initiated, providing the petitioner an opportunity to object to the reopening of assessments. The petitioner responded, claiming eligibility for benefits of mutuality and Section 80P deduction, citing a Supreme Court judgment. However, the assessing authority rejected these claims, stating that deductions under Section 80P cannot be claimed without filing returns under Section 139(1), and that returns under Section 148 were required. The petitioner subsequently filed returns for the assessment years in question, and final orders were yet to be passed.

What were the issues?

1. Whether the petitioner, a co-operative society, is eligible for benefits of mutuality and Section 80P deduction for assessment years 2018-19 and 2019-20, despite not filing returns under Section 139(1)? (Question of law and fact, concerning Section 80P and Section 139(1) of the Income Tax Act, 1961). Assessee's Contention: The petitioner argued that they were eligible for benefits of mutuality and Section 80P deduction, relying on the Supreme Court judgment in M/s. Mavilayi Service Co-operative Bank Ltd. and another v. Commissioner of Income Tax, Calicut and another [2021(1) KHC 303 (SC)]. Revenue's Contention: The assessing authority rejected the petitioner's submission, holding that without filing returns under Section 139(1), no deduction can be claimed as provided under Section 80AC(2) of the Act. Therefore, the petitioner was required to file returns under Section 148.

Which sections of the Income-tax Act were involved?

Section 148A,Section 148,Section 139(1),Section 80P,Section 80AC(2)

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE DINESH KUMAR SINGH WEDNESDAY, THE 17TH DAY OF JANUARY 2024 / 27TH POUSHA, 1945 WP(C) NO. 24210 OF 2023 PETITIONER/S: CORPORATION OF COCHIN EMPLOYEES CO-OPERATIVE SOCIETY LTD NO.331, CC 16/254, A CORPORATION OF COCHIN EMPLOYEES CO-OP SOCIETY LAD NO. 331, NEAR VILLAGE OFFICE, THOPUMPADY P.O., ERNAKULAM, PIN – 682005, KERALA REPRESENTED BY ITS SECRETARY, V.S SARITHA, BY ADVS. V.P.NARAYANAN M.M.MONAYE M.PAUL VARGHESE RESPONDENT/S: 1 THE INCOME TAX OFFICER, WARD 2(4) & TPS, CENTRAL REVENUE BUILDING, I.S. PRESS ROAD, KOCHI, KERALA, PIN - 682018 2 ASSESSMENT UNIT NATIONAL E-ASSESSMENT CENTER, INCOME TAX DEPARTMENT, MINISTRY OF FINANCE, ROOM NO. 401, 2ND FLOOR, E-RAMP, JAWAHARLAL STADIUM NEW DELHI, REPRESENTED BY ITS INCOME TAX OFFICER, PIN - 110003 3 THE PRINCIPAL CHIEF COMMISSIONER OF INCOME TAX (KERALA), CENTRAL REVENUE BUILDING, I.S. PRESS ROAD, KOCHI,, PIN – 682018. BY ADV CHRISTOPHER ABRAHAM OTHER PRESENT: SRI.CHRISTOPHER ABRAHAM-SC THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 17.01.2024, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C) NO. 24210 OF 2023. 2

J U D G M E N T The present writ petition has been filed impugning orders at Exts.P3 and P7 dated 28.4.2022 and 23.2.2023, respectively, passed under clause (d) of Section 148A of the Income Tax Act, 1961 ('Act', for short) for the assessment years 2018-19 and 2019-20, respectively. The petitioner is a co- operative society. The petitioner had not filed returns of its income for the assessment years in question.

2.

The information available from the “INSIGHT” module of Income Tax Department would disclose huge cash transactions of a few crores of rupees in both the assessment years. For the failure on the part of the assessee to file valid returns of income and submit a proper and timely explanation with regard to cash transactions, provisions under Section 148A of the Act had been invoked, along with sharing of the information as available in the “INSIGHT”. An opportunity as per

WP(C) NO. 24210 OF 2023. 3 Section 148A(b) of the Act was given to the assessee for filing objections as to why notice under Section 148 of the Act for reopening the assessment proceedings for the two assessment years, i.e. 2018-19 and 2019-20, should not be initiated against the petitioner on the basis of the information, which would suggest that the income chargeable to tax had escaped assessment for the relevant assessment years. The petitioner replied to the show cause notices.

3.

The assessing authority did not satisfy with the replies. The petitioner took the plea that they were eligible for benefits of mutuality and relied on the judgment of the Hon'ble Supreme Court in M/s.Mavilayi Service Co-operative Bank Ltd. and another v. Commissioner of Income Tax, Calicut and another [2021(1) KHC 303 (SC)] being eligible for 80P deduction. However, the assessing authority rejected the said submission. Without filing returns under Section 139(1) of the Act, no deduction can be claimed by the assessee as WP(C) NO. 24210 OF 2023. 4 provided under Section 80AC(2) of the Act. Therefore, the petitioner was required to file returns of its income under Section 148 of the Act and the petitioner had filed returns of its income for the assessment years 2018-19 and 2019-20. Final orders are yet to be passed on the returns so filed by the petitioner. In view of the above, this Court finds no ground to entertain the present writ petition, which is hereby dismissed. No order as to costs. Pending interlocutory application, if any, in the present writ petition stands dismissed. DINESH KUMAR SINGH

JUDGE jg

WP(C) NO. 24210 OF 2023. 5

Appendix — schedule of exhibits
APPENDIX OF WP(C) 24210/2023 PETITIONER EXHIBITS Exhibit P1 THE TRUE COPY OF THE NOTICE ISSUED UNDER SECTION 148A(B) OF THE ACT DATED 17.03.2022 Exhibit P2 THE TRUE COPY OF THE REPLY DATED 16.04.2022 SUBMITTED BY THE PETITIONER Exhibit P3 THE TRUE COPY OF THE ORDER UNDER SECTION 148A(D) OF THE ACT DATED 28.04.2022 ISSUED BY THE 1ST RESPONDENT FOR AY 2018-19 Exhibit P4 THE TRUE COPY OF THE NOTICE ISSUED UNDER SECTION 148 OF THE ACT DATED 28.04.2022 FOR AY 2018-19 Exhibit P5 THE TRUE COPY OF THE NOTICE ISSUED UNDER SECTION 148A(B) OF THE ACT DATED 17.01.2023 Exhibit P6 THE TRUE COPY OF THE REPLY FILED BY THE PETITIONER DATED 01.02.2023 Exhibit P7 THE TRUE COPY OF THE ORDER UNDER SECTION 148A(D) OF THE ACT DATED 23.02.2023 ISSUED BY THE 1ST RESPONDENT FOR AY 2019-20 Exhibit P8 THE TRUE COPY OF THE NOTICE ISSUED UNDER SECTION 148 OF THE ACT DATED 09.03.2023 FOR AY 2019-20 Exhibit P9 THE TRUE COPY OF THE NOTICE ISSUED BY THE 1ST RESPONDENT DATED 30.05.2022 Exhibit P10 THE TRUE COPY OF THE RETURNS FILED BY THE PETITIONER FOR AY 2019-20 DATED 28.03.2023 WP(C) NO. 24210 OF 2023. 6 Exhibit P11 THE TRUE COPY OF THE INTERIM ORDER PASSED IN W.P(C) NO. 22560/2023 DATED 12.07.2023, THE CASE OF PARAVUR GOVT SERVANTS CO-OPERATIVE BANK LTD RESPONDENT EXHIBITS Exhibit R1(a) Copy of Judgment of Supreme Court in the case of Anshul Jain V. Principal Commissioner of Income Tax and Another dated 2nd September 2022[2022] 449 ITR 256 (SC) Exhibit R1(b) Copy of the Judgment of the Punjab and Hariyana High Court in the case of Anshul Jain v. Principal Commissioner of Income Tax and Another dated 2nd June 2022 [2022] 449 ITR 251 (P and H) Exhibit R1(c) Copy of the Judgment of the Kerala High Court in W.P.(c) No. 37527 of 2022 dated 07.12.2022 in the case of M/s Viswabarathi Medicals V. Income Tax Officer

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