MUTTATHARA SERVICE CO-OPERATIVE BANK LTD, TC 42/942(1) vs. THE CENTRAL BOARD OF DIRECT TAXES

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WP(C)/18686/2024HC KeralaKLHC01108288202404 June 2024Author: HONOURABLE MR.JUSTICE MURALI PURUSHOTHAMAN4 pages
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What did the High Court hold?

The High Court directed the 3rd respondent (Commissioner of Income Tax (Appeals)) to consider the stay petition (Ext.P3) expeditiously, within two months from the date of receiving the judgment. The Court further ordered that all recovery proceedings pursuant to the penalty order (Ext.P1) and the notice under Section 156 (Ext.P4) shall be deferred until orders are passed on the stay petition. The writ petition was disposed of with this direction. The High Court did not decide on the merits of the penalty or the deduction claim, focusing solely on the procedural aspect of recovery pending appeal.

What were the facts?

The petitioner, Muttathara Service Co-operative Bank Ltd., is an assessee under the Income Tax Act, 1961. For assessment year 2017-2018, it claimed deduction under Section 80P. The assessment was completed by rejecting this claim, and a penalty order under Section 271AAC(1) was issued. The petitioner filed a statutory appeal under Section 246A before the Commissioner of Income Tax (Appeals) and a stay petition. Despite the pending appeal and stay petition, the Assessing Authority issued a notice under Section 156 for recovery. Aggrieved by this, the petitioner approached the High Court.

What were the issues?

1. Whether the recovery proceedings initiated by the Assessing Authority are premature and ought to be deferred pending the decision on the stay petition filed before the Commissioner of Income Tax (Appeals)? (Question of law and fact, concerning the procedural propriety of recovery actions). Assessee's Contention: The assessee argued that recovery proceedings should be stayed as they have filed a statutory appeal and a stay petition before the appellate authority. They contended that issuing recovery notices while these are pending is improper. Revenue's Contention: The judgment does not record any specific contentions from the revenue regarding this issue. The revenue's actions, as described, were to issue the recovery notice.

Which sections of the Income-tax Act were involved?

Section 80P,Section 271AAC(1),Section 246A,Section 156

AI-generated summary — verify with the full judgment below

Heard together (2 matters)

WP(C) NO. 18686 OF 2024
TC 42/94

Read from the judgment's own cause title. This page is filed under one of them.

Cause title — parties, addresses and appearances
IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE MURALI PURUSHOTHAMAN TUESDAY, THE 4TH DAY OF JUNE 2024 / 14TH JYAISHTA, 1946 WP(C) NO. 18686 OF 2024 PETITIONER: MUTTATHARA SERVICE CO-OPERATIVE BANK LTD., TC 42/942(1) MUTTATHARA, VALLAKKADAVU P.O THIRUVANANTHAPURAM REPRESENTED BY ITS SECRETARY NIRMAL V., PIN – 695 008. BY ADVS. K.P.PRADEEP T.T.BIJU T.THASMI M.J.ANOOPA RESPONDENTS: 1 THE CENTRAL BOARD OF DIRECT TAXES DEPARTMENT OF REVENUE, MINISTRY OF FINANCE, GOVERNMENT OF INDIA, NORTH BLOCK, NEW DELHI REPRESENTED BY ITS CHAIRMAN, PIN – 110 001. 2 ADDITIONAL COMMISSIONER OF INCOME TAX ASSESSMENT UNIT, INCOME TAX DEPARTMENT NATIONAL FACELESS ASSESSMENT CENTRE, DELHI, ROOM NO. 401, 2ND FLOOR, E-RAMP, JAWAHARLAL NEHRU STADIUM, DELHI, PIN – 110 003. 3 COMMISSIONER OF INCOME TAX (APPEALS) NATIONAL FACELESS APPEAL CENTRE (NFAC), DELHI, ROOM NO.401, 2ND FLOOR, E-RAMP, JAWAHARLAL NEHRU STADIUM, DELHI, PIN – 110 003. SRI. CHRISTOPHER ABRAHAM SRI. P.R.AJITH KUMAR - SC THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 04.06.2024, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C).No.18686 OF 2024 2

JUDGMENT The petitioner Co-operative society is an assessee under the Income Tax Act, 1961 (for short, ‘the Act’). For the assessment year 2017- 2018, the petitioner filed return claiming deduction under Section 80(P) of the Act. However, the assessment was completed by rejecting the claim for deduction and Ext.P1 penalty order under Section 271AAC(1) of the Act was passed. The petitioner filed Ext.P2 appeal before the 3rd respondent under Section 246A of the Act. Along with Ext.P2, Ext.P3 stay petition was also filed. However, the 2nd respondent, the Assessing Authority issued Ext.P4 notice under Section 156 of the Act, pursuant to Ext.P1 order. Aggrieved by the same, the petitioner has approached this Court.

WP(C).No.18686 OF 2024 3

2.

Ext.P2 is a statutory appeal. There will be a direction to the 3rd respondent to consider Ext.P3 stay petition, as expeditiously as possible, at any rate, within a period of two months from the date of receipt of a copy of this judgment. Till orders are passed on the stay petition, all recovery proceedings pursuant to Exts.P1 and P4 shall be deferred. The writ petition is disposed of with the above direction. MURALI PURUSHOTHAMAN JUDGE SPR

WP(C).No.18686 OF 2024 4

Appendix — schedule of exhibits
APPENDIX PETITIONER’ S EXHIBITS :- EXHIBIT P1 TRUE COPY OF THE PENALTY ORDER NO ITBA/PNL/F/271AAC(1)/2024-25/1064774483(1) DATED 09-05-2024 ISSUED FOR THE YEAR 2017- 18 BY THE 2ND RESPONDENT TO THE PETITIONER. EXHIBIT P2 TRUE COPY OF THE APPEAL DATED 10-05-2024 AGAINST THE PENALTY ORDER FILED FOR THE YEAR 2017-18 BEFORE THE 3RD RESPONDENT BY THE PETITIONER. EXHIBIT P3 TRUE COPY OF THE STAY PETITION DATED 10-05-2024 SUBMITTED BY THE PETITIONER BEFORE THE 3RD RESPONDENT. EXHIBIT P4 TRUE COPY OF THE DEMAND NOTICE NO.ITBA/PNL/S/156/2024-25/1064770158(1) DATED 09-05-2024 IN PENALTY ORDER ISSUED UNDER SECTION 156 OF THE INCOME TAX ACT, 1961,FOR THE ASSESSMENT YEAR 2017-18 BY THE 2ND RESPONDENT TO THE PETITIONER. RESPONDENTS EXHIBITS: NIL.

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