PEROORKADA SERVICE CO-OPERATIVE BANK LIMITED, vs. THE INCOME TAX OFFICER,

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WP(C)/40553/2018HC KeralaKLHC01094199201804 January 2019Author: HONOURABLE MR. JUSTICE DAMA SESHADRI NAIDU4 pages
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What did the High Court hold?

The High Court held that the issuance of the garnishee order freezing the petitioner's bank account for Rs. 24 Crore was premature and hasty. The court reasoned that the order was issued even before the statutory limitation period for filing the second appeal had expired, and crucially, before the Income Tax Appellate Tribunal had an opportunity to consider the petitioner's stay petition. The court acknowledged that the petitioner had filed the second appeal and stay petition promptly after receiving the first appellate authority's order. Consequently, the High Court directed the respondent authorities to defer coercive steps and not prevent the petitioner from carrying on its business until the Tribunal considers the petitioner's stay petition. The operative direction was to suspend coercive actions pending the Tribunal's decision on the stay.

What were the facts?

The petitioner, Peroorkada Service Co-operative Bank Limited, a co-operative society, faced an adverse assessment for Assessment Year 2013-14. Following an order by the first appellate authority (Commissioner of Income Tax (Appeals)), the petitioner filed a second appeal before the Income Tax Appellate Tribunal (ITAT) along with a stay petition. While the stay petition was pending, the Income Tax Department issued a garnishee order freezing the petitioner's bank account for Rs. 24 Crore. The petitioner argued that the garnishee order was premature, issued before the limitation period for the appeal expired and before the Tribunal could consider the stay petition. The High Court had previously suspended the garnishee order until the Tribunal considered the stay petition.

What were the issues?

1. Whether the garnishee order freezing the petitioner's bank account for Rs. 24 Crore was premature and hasty, issued before the Income Tax Appellate Tribunal could consider the petitioner's stay petition, and before the statutory period for filing the second appeal had expired (turning on principles of procedural fairness and the intent behind the Income Tax Act's appeal provisions). Assessee's Contentions: - The garnishee order (Ext.P6) was issued prematurely and hastily. - It was issued even before the limitation period for filing the second appeal could expire. - It was issued before the Tribunal could take up and consider the petitioner's stay petition (Ext.P5). - The order of the first appellate authority (Ext.P2) was served late, on 14.11.2018, and the second appeal was filed on 03.12.2018, well within the sixty-day statutory limit. Revenue's Contentions: - No specific contentions of the revenue are recorded in the judgment regarding the garnishee order's timing or validity.

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 DAMA SESHADRI NAIDU FRIDAY,THE 04TH DAY OF JANUARY 2019 / 14TH POUSHA, 1940 WP(C).No. 40553 of 2018 PETITIONER: PEROORKADA SERVICE CO-OPERATIVE BANK LIMITED, NO.T.1412,REPRESENTED BY ITS SECRETARY SHRI.VISWAKUMAR V, S/O K.VASUDEVAN PILLAI AGED 54 YRS,PEROORKADA.P.O,THIRUVANANTHAPURAM DISTRICT,KERALA, PIN-695005. BY ADVS. SRI.C.A.JOJO SRI.JACOB CHACKO SRI.MATHEWS JOSEPH RESPONDENTS: 1 THE INCOME TAX OFFICER, WARD-2(1)KOWDIAR,TRIVANDRUM-695003. 2 COMMISSIONER OF INCOME TAX(APPEALS)-1., OFFICE OF THE COMMISSIONER OF INCOME TAX(APPEALS),TRIVANDRUM- 695003. 3 THE ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL,COCHIN BENCH-689031. 4 THE GENERAL MANAGER TRIVANDRUM DISTRICT CO-OPERATIVE BANK LTD, THIRUVANANTHAPURAM-695572. SRI CHRISTOPHER ABRAHAM, SC SRI THOMAS ABRAHAM, SC THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 04.01.2019, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C).No. 40553 of 2018 2

JUDGMENT The petitioner, a Co-operative Society, for the Assessment Year 2013-14, suffered an adverse assessment. Against the Ext.P2 order in appeal the petitioner filed the Ext.P4 second appeal before the Tribunal. In that appeal it has also filed the Ext.P5 stay petition. Before the Tribunal could take up the stay petition, the income Tax Department issued the Ext.P6 garnishee order freezing the petitioner's bank account for Rs.24 Crore.

2.

As contended by the petitioner's counsel, the first appellate authority passed the Ext.P2 order on 02.11.2018. But it served the order on the petitioner on 14.11.2018. Soon thereafter, the petitioner filed the second appeal—on 03.12.2018—in two weeks. In fact, the statutory period of limitation is sixty days for the second appeal. I reckon that the authority's issuing the Ext.P6 garnishee order even before the limitation period could expire, leave alone the Tribunal considering the petitioner's Ext.P5 stay petition, is pre-mature and hasty.

3.

On 12.12.2018 this Court suspended the operation of the Ext.P6 until the Tribunal considers the stay petition. Now I, therefore, dispose of the writ petition holding that the respondent authorities will defer coercive steps. Nor do they prevent the petitioner from carrying on its business until the Tribunal considers the petitioner's Ext.P5 stay petition. DAMA SESHADRI NAIDU JUDGE

Appendix — schedule of exhibits
APPENDIX PETITIONER'S EXHIBITS: EXHIBIT P1 A TRUE COPY OF THE ORDER OF THE HON'BLE TRIBUNAL IN ITA.NO.97/COCH/2018 DATED 13.08.2018 EXHIBIT P2 A TRUE COPY OF THE ORDER OF THE 2ND RESPONDENT DATED 07.11.2018. EXHIBIT P3 A TRUE COPY OF THE ORDER OF THE 1ST RESPONDENT DATED 28.11.2018. EXHIBIT P4 A TRUE COPY OF THE APPEAL BEFORE THE 3RD RESPONDENT DATED 03.12.2018 EXHIBIT P5 A TRUE COPY OF THE APPEAL BEFORE THE 3RD RESPONDENT DATED 03.12.2018 EXHIBIT P6 A TRUE COPY OF THE NOTICE U/S 226(3)OF THE INCOME TAX ACT ISSUED TO THE 4TH RESPONDENT BY THE 1ST RESPONDENT DATED 11.12.2018. EXHIBIT P7 A TRUE COPY OF THE LETTER ISSUED BY THE 4TH RESPONDENT DATED 11.12.2018 WITH ITS ENGLISH TRANSLATION. EXHIBIT P8 A TRUE COPY OF THE LETTER SUBMITTED BY THE 1ST RESPONDENT DATED 11.12.2018. RESPONDENTS' EXHIBITS NIL // TRUE COPY // P.A. TO JUDGE SD

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