THE KADANNAMANNA SERVICE CO-OPERATIVE BANK LIMITED NO.10561 vs. THE COMMISSIONER OF INCOME TAX (APPEALS)
What did the High Court hold?
The High Court allowed the writ appeals and set aside the impugned judgments of the single judge. The Court held that considering the 'peculiar aspect involved touching the merits in the appeals based on the Full Bench decision' in 'The Mavilayi Service Co-operative Bank Ltd.', the insistence for payment of a portion of the disputed tax as a condition for granting stay was not necessary. The respective writ petitions were allowed to the extent of directing the Commissioner of Income Tax (Appeals) to dispose of the statutory appeals at the earliest, taking note of the Full Bench decision, and to keep in abeyance the recovery and collection of the assessed tax pending disposal of such appeals. The Court did not expressly leave any issue undecided.
What were the facts?
The appellant, Kadannama Service Co-operative Bank Ltd., filed writ appeals challenging the interim orders of the Commissioner of Income Tax (Appeals) which insisted on the payment of 20% of the disputed tax amount pending disposal of appeals. The learned single judge of the High Court had reduced this condition to 10%. The appellant banks argued that a Full Bench of the High Court in 'The Mavilayi Service Co-operative Bank Ltd. v. The Commissioner of Income Tax, Calicut' had decided that the appellate authority could only remand the matter for fresh inquiry regarding the nature of the banks' activities. They contended that insisting on any payment pending appeal would cause hardship. The revenue argued that the insistence on part payment for stay falls within the appellate authority's discretion and should not be interfered with.
What were the issues?
1. Whether the insistence on payment of a portion of the disputed tax amount as a condition for granting stay pending appeal is justified, considering the Full Bench decision in 'The Mavilayi Service Co-operative Bank Ltd. v. The Commissioner of Income Tax, Calicut' (ITA.Nos.97/16 and connected cases, dated 19.3.2019)? (Question of law and fact, concerning the discretion of the appellate authority and the impact of a binding precedent). Assessee's Contentions: - The Full Bench decision in 'The Mavilayi Service Co-operative Bank Ltd.' mandates remand for fresh inquiry regarding the nature of activities, implying no demand for tax payment pending appeal. - Insisting on payment of any portion of the disputed tax amount will cause hardship and prejudice to the banks. Revenue's Contentions: - The insistence on part payment for granting stay is a matter within the discretion of the appellate authority. - The High Court should not interfere with the exercise of such discretion.
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Heard together (2 matters)
Read from the judgment's own cause title. This page is filed under one of them.
Cause title — parties, addresses and appearances
JUDGMENT Abdul Rehim, J. 1.Since the issue involved in all these writ appeals are identical, they were considered together and disposed of through this common judgment. 2.Challenge raised in the writ petitions are against the interim order passed by the Commissioner of Income Tax (Appeals), insisting upon payment of 20% of the disputed tax amount, pending disposal of the appeals. The learned single Judge while disposing the writ petitions, had reduced the condition by limiting the payment to an amount of 10%, till the disposal of the appeals. It is challenging those judgments, these appeals are filed.
Learned counsel for the appellants contended that, the question regarding liability of the appellant banks to pay the income tax assessed, is a matter which was decided by a Full Bench of this Court in the judgment in ITA.Nos.97/16 and connected cases, dated 19.3.2019 {The Mavilayi Service Co-operative Bank Ltd. v. The Commissioner of Income Tax, Calicut [2019 (2) KHC 287]}. In view of the dictum laid in the said judgment, it is contended that the appellate authority can only remand the matter to the assessing authority for conducting a fresh enquiry with respect to the nature of the activities of the banks in question. Hence it is contended that, the insistence for making payment of any portion of the amount under demand, pending disposal of the appeal, may cause hardships and prejudices to the banks concerned.
Sri.Christopher Abraham, learned standing counsel appearing for the respondent, on the other hand contended that, the part payment insisted for granting stay is a matter which comes within the discretion of the appellate authority and this Court may not be justified in interfering with exercise of such discretion.
However, taking note of the peculiar aspect involved touching the merits in the appeals based on the Full Bench decision mentioned above, we are of the opinion that the insistence for payment of a portion, as a condition for granting stay, need not be made in the cases at hand. Therefore the impugned judgments need to be modified.
Hence, the writ appeals are hereby allowed. The impugned judgment of the single Judge are hereby set aside. The respective writ petitions are allowed to the extent of directing the Commissioner of Income Tax (Appeals) to consider and dispose of the statutory appeals filed by the appellants herein, at the earliest, taking note of the Full Bench decision cited above and to keep in abeyance recovery and collection of the tax assessed, pending disposal of such appeals. C.K.ABDUL REHIM JUDGE R. NARAYANA PISHARADI kkb. JUDGE
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