KANIPPAYUR SERVICE CO-OPERATIVE BANK LIMITED NO. 280 vs. THE INCOME TAX OFFICER

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WP(C)/10405/2019HC KeralaKLHC01026081201903 April 2019Author: HONOURABLE MR.JUSTICE S.V.BHATTI5 pages
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What did the High Court hold?

The High Court disposed of the writ petition by granting a stay of recovery of tax for the assessment year 2013-2014, subject to the petitioner depositing 10% of the tax demanded within six weeks from the date of the order, and another 10% within six weeks thereafter. The petitioner would continue to enjoy the protection granted by the court as long as they complied with these conditions; failure to do so would result in the stay being vacated without further reference to the court. The court also directed the Commissioner of Income Tax (Appeals) to consider and dispose of the petitioner's appeal expeditiously, preferably within six months from the date of receipt of a copy of the order. The court exercised its discretion, acknowledging the statutory appeal as an important legal remedy, and modified the original stay condition imposed by the Commissioner of Income Tax (Appeals).

What were the facts?

The petitioner, Kanippayur Service Co-operative Bank Limited, filed an appeal for assessment year 2013-2014 before the Commissioner of Income Tax (Appeals) (2nd respondent). The 2nd respondent granted a stay of demand, subject to the petitioner depositing 30% of the disputed tax. The petitioner failed to comply with this condition. Consequently, the Income Tax Officer (1st respondent) issued a notice under Section 221(1) for non-compliance. The petitioner filed a writ petition challenging the Section 221(1) notice and seeking directions for the disposal of their appeal, despite the non-compliance with the stay condition.

What were the issues?

1. Whether the High Court can issue directions for the disposal of the appeal (Ext.P3) and grant a stay of recovery, notwithstanding the petitioner's default in complying with the condition imposed by the Commissioner of Income Tax (Appeals) (Ext.P4) for depositing 30% of the demand. Assessee's Contention: The petitioner sought directions for the disposal of their appeal and a stay of recovery, implicitly arguing that the court's discretion could be exercised to consider their appeal on merits. They relied on a Division Bench view of the Delhi High Court in W.P.(C)No.682/2019 & CM Appl.3018/2019, suggesting that reasonable time could be granted for depositing a portion of the demand. Revenue's Contention: The revenue argued that there was no challenge to the order of the Commissioner of Income Tax (Appeals) (Ext.P4) imposing the deposit condition. Therefore, the court could not issue any directions, even for the disposal of the appeal, given the petitioner's non-compliance. Alternatively, the revenue suggested that the court could exercise its discretion to impose a condition of depositing 20% of the demand for either a stay or for directing the disposal of the appeal.

Which sections of the Income-tax Act were involved?

Section 221(1)

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 S.V.BHATTI WEDNESDAY,THE 03RD DAY OF APRIL 2019 / 13TH CHAITHRA, 1941 WP(C).No. 10405 of 2019 PETITIONER/S: KANIPPAYUR SERVICE CO-OPERATIVE BANK LIMITED NO. 280 REPRESENTED BY ITS SECRETARY PARAMESWARAN, AGED 57 YEARS, W/O VISWESARAN, KANIPPAYUR P.O., THRISSUR DISTRICT, PIN - 680 517 BY ADVS. SRI.C.A.JOJO SRI.JACOB CHACKO SRI.MATHEWS JOSEPH RESPONDENT/S: 1 THE INCOME TAX OFFICER WARD-1, CITY PLAZA, WESTNADA, GURUVAYUR, THRISSUR, PIN - 680 517 2 THE COMMISSIONER OF INCOME TAX (APPEALS) AAYAKAR BHAVAN, THRISSUR - 680 001 3 THE PRINCIPAL COMMISSIONER OF INCOME TAX AAYAKAR BHAVAN, THRISSUR - 680 001 SC SRI. CHRISTOPHER ABRAHAM THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 03.04.2019, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: W.P.(C)No.10405/2019 2

JUDGMENT The petitioner, a Co-operative Bank filed appeal against the order of assessment for the year 2013-2014 before the 2nd respondent. The petitioner moved the 2nd respondent by filing Ext.P3 appeal together with stay petition. The 2nd respondent vide order Ext.P4 granted stay but imposed the condition of depositing 30% of the demand. Apparently, the petitioner has not complied with the condition imposed in Ext.P4. 2. Having regard to the non compliance with the condition incorporated in Ext.P4, Ext.P8 notice under Section 221(1) dated 21.03.2019 is issued by the 1st respondent, hence the writ petition. The petitioner in effect has framed the writ prayers in such a way that not withstanding the default in complying with the condition imposed by Ext.P4 order this Court considers and examines the challenge made to Ext.P8 and further directs disposing of Ext.P3 appeal.

3.

The prayers though made carefully the intention of these prayers are easily demonstrated by Mr.Christopher Abraham. His simple objection is that there is no challenge to Ext.P4. This Court

W.P.(C)No.10405/2019 3 adverts and exercise the discretion keeping in mind the order already passed by the Commissioner of Appeal-2nd respondent. In the circumstances of this case he contends that no direction could be issued by this Court even for disposing of Ext.P3 appeal. He alternatively submits that the statutory appeal since is an important legal remedy this court can exercise its discretion to put the petitioner to the condition of 20% either for stay or for directing 2nd respondent to dispose of the appeal.

3.

The learned counsel for the petitioner fairly draws the attention of the court to the view taken by a Division Bench of Delhi High Court in W.P.(C)No.682/2019 & CM Appl.3018/2019 and says that some reasonable time could be considered by this Court for depositing 20% and appropriate directions are issued for disposing of the appeals. Having regard to above submission the writ petition is disposed of by this order:- (a) there shall be stay of recovery of tax determined for the assessment year 2013-2014 subject to the petitioner depositing 10% of the tax demanded within six weeks from today and another 10% within six weeks thereafter. The petitioner continues to enjoy the W.P.(C)No.10405/2019 4 protection granted by this Court subject to complying with the condition imposed by the order. In default without reference to court the stay shall be deemed to have been vacated. The 2nd respondent considers and disposes of appeal as expeditiously as possible preferably within six months from the date of receipt of a copy of this order. S.V.BHATTI JUDGE Ac

W.P.(C)No.10405/2019 5

Appendix — schedule of exhibits
APPENDIX PETITIONER'S/S EXHIBITS: EXHIBIT P1 A TRUE COPY OF THE ASSESSMENT ORDER DATED 17-03-2016 ISSUED BY THE FIRST RESPONDENT EXHIBIT P2 A TRUE COPY OF THE DEMAND NOTICE DATED 17- 03-2016 ISSUED BY THE FIRST RESPONDENT EXHIBIT P3 A TRUE COPY OF THE APPEAL FOR AY 2013-14 DATED 13-04-2016 FILED BEFORE THE 2ND RESPONDENT EXHIBIT P4 A TRUE COPY OF THE ORDER DATED 24-05-2017 ISSUED BY THE 2ND RESPONDENT EXHIBIT P5 A TRUE COPY OF THE PETITION DATED 08-02- 2018 BEFORE THE 1ST RESPONDENT EXHIBIT P6 A TRUE COPY OF THE REVIEW PETITION DATED 09.06.2017 FILED BEFORE THE 3RD RESPONDENT EXHIBIT P7 A TRUE COPY OF THE ORDER ON REVIEW PETITION BY THE 3RD RESPONDENT DATED 25- 06-2018 EXHIBIT P8 A TRUE COPY OF THE NOTICE U/S 221(1) DATED 21-03-2019 ISSUED BY THE 1ST RESPONDENT RESPONDENT'S/S EXHIBITS : NIL //TRUE COPY// Sd/- PA TO JUDGE

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