THE THATHAMANGALAM SERVICE CO-OPERATIVE BANK LTD. vs. THE INCOME TAX OFFICER

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WP(C)/17740/2019HC KeralaKLHC01045469201901 July 2019Bench: HONOURABLE MR.JUSTICE S.V.BHATTI5 pages
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What did the High Court hold?

The High Court held that the order of the Commissioner of Income Tax (Appeals) (Ext.P4) granting stay of recovery, subject to depositing 20% of the demand in installments, was made with due consideration of the CBDT directions and the merits of the matter. The Court found no reason to interfere with Ext.P4 under Article 226 of the Constitution. However, to meet the ends of justice, the Court accepted the petitioner's alternative submission for an extension of time. The operative part of Ext.P4 was modified to allow the petitioner to commence the payment of the first installment on or before July 30, 2019. The stay of 80% of the demand was to continue until the disposal of the appeal or for six months, whichever was earlier, with the Assessing Officer to monitor compliance and any default leading to revocation of the stay. No issue was expressly left undecided.

What were the facts?

The petitioner, The Thathamangalam Service Co-operative Bank Ltd., is aggrieved by an assessment order (Ext.P1) and has filed an appeal before the Commissioner of Income Tax (Appeals) (2nd respondent). The petitioner sought a stay of recovery of the demand raised in Ext.P1 by filing a stay petition (Ext.P3). The 2nd respondent, in Ext.P4, granted a stay of recovery of the demand, subject to the condition of depositing 20% of the tax demanded in five equal monthly installments, starting from June 2019. The petitioner challenged this condition as onerous and alternatively sought an extension of time for the first installment, proposing to start payments on or before July 30, 2019. The High Court considered the matter.

What were the issues?

1. Whether the condition imposed by the Commissioner of Income Tax (Appeals) for depositing 20% of the tax demanded as a pre-condition for stay of recovery, in relation to a claim of deduction under Section 80P, is onerous and incompatible with the merits of the appeal? (Question of law and fact, concerning Section 80P of the Income Tax Act, 1961). Assessee's Contention: The petitioner argued that the condition of depositing 20% of the demand is very onerous and not compatible with the merits of the appeal. Alternatively, they sought an extension of time for making the first installment, proposing to commence payments on or before July 30, 2019. Revenue's Contention: The judgment does not record any specific arguments made by the revenue in opposition to the petitioner's contentions regarding the onerous nature of the condition or the request for extension of time.

Which sections of the Income-tax Act were involved?

Section 80P

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE S.V.BHATTI MONDAY, THE 01ST DAY OF JULY 2019 / 10TH ASHADHA, 1941 WP(C).No.17740 of 2019 PETITIONER/S: THE THATHAMANGALAM SERVICE CO-OPERATIVE BANK LTD. NO. P 502, TATTAMANGALAM, PALAKKAD 678 012, REPRESENTED BY ITS SECRETARY K. JYOTHI, AGED 42, W/O. DIVYA PRASAD. BY ADVS. SRI.HARISANKAR V. MENON SMT.K.KRISHNA SMT.MEERA V.MENON RESPONDENT/S: 1 THE INCOME TAX OFFICER WARD 5, AYAKAR BHAVAN, PALAKKAD 678 014 2 THE COMMISSIONER OF INCOME TAX (APPEALS), SAKTHAN NAGAR, THRISSUR 680 001 BY SRI. JOSE JOSEPH, STANDING COUNSEL THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 01.07.2019, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

WP(C).No.17740 of 2019 2 JUDGMENT Heard Sri. Harisankar. V. Menon, for the petitioner and Sri. Jose Joseph, for the respondents.

2.

The petitioner, a Co-operative Bank is, aggrieved by Ext.P1 assessment order in appeal before the 2nd respondent. The petitioner moved Ext.P3 stay petition praying for stay of recovery pursuant to Ext.P1 assessment order. The 2nd respondent through Ext.P4 considered and granted stay of recovery of the amount determined in Ext.P1 by imposing a condition of depositing 20% of the tax demanded in five equal installments. For convenience, the operative portion of the order of Ext.P4 is extracted herein:- The issue involve the claim of deduction u/s.80P disallowance. In the totality of the facts, I deem it proper to stay 80% of the demand till disposal of appeal or 6 months whichever is earlier. 20% of the balance demand in five equal monthly installment starting from June, 2019 should be paid. The Assessing Officer shall monitor the payment of demand and report and default on part of the appellant. Any default on part of appellant to pay demand will invite revocation of stay granted.

WP(C).No.17740 of 2019 3 3. The petitioner challenges Ext.P4 firstly, by contending that the condition imposed of depositing 20% is very onerous and is not compatible to the merits canvassed by the petitioner in the appeal. Alternatively submits that, the petitioner can be given extension of time for making the first installment. In other words, the request is to start the payment, of first installment on or before the 30th day of July, 2019.

4.

Ext.P4 is an order made by the 2nd respondent by keeping in view the directions issued by the CBDT and also the merits of the matter. There is sufficient consideration of and application of mind to the issue by the 2nd respondent while granting the stay order. I am convinced that Ext.P4 does not warrant interference of this Court in exercise of its power of review under Article 226 of the Constitution of India and hence the first ground against Ext.P4 fails.

5.

The next submission of Sri. Harisankar. V. Menon is that the petitioner may be permitted to comply with the order by starting the payment of the installments on or before 30th of July, 2019. To meet the ends of justice this prayer could be considered and accordingly accepted. Having regard to the

WP(C).No.17740 of 2019 4 above, Ext.P4 order reads thus:- The issue involves the claim of deduction u/s.80P disallowance. In the totality of the facts, I deem it proper to stay 80% of the demand till disposal of appeal or 6 months whichever is earlier. 20% of the balance demand in five equal monthly installments starting from on or before the 30th day of July, 2019 should be paid. The Assessing Officer shall monitor the payment of demand and report and default on part of the appellant. Any default on part of appellant to pay demand will invite revocation of stay granted.

The Writ Petition stands disposed of, accordingly. Sd/- S.V. BHATTI JUDGE ajt

WP(C).No.17740 of 2019 5 APPENDIX PETITIONER'S/S EXHIBITS: EXHIBIT P1 COPY OF ASSESSMENT ORDER ISSUED BY THE 1ST RESPONDENT FOR THE YEAR 2016-17 EXHIBIT P2 COPY OF APPEAL FILED BY THE PETITIONER BEFORE THE 2ND RESPONDENT FOR THE YEAR 2016-17 EXHIBIT P3 COPY OF STAY PETITION FILED BY THE PETITIONER BEFORE THE 2ND RESPONDENT FOR THE YEAR 2016-17 EXHIBIT P4 COPY OF ORDER ISSUED BY THE 2ND RESPONDENT FOR THE YEAR 2016-17

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