VENGERI URBAN CO OPERATIVE SOCIETY LIMITED vs. INCOME TAX OFFICER

WP(C)/12374/2021HC KeralaKLHC01033556202122 May 2024Bench: HONOURABLE MR. JUSTICE GOPINATH P.4 pages

AI SummaryRemanded

What did the High Court hold?

The High Court allowed the writ petition. It held that the assessment order (Ext.P5) was liable to be set aside because it was passed following a Full Bench judgment of the Kerala High Court which was subsequently reversed by the Supreme Court in Mavilayi Service Co-operative Bank Limited and others v. Commissioner of Income Tax. The Court also noted the petitioner's grievance regarding the violation of principles of natural justice. Consequently, the Court set aside Ext.P5 and directed that the assessment for the assessment year 2018-19 be completed afresh. This fresh assessment is to be done after affording an opportunity of hearing to the petitioner and taking into consideration the Supreme Court's judgment. The issue of violation of principles of natural justice was implicitly addressed by directing a fresh assessment with an opportunity of hearing.

What were the facts?

The petitioner, Vengeri Urban Co Operative Society Limited, filed a writ petition challenging an order of assessment (Ext.P5) issued by the National E-Assessment Centre. The assessment was completed based on a Full Bench judgment of the Kerala High Court in Mavilayi Service Co-operative Bank Ltd v. Commissioner of Income Tax. However, this High Court judgment was subsequently reversed by the Supreme Court in Mavilayi Service Co-operative Bank Limited and others v. Commissioner of Income Tax. The petitioner also contended that the assessment order violated principles of natural justice. The Income Tax Department, through its Senior Standing Counsel, acknowledged that the assessment order was passed following the High Court's judgment without considering the Supreme Court's decision.

What were the issues?

1. Whether the order of assessment (Ext.P5) is liable to be set aside for having been passed based on a High Court judgment that was subsequently reversed by the Supreme Court. (Question of law) 2. Whether the order of assessment (Ext.P5) is liable to be set aside for violation of principles of natural justice. (Question of mixed law and fact) Assessee's Contentions: - The assessment order is bad in law as it relies on a Kerala High Court judgment that has been overruled by the Supreme Court. - The assessment order is bad for violation of principles of natural justice. Revenue's Contentions: - The learned Senior Standing Counsel for the Income Tax Department fairly stated that the assessment order was passed following the Full Bench judgment of this Court and without the benefit of the Supreme Court's judgment.

Which sections of the Income-tax Act were involved?

Income Tax Act 1961

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE GOPINATH P. WEDNESDAY, THE 22ND DAY OF MAY 2024 / 1ST JYAISHTA, 1946 WP(C) NO. 12374 OF 2021 PETITIONER: VENGERI URBAN CO OPERATIVE SOCIETY LIMITED ISLET ARCADE BUILDING, THADAMBATTHAZHAM, VENGERI PO. REPRESENTED BY SECRETARY BIJEESH KOZHIKODE, PIN - 673010 BY ADV RISHAL.K RESPONDENT/S: 1 INCOME TAX OFFICER NATIONAL E-ASSESSMENT CENTRE, MINISTRY OF FINANCE, NEW DELHI, PIN - 110001 2 INCOME TAX OFFICER WARD 1(4), AAYAKAR BHAVAN, NORTH BLOCK, KOZHIKODE KOZHIKODE, PIN - 673001 3 PRINCIPAL CHIEF COMMISSIONER OF INCOME TAX NATIONAL E-ASSESSMENT CENTRE, MINISTRY OF FINANCE, NEW DELHI, PIN - 110001 4 CENTRAL BOARD OF DIRECT TAXES NORTH BLOCK, NEW DELHI: REPRESENTED BY CHAIRMAN, PIN - 110001 5 GOVERNMENT OF INDIA MINISTRY OF FINANCE, NEW DELHI: REPRESENTED BY SECRETARY, PIN - 110001 OTHER PRESENT: SRI. CHRISTOPHER ABRAHAM (IT DEPT) THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 22.05.2024, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

W.P.(C)No.12374/2021 2 JUDGMENT This writ petition has been filed challenging Ext.P5 order of assessment issued by the 1st respondent. It is seen from Ext.P5 that the assessment was completed with reference to the judgment of the Full Bench of this Court in Mavilayi Service Co-operative Bank Ltd v. Commissioner of Income Tax, Calicut; 2019 SCC OnLine Ker 1020; The said decision of the Full Bench of this Court has been reversed by the Supreme Court in Mavilayi Service Co-operative Bank Limited and others v. Commissioner of Income Tax, Calicut and another; (2021) 7 SCC 90. Moreover, the petitioner has a case that the order of assessment is bad for violation of principles of natural justice. 2. Heard the learned Senior Standing Counsel appearing for the Income Tax Department also. The learned Senior Standing Counsel very fairly states that Ext.P5 order has been passed following the Full Bench judgment of this Court in Mavilayi Service Co-operative Bank Ltd (supra) and without having the benefit of the judgment of the Supreme Court. Taking into consideration the above facts and circumstances, the writ petition is allowed by setting aside Ext.P5 order of assessment and

W.P.(C)No.12374/2021 3 directing that the assessment of the petitioner for the assessment year 2018-19 under the provisions of the Income Tax Act 1961 shall be completed afresh after affording an opportunity of hearing to the petitioner and taking note of the judgment of the Supreme Court in Mavilayi Service Co-operative Bank Ltd and others (supra) . The writ petition is disposed of as above. Sd/- GOPINATH P. JUDGE acd

W.P.(C)No.12374/2021 4 APPENDIX OF WP(C) 12374/2021 PETITIONER EXHIBITS Exhibit P5 ASSESSMENT ORDER U/S 143[3] DATED 07.04.2021 WITH DEMAND NOTICE Exhibit P6 FACELESS

ASSESSMENT

SCHEME

DATED 12.09.2019 AS AMENDED BY NOTIFICATION DATED 13.08.2020

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