SOORANAD GRAMODHARANA SERVICE CO-OPERATIVE BANK LTD, vs. THE CENTRAL BOARD OF DIRECT TAXES,

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WP(C)/21407/2023HC KeralaKLHC01046789202324 July 2023Author: HONOURABLE MR.JUSTICE C.S.DIAS6 pages
AI SummaryRemanded

What did the High Court hold?

The High Court held that the impugned order (Ext.P6) passed by the Commissioner of Income Tax (Appeals) suffers from errors of law and violates the rudimentary principles of natural justice. The Court noted that the notice for final hearing was for June 26, 2023, and the petitioner had indeed produced Ext.P4 and Ext.P5 on that date, a fact not disputed by the respondents. Therefore, the observation in Ext.P6 that no documents were produced or submissions made was factually incorrect. Consequently, Ext.P6 was quashed and set aside. The Court directed the Commissioner of Income Tax (Appeals) to re-consider the appeal (Ext.P2) afresh, taking into account Ext.P4 and Ext.P5, and after affording the petitioner an opportunity of being heard. Until a fresh order is passed, coercive proceedings pursuant to Ext.P1 are deferred.

What were the facts?

The petitioner, Sooranad Gramodharana Service Co-operative Bank Ltd., is a Primary Agricultural Credit Society claiming deductions under Section 80P of the Income Tax Act, 1961. For assessment year 2017-2018, it filed a return claiming deductions. The Income Tax Officer (respondent 2) rejected this claim via assessment order (Ext.P1). The petitioner appealed this order to the Commissioner of Income Tax (Appeals) (respondent 4) via Ext.P2. The petitioner was notified of a final hearing on June 26, 2023. On that date, the petitioner submitted documents (Ext.P4) and a hearing note (Ext.P5). However, respondent 4, by order Ext.P6, rejected the appeal, stating the petitioner failed to produce documents or present submissions. The petitioner filed a writ petition challenging Ext.P6.

What were the issues?

1. Whether the order passed by the Commissioner of Income Tax (Appeals) (respondent 4) rejecting the petitioner's appeal is arbitrary and against the facts, thus liable to be quashed, in light of the petitioner having produced documents and a hearing note on the scheduled date of hearing? (Question of mixed law and fact, concerning principles of natural justice and procedural fairness under the Income Tax Act, 1961). Assessee's Contention: The petitioner argued that Ext.P6 order is arbitrary and against true facts because it erroneously states that no documents were produced or submissions made, despite the petitioner having filed Ext.P4 and Ext.P5 on the hearing date. The petitioner contended that the order violates principles of natural justice. Revenue's Contention: The respondents did not dispute the factual assertion made by the petitioner regarding the production of Ext.P4 and Ext.P5.

Which sections of the Income-tax Act were involved?

Section 80P

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 C.S.DIAS MONDAY, THE 24TH DAY OF JULY 2023 / 2ND SRAVANA, 1945 WP(C) NO. 21407 OF 2023 PETITIONER: SOORANAD GRAMODHARANA SERVICE CO-OPERATIVE BANK LTD, NO 3947, SOORANAD NORTH, ANAYADI P.O., KOLLAM, REPRESENTED BY ITS SECETARY DIVYA D.L., PIN - 690561 BY ADVS. K.P.PRADEEP SANAND RAMAKRISHNAN HAREESH M.R. T.T.BIJU T.THASMI M.J.ANOOPA RESPONDENTS: 1 THE CENTRAL BOARD OF DIRECT TAXES, DEPARTMENT OF REVENUE, MINISTRY OF FINANCE, GOVERNMENT OF INDIA, NORTH BLOCK, NEW DELHI- , REPRESENTED BY ITS CHAIRMAN., PIN - 110001 2 INCOME TAX OFFICER, KOLLAM CIRCLE, AAYAKKAR BHAVAN, INCOME TAX OFFICE, NEAR KARBALA JUNCTION, RAILWAY STATION ROAD, KOLLAM- KERALA- 691001., PIN - 691001 3 ADDITIONAL COMMISSIONER OF INCOME TAX,, INCOME TAX OFFICER, NATIONAL FACELESS ASSESSMENT CENTRE, DELHI ROOM NO. 401, 2ND FLOOR, E-RAMP, JAWAHARLAL NEHRU STADIUM, NEW DELHI-110003., PIN - 110003 4 COMMISSIONER OF INCOME TAX (APPEALS), , NATIONAL FACELESS APPEAL CENTRE (NFAC), DELHI,ROOM NO. 401, 2ND FLOOR, E-RAMP, JAWAHARLAL NEHRU STADIUM, NEW DELHI-110003., PIN - 110003 BY ADV CHRISTOPHER ABRAHAM, INCOME TAX DEPARTMENT THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 24.07.2023, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C) NO. 21407 OF 2023 2 Dated this the 24th day of July, 2023

JUDGMENT

The writ petition is filed assailing Ext.P6 order passed by the 4th respondent.

2.

The petitioner’s case is that, it is a Primary Agricultural Credit Society entitled to deductions under Section 80 P of the Income Tax Act,1961 (in short ’Act’). For the assessment year 2017-2018, the petitioner had filed its return of income and claimed deductions on the entire income received under the various provisions of the Act. But, the second respondent has passed Ext.P1 assessment order, rejecting the claim of the petitioner. Challenging Ext.P1 assessment order, the petitioner preferred Ext.P2 appeal before the 4th respondent. The petitioner was served with Ext.P3 notice stating that the appeal stands posted to 26.6.2023 for final hearing. The petitioner immediately produced Ext.P4 document and WP(C) NO. 21407 OF 2023 3 Ext.P5 hearing note on 26.6.2023. Surprisingly, the 4th respondent, by Ext.P6 order, rejected the appeal on the finding that the petitioner has failed to produce any document or address his submissions. Ext.P6 is arbitrary and against the true facts, and therefore, is liable to be quashed. Hence, the writ petition.

3.

Heard; Sri. K.P. Pradeep, the learned counsel appearing for the petitioner and Sri.Christopher Abraham, the learned counsel appearing for the respondents.

4.

A reading of Ext.P3 notice establishes that the fourth respondent had fixed final hearing on 26.6.2023. It is discernible from Ext.P4 document and Ext.P5 hearing note that, the petitioner had produced the above two documents before the 4th respondent on 26.6.2023. However, the 4th respondent, in the impugned Ext.P6 order, has observed that the petitioner has not produced

WP(C) NO. 21407 OF 2023 4 any documents or address its submissions. This is factually incorrect in view of Exts.P4 and P5 produced before this Court, which in turn is not disputed by the respondents.

5.

Viewed in the above factual background, I am of the definite view that Ext.P6 suffers from errors of law and is passed in violation of the rudimentary principles of natural justice. Therefore, Ext.P6 is liable to be quashed and set aside and the fourth respondent is to be directed to re-consider Ext.P2 appeal afresh, after adverting to Exts.P4 and P5 and after affording the petitioner an opportunity of being heard, which will do complete justice to both sides. Resultantly, I order the writ petition as follows:- (i) Ext.P6 order is set aside. (ii) The 4th respondent is directed to re-consider Ext.P2 appeal, in accordance with law and as WP(C) NO. 21407 OF 2023 5 expeditiously as possible after adverting to Exts.P4 and P5 and after affording the petitioner an opportunity of being heard. (iii) Until such time orders are passed on Ext.P2 appeal, all further coercive proceedings pursuant to Ext.P1 shall stand deferred. rmm25/7/2023 C.S.DIAS, JUDGE

WP(C) NO. 21407 OF 2023 6

Appendix — schedule of exhibits
APPENDIX OF WP(C) 21407/2023 PETITIONER EXHIBITS Exhibit P1 TRUE COPY OF THE ASSESSMENT ORDER NO ITBA/AST/S/143(3)/2019-20/ 1022975556(1) DATED 24-12-2019 ISSUED FOR THE YEAR 2017-18 BY THE 2ND RESPONDENT TO THE PETITIONER Exhibit P2 TRUE COPY OF THE APPEAL DATED 21-01-2020 FILED FOR THE YEAR 2017-18 Exhibit P3 TRUE COPY OF THE APPEAL HEARING NOTICE DIN: ITBA/NFAC/F/APL_1/2023- 24/1053823925(1) DATED 20-06-2023 Exhibit P4 TRUE COPY OF THE ACKNOWLEDGMENT UPLOADING THE CERTIFICATE NO 296488331260623 DATED 26-6-2023 Exhibit P5 TRUE COPY OF THE ACKNOWLEDGMENT NO 297954811260623 DATED 26-6-2023 Exhibit P6 TRUE COPY OF THE ORDER IN APPEAL NO ITBA/NFAC/S/250/2023-24/1053964412(1) DATED 27-06-2023

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