The Ayarkunnam Service Co operative Bank Limited vs. The Additional / Joint / Deputy / Assistant Commissioner of Income Tax,

WP(C)/33561/2022HC KeralaKLHC01071514202203 November 2022Author: HONOURABLE MR. JUSTICE GOPINATH P.5 pages

AI SummaryRemanded

What did the High Court hold?

The High Court held that the order of assessment (Ext.P4) should be set aside. The Court reasoned that the assessment order was issued without taking note of the law laid down by the Supreme Court in Mavilayi Co-operative Bank Ltd. (Supra). The Court found this sufficient to quash the order, notwithstanding the existence of an alternative remedy. The ratio decidendi is that an assessment order passed without considering a binding Supreme Court judgment is unsustainable. The Court quashed Ext.P4 and directed the 1st respondent to reconsider the matter after affording the petitioner an opportunity of being heard and taking into account the Supreme Court's judgment in Mavilayi Co-operative Bank Ltd. (Supra) expeditiously.

What were the facts?

The petitioner, The Ayarkunnam Service Co Operative Bank Limited, approached the High Court of Kerala challenging an order of assessment (Ext.P4) passed by the Assessing Officer (1st respondent). The petitioner contended that the assessment order was passed without considering the Supreme Court's judgment in Mavilayi Co-operative Bank Ltd. and others v. Commissioner of Income Tax and another. The petitioner argued that the Assessing Officer had followed a Full Bench decision of the High Court which was subsequently reversed by the Supreme Court. The respondent department acknowledged that the Assessing Officer did not appear to have considered the Supreme Court's judgment.

What were the issues?

1. Whether the order of assessment (Ext.P4) is liable to be quashed for having been passed without considering the binding judgment of the Supreme Court in Mavilayi Co-operative Bank Ltd. and others v. Commissioner of Income Tax and another, despite the availability of an alternative remedy. Assessee's Contentions: The petitioner argued that the Assessing Officer erred by not considering the Supreme Court's decision in Mavilayi Co-operative Bank Ltd. (Supra), which reversed the High Court's Full Bench ruling that the Assessing Officer had apparently followed. This failure to consider the apex court's judgment rendered the assessment order invalid. Revenue's Contentions: The respondent department stated that the petitioner did not respond to the show cause notice, and therefore, the Assessing Officer completed the assessment based on available material. However, the department fairly admitted that the Supreme Court's judgment in Mavilayi Co-operative Bank Ltd. (Supra) does not appear to have been considered by the Assessing Officer.

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE GOPINATH P. THUR AY, THE 3RD DAY OF NOVEMBER 2022 / 12TH KARTHIKA, 1944 WP(C) NO. 33561 OF 2022 PETITIONER: THE AYARKUNNAM SERVICE CO OPERATIVE BANK LIMITED AGED 50 YEARS AYARKUNNAM.P.O,, KOTTAYAM DISTRICT REPRESENTED BY ITS SECRETARY PIN - 686564 BY ADV O.D.SIVADAS RESPONDENTS: 1 THE ADDITIONAL / JOINT / DEPUTY / ASSISTANT COMMISSIONER OF INCOME TAX, THE NATIONAL FACELESS ASSESSMENT CENTRE, INCOME TAX DEPARTMENT, DELHI, , PIN - 110054 2 THE INCOME TAX OFFICER, INCOME TAX DEPARTMENT, KOTTAYAM, , PIN - 686001 BY ADV JOSE JOSEPH, SC, INCOME TAX DEPARTMENT, KERALA THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 03.11.2022, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

..2.. JUDGMENT Dated this the 3rd day of November, 2022 The petitioner has approached this Court challenging Ext.P4 order of assessment. According to the petitioner, the Assessing Officer (1st respondent) issued the order without taking note of the judgment of the Supreme Court in Mavilayi Co-operative Bank Ltd. and others v. Commissioner of Income Tax and another [2021 (1) KHC 303 SC = ITR 1]. It is submitted that the 1st respondent has followed the law laid down by the Full Bench of this Court which has been reversed by the Supreme Court in the decision referred to above.

The learned Standing Counsel appearing for the respondent department states that a reading of the assessment ..3.. order shows that the petitioner was issued the show cause notice and the petitioner did not respond to the same. It is submitted that in such circumstances, the Assessing Officer cannot be found fault with for having completed the assessment on the basis of the materials available with him. It is however fairly admitted that the Assessing Officer does not appear to have considered the judgment of the Supreme Court in Mavilayi Co-operative Bank Ltd. (Supra).

Having regard to the facts and circumstances of the case and considering the submissions made by both sides, I am of the view that since Ext.P4 order of assessment has been issued without taking note of the law laid down by the Supreme Court in Mavilayi Co-operative Bank Ltd. (Supra), the order of assessment can be set aside notwithstanding the availability of an alternative remedy. The Writ Petition is therefore allowed. Ext.P4 order of assessment is quashed with ..4.. a direction to the 1st respondent to reconsider the matter after affording to the petitioner an opportunity of being heard and taking note of the judgment in the Supreme Court in Mavilayi Co-operative Bank Ltd (Supra) as expeditiously as possible and without any further delay. GOPINATH P. JUDGE RMV

Appendix — schedule of exhibits

APPENDIX OF WP(C) 33561/2022 PETITIONER EXHIBITS Exhibit P1 TRUE COPY OF THE REPLY DATED 2.03.2022 SUBMITTED BY THE PETITIONER. Exhibit P2 SHOW CAUSE NOTICE DATED 12.09.2022 ISSUED BY THE 1ST RESPONDENT TO THE PETITIONER, FOR THE ASSESSMENT YEAR 2020-21. Exhibit P3 TRUE COPY OF THE SCREEN SHOT FROM THE EIFILING PORTAL OF THE INCOME TAX DEPARTMENT. Exhibit P4 TRUE COPY OF THE ASSESSMENT ORDER DATE 22/09/2022 ISSUED BY THE 1ST RESPONDENT FOR THE ASSESSMENT YEAR 2020-21 WITH COMPUTATION SHEET Exhibit P5 TRUE COPY OF THE NOTICE DATED 22.09.2022 ISSUED UNDER SECTION 156 OF TBE INCOME TAX ACT ISSUED BY THE 2ND RESPONDENT FOR THE ASSESSMENT YEAR 2020-21. Exhibit P6 TRUE COPY OF THE JUDGMENT IN WA NO. 753 OF 2021 DATED 28.06.2021 RENDERED BY THIS HON'BLE COURT. TRUE COPY P.A.TO JUDGE

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