M/S ETTUMANOOR SERVICE CO-OPERATIVE BANK LTD vs. THE INCOME TAX OFFICER

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WP(C)/33715/2022HC KeralaKLHC01071900202227 October 2022Author: HONOURABLE MR. JUSTICE GOPINATH P.5 pages
AI SummaryRemanded

What did the High Court hold?

The High Court acknowledged that the Assessing Officer did not consider the Division Bench judgment of the High Court. While normally such a lapse would be a matter for appeal, the Court, to avoid inconvenience and hardship to the petitioner, quashed the assessment order (Ext.P9). The matter was remitted to the 2nd respondent (Assessment Unit, National Faceless Assessment Centre) to complete the assessment afresh. The Court explicitly stated that it had not expressed any opinion on the merits of the matter and that the Assessing Authority was free to decide the case in accordance with law, taking into consideration the Division Bench judgment (Ext.P10). The ratio decidendi is that while procedural lapses like ignoring a binding precedent are typically for appeal, courts may intervene under Article 226 to prevent hardship, by remanding the matter for fresh consideration with due regard to the precedent.

What were the facts?

The petitioner, M/s Ettumanoor Service Co-operative Bank Ltd., filed a writ petition before the High Court of Kerala challenging an assessment order (Ext.P9) issued by the Assessing Officer. The petitioner contended that the Assessing Officer failed to consider a Division Bench judgment of the High Court (Ext.P10) that was brought to his notice via Ext.P8. The assessment year(s) are not explicitly stated. The Income Tax Department, represented by its Standing Counsel, argued that failure to consider a judgment, while potentially an issue for appeal, is not a sufficient ground for interference under Article 226 of the Constitution. The assessment order was passed by the 1st respondent, the Income Tax Officer, Ward-1, but the remanding authority is the 2nd respondent, identified as the Additional/Joint/Deputy/Assistant Commissioner of Income Tax/Income Tax Officer, Assessment Unit, National Faceless Assessment Centre.

What were the issues?

1. Whether the failure of the Assessing Officer to consider a binding Division Bench judgment of the High Court, brought to his notice, warrants interference with an assessment order under Article 226 of the Constitution of India, despite the availability of an appellate remedy? Assessee's Contention: The petitioner argued that the Assessing Officer's failure to consider Ext.P10, a Division Bench judgment of the High Court that squarely covered the issue in their favour, despite being notified through Ext.P8, was a ground for intervention. The petitioner relied on the principle that a binding precedent should be followed. Revenue's Contention: The Standing Counsel for the Income Tax Department contended that while the Assessing Officer may not have considered the judgment, this fact alone is not a sufficient ground to interfere with an assessment order under Article 226 of the Constitution. They implicitly suggested that such a grievance should be raised through the statutory appellate process.

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 GOPINATH P. THURSDAY, THE 27TH DAY OF OCTOBER 2022 / 5TH KARTHIKA, 1944 WP(C) NO. 33715 OF 2022 PETITIONER: M/S ETTUMANOOR SERVICE CO-OPERATIVE BANK LTD, PEROOR ROAD, ETTUMANOOR, KOTTAYAM – 686 631 REPRESENTED BY ITS SECRETARY-IN-CHARGE THUSHARA JOSEPH BY ADVS. S.ARUN RAJ C.T.SUJA ARJUN S.RAJ RESPONDENTS: 1 THE INCOME TAX OFFICER WARD-1, PUBLIC LIBRARY BUILDING, SASTRI ROAD, KOTTAYAM – 686 001 2 ADDITIONAL/JOINT/DEPUTY/ASSISTANT COMMISSIONER OF INCOME TAX/INCOME TAX OFFICER ASSESSMENT UNIT, NATIONAL FACELESS ASSESSMENT CENTRE, INCOME TAX DEPARTMENT, 2ND FLOOR, E-RAMP, JAWAHARLAL NEHRU STADIUM, NEW DELHI – 110 003 3 THE PRINCIPAL COMMISSIONER OF INCOME TAX NAGAMBADAM, KOTTAYAM, PIN – 686 002 BY ADV JOSE JOSEPH, SC, INCOME TAX DEPARTMENT, KERALA THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 27.10.2022, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C) NO. 33715 OF 2022 2

JUDGMENT This writ petition has been filed on the short ground that Ext.P10 judgment of Division Bench of this Court which squarely covers the issue in favour of the petitioner was not taken note of by the Assessing Officer while issuing Ext.P9 order of assessment, despite the fact that the judgment was brought to his notice through Ext.P8. 2. Learned Standing Counsel for the Income Tax Department states that while it may be true that the Assessing Officer did not consider Ext.P10 Judgment of Division Bench of this Court, that, by itself may not be a ground for interfere with an order of assessment under Article 226 of the Constitution of India.

3.

Having heard the learned counsel for the petitioner and the learned counsel appearing for the Income Tax Department, I am of the view that the fact that a Division Bench judgment of this Court was not noticed by the Assessing Officer, should normally be a matter that should be taken up in appeal and there is no good reason as to why an assessment order should be interfered with WP(C) NO. 33715 OF 2022 3 under Article 226 of the Constitution of India, on that ground. However, to avoid inconvenience and hardship to the petitioner Ext.P9 order of assessment is quashed and the matter is remitted to the 2nd respondent, who shall complete the assessment afresh after taking note of Ext.P10 judgment of a Division Bench of this Court. I make it clear that, I have not expressed any opinion on the merits of the matter and it is open to the Assessing Authority to decide the matter in accordance with law also taking into consideration Ext.P10 judgment of a Division Bench of this Court. GOPINATH P. JUDGE nak

WP(C) NO. 33715 OF 2022 4

Appendix — schedule of exhibits
APPENDIX OF WP(C) 33715/2022 PETITIONER EXHIBITS Exhibit P1 TRUE COPY OF THE NOTICE UNDER SECTION 142 (1) DATED 09-12-2021 ISSUED BY THE 2ND RESPONDENT FOR THE AY 2020-21 Exhibit P2 TRUE COPY OF THE REPLY DATED 28-12-2021 E-FILED BY THE PETITIONER IN RESPONSE TO THE NOTICE DATED 09-12-2021 Exhibit P3 TRUE COPY OF THE NOTICE DATED 12-03-2022 U/S 142(1) OF THE ACT ISSUED BY THE 2ND RESPONDENT Exhibit P4 TRUE COPY OF THE REPLY DATED 14-03-2022 E-FILED BY THE PETITIONER IN RESPONSE TO THE NOTICE DATED 12-03-2022 ISSUED UNDER SECTION 142(1) OF THE ACT. Exhibit P4(A) TRUE COPY OF THE NOTICE DATED 16-03-2022 U/S 142(1) OF THE ACT ISSUED BY THE 2ND RESPONDENT Exhibit P4(B) TRUE COPY OF THE REPLY DATED 16-03-2022 E-FILED BY THE PETITIONER Exhibit P5 TRUE COPY OF THE SHOW CAUSE NOTICE DATED 21-03-2022 ISSUED BY THE 2ND RESPONDENT FOR THE AY 2020-21 Exhibit P6 TRUE COPY OF THE REPLY DATED 22-03-2022 E-FILED BY THE PETITIONER Exhibit P7 TRUE COPY OF THE SHOW CAUSE NOTICE DATED 01-09-2022 ISSUED BY THE 2ND RESPONDENT FOR THE AY 2020-21 Exhibit P8 TRUE COPY OF THE REPLY DATED 03-09-2022 E-FILED BY THE PETITIONER IN RESPONSE TO WP(C) NO. 33715 OF 2022 5 THE SHOW CAUSE NOTICE DATED 01-09-2022 Exhibit P9 TRUE COPY OF THE ASSESSMENT ORDER DATED 23-09-2022 U/S 143(3) R.W.S. 144 B OF THE ACT ALONG WITH THE DEMAND NOTICE ISSUED BY THE 2ND RESPONDENT FOR THE ASSESSMENT YEAR 2020-21 Exhibit P10 TRUE COPY OF THE JUDGMENT DATED 01-11- 2021 PASSED BY THE DIVISION BENCH OF THIS HONOURABLE COURT IN ITA NO. 323 OF 2019 AND CONNECTED CASES Exhibit P11 TRUE COPY OF THE PENALTY NOTICE DATED 23- 09-2022 UNDER SECTION 274 R.W.S. 270A OF THE ACT FOR THE AY 2020-21 ISSUED BY THE 2ND RESPONDENT

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