KAITHODU RURAL CO-OPERATIVE SOCIETY LTD vs. CENTRAL BOARD OF DIRECT TAXES

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WP(C)/21299/2022HC KeralaKLHC01043840202230 June 2022Author: HONOURABLE MR. JUSTICE GOPINATH P.4 pages
AI SummaryRemanded

What did the High Court hold?

The High Court directed that if the petitioner files a stay petition in their appeal (Ext.P2) within ten days of a suitable link being provided by the respondent Department, recovery proceedings against the petitioner will be kept in abeyance until a decision is taken on the stay petition by the appellate authority. The appellate authority is directed to endeavor to dispose of the stay petition within two months from the date it is uploaded by the petitioner. The writ petition is disposed of with these directions. The court did not decide on the merits of the assessment or the petitioner's eligibility for Section 80P deductions, but rather provided a procedural path for seeking a stay.

What were the facts?

The petitioner, Kaithodu Rural Co-operative Society Ltd., is aggrieved by an assessment order (Ext.P1) and a notice of demand. The petitioner has filed an appeal (Ext.P2) against the assessment order. The petitioner seeks a direction for the disposal of the appeal and a stay of the demand pending the appeal's disposal, citing a previous judgment (Ext.P4). The revenue contends that the demand arose from unexplained cash deposits and that the petitioner is not entitled to deductions under Section 80P of the Income Tax Act, thus not eligible for the stay granted in Ext.P4 or similar judgments. The revenue argues that the petitioner should seek a stay from the appellate authority.

What were the issues?

1. Whether the petitioner is entitled to a stay of the demand pending the disposal of their appeal before the appellate authority, considering the nature of the demand (unexplained cash deposits) and the petitioner's claim for deductions under Section 80P of the Income Tax Act. Assessee's Contention: The petitioner argues that they have filed an appeal and seeks a direction for its disposal and a stay of the demand, relying on Ext.P4 judgment and similar precedents where demands were stayed pending appeal. Revenue's Contention: The revenue argues that the assessment order indicates the demand arose from unexplained cash deposits and that the petitioner is not entitled to deductions under Section 80P. Therefore, the petitioner is not entitled to the benefit of Ext.P4 or other judgments granting stays, and the petitioner should seek a stay from the appellate authority based on the facts.

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 GOPINATH P. THURSDAY, THE 30TH DAY OF JUNE 2022 / 9TH ASHADHA, 1944 WP(C) NO. 21299 OF 2022 PETITIONER: KAITHODU RURAL CO-OPERATIVE SOCIETY LTD, KAITHODU P.O,KOTTARAKKARA, KOLLAM-691 535 REPRESENTED BY ITS SECRETARY BINDHUKUMARI. BY ADVS. K.P.PRADEEP HAREESH M.R. SANAND RAMAKRISHNAN T.T.BIJU T.THASMI M.J.ANOOPA SANU S MALAKEEL RESPONDENTS: 1 THE CENTRAL BOARD OF DIRECT TAXES DEPARTMENT OF REVENUE, MINISTRY OF FINANCE GOVERNMENT OF INDIA, NORTH BLOCK NEW DELHI- 110 001, REPRESENTED BY ITS CHAIRMAN. 2 INCOME TAX OFFICER, WARD-2, KOLLAM, INCOME TAX DEPARTMENT, AAYAKAR BHAVAN INCOME TAX OFFICE, NEAR KARBALA JUNCTION, RAILWAY STATION ROAD, KOLLAM- 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, DELHI-110 003. 4 COMMISSIONER OF INCOME TAX (APPEALS), NATIONAL FACELESS APPEAL CENTRE (NFAC), DELHI, ROOM NO. 401, 2ND FLOOR, E-RAMP, JAWAHARLAL NEHRU STADIUM, DELHI-110 003. BY ADV. SRI.CHRISTOPHER ABRAHAM, SC THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 30.06.2022, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C) NO. 21299 OF 2022 2

JUDGMENT The petitioner is aggrieved by Ext.P1 order of assessment and Ext.P3 notice of demand in respect of the amount assessed under Ext.P1. The learned counsel for the petitioner submits that the petitioner has filed Ext.P2 appeal and the same may be directed to be disposed of. It is submitted that as in Ext.P4 judgment, the demand against the petitioner may be stayed pending disposal of the appeal.

2.

The learned Standing Counsel appearing for the respondent Department points out that the assessment order in this case shows that the demand primarily arose on account of unexplained cash deposits and the petitioner is clearly not entitled to any deduction under Section 80P of the Income Tax Act. It is submitted that the petitioner is not entitled to the benefit of Ext.P4 judgment and other judgments rendered by this court where the demands have been stayed till the appeal is decided. It is submitted that it is for the petitioner to seek stay from the appellate authority considering the facts and circumstances of the case and no stay can be granted till the appeal is decided.

WP(C) NO. 21299 OF 2022 3

3.

Having heard the learned counsel for the petitioner and the learned Standing Counsel for the Department, I am of the opinion that this writ petition can be disposed of directing that if the petitioner files a stay petition in Ext.P2 appeal within ten days from the date on which a suitable link is provided by the respondent Department, the recovery proceedings against the petitioner can be kept in abeyance till a decision is taken on the stay petition by the appellate authority. The appellate authority shall endeavour to dispose of the stay petition within a period of two months from the date on which the stay petition is uploaded by the petitioner as above. The writ petition will stand disposed of as above. GOPINATH P. JUDGE DK

WP(C) NO. 21299 OF 2022 4

Appendix — schedule of exhibits
APPENDIX OF WP(C) 21299/2022 PETITIONER EXHIBITS Exhibit P1 TRUE COPY OF THE ASSESSMENT ORDER NO ITBA/AST/S/147/2021-22/1035146894(1) DATED 27-08-2021 ISSUED FOR THE YEAR 2017-18 BY THE 3RD RESPONDENT TO THE PETITIONER. Exhibit P2 TRUE COPY OF THE APPEAL DATED 3-05-2022 FILED FOR THE YEAR 2017-18 BEFORE THE 4TH RESPONDENT BY THE PETITIONER. Exhibit P3 TRUE COPY OF THE DEMAND NOTICE NO PAN AAABK1804G/2017-18 DATED 26-03-2022 ISSUED FOR THE YEAR 2017-18 BY THE 2ND RESPONDENT TO THE PETITIONER. Exhibit P4 TRUE COPY OF THE JUDGMENT DATED 23-02- 2022 IN WPC NO. 6109 OF 2022.

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