MALAPPATTAM SERVICE CO-OPERATIVE BANK LTD vs. ADDITIONAL/JOINT/DEPUTY/ASSISTANT COMMISSIONER OF INCOME TAX/INCOME TAX OFFICER

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WP(C)/35017/2022HC KeralaKLHC01074835202202 November 2022Author: HONOURABLE MR. JUSTICE GOPINATH P.4 pages
AI SummaryRemanded

What did the High Court hold?

The High Court held that the assessment order (Ext.P4) was liable to be set aside because it failed to consider the Supreme Court's judgment in Mavilayi Service Co-operative Bank Ltd. v. Commissioner of Income Tax, which had reversed the Full Bench judgment of the High Court in The Mavilayi Service Co-operative Bank Ltd. V. CIT. The Court found this error significant enough to warrant setting aside the order, notwithstanding the availability of an alternative remedy. Consequently, Ext.P4 was quashed and the matter was remitted to the National Faceless Assessment Centre for fresh consideration in accordance with law, taking into account the Supreme Court's observations. The principle established is that assessment orders must be based on the prevailing law as determined by the Apex Court, even if it means disregarding a lower court's precedent that has been overturned.

What were the facts?

The petitioner, Malappattam Service Co-operative Bank Ltd., a Primary Agricultural Credit Society, filed a writ petition challenging an assessment order for the assessment year 2020-21. The petitioner contended that the Assessing Officer applied a Full Bench judgment of the Kerala High Court in The Mavilayi Service Co-operative Bank Ltd. V. CIT, without considering the subsequent Supreme Court judgment in Mavilayi Service Co-operative Bank Ltd. v. Commissioner of Income Tax, which had reversed the High Court's Full Bench decision. The assessment order under challenge is Ext.P4.

What were the issues?

1. Whether the assessment order for AY 2020-21 (Ext.P4) is vitiated by the Assessing Officer's failure to consider the Supreme Court judgment in Mavilayi Service Co-operative Bank Ltd. v. Commissioner of Income Tax, which reversed the Kerala High Court's Full Bench judgment in The Mavilayi Service Co-operative Bank Ltd. V. CIT? Assessee's contention: The Assessing Officer erred by relying on a High Court Full Bench judgment that was subsequently overturned by the Supreme Court, thereby failing to apply the correct legal precedent. The petitioner relies on the Supreme Court's decision in Mavilayi Service Co-operative Bank Ltd. v. Commissioner of Income Tax. Revenue's contention: The judgment records that the learned counsel for the respondent-Department was heard, but does not detail their specific arguments.

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. WEDNESDAY, THE 2ND DAY OF NOVEMBER 2022 / 11TH KARTHIKA, 1944 WP(C) NO. 35017 OF 2022 PETITIONER/S: MALAPPATTAM SERVICE CO-OPERATIVE BANK LTD MALAPPATTAM, KANNUR, REPRESENTED BY ITS SECRETARY P. GOPALAKRISHNAN, PIN - 670631 BY ADVS. S.ARUN RAJ C.T.SUJA ARJUN S.RAJ RESPONDENT/S: 1 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, PIN - 110003 2 THE PRINCIPAL COMMISSIONER OF INCOME TAX AAYAKAR BHAVAN, NORTH BLOCK, MANANCHIRA, KOZHIKODE, PIN - 673001 BY ADV JOSE JOSEPH, SC, INCOME TAX DEPARTMENT, KERALA ADV. CHRISTOPHER ABRAHAM (SC) THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 02.11.2022, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C) NO. 35017 OF 2022 2

JUDGMENT

Petitioner is a Primary Agricultural Credit Society registered under the Kerala Co-operative Societies Act, 1969. Petitioner has approached this Court, challenging Ext.P4 order of assessment for the assessment year 2020-21, on one short ground. It is the case of the petitioner that the Assessing Officer, applied the judgment of a Full Bench of this Court in The Mavilayi Service Co-operative Bank Ltd. V. CIT [ITA No.97/2016 order dated 19.03.2019], without taking into consideration the judgment of the Hon’ble Supreme Court in Mavilayi Service Co-operative Bank Ltd. v. Commissioner of Income Tax

[2021 (1) KLT 485]

, which had reversed the judgment of the Full Bench of this Court.

2.

Heard the learned counsel appearing for the respondent-Department also.

3.

Having regard to the facts and circumstances of the case and considering the fact that Ext.P4 order of assessment did not consider the fact that the Full Bench judgment of this Court in Mavilayi (supra) has been reversed by the Hon’ble Supreme Court in the judgment reported in Mavilayi Service Co-operative Bank Ltd. v. Commissioner of Income Tax

WP(C) NO. 35017 OF 2022 3 [2021 (1) KLT 485], I am of the opinion that Ext.P4 order of assessment is liable to be set aside, notwithstanding the availability of alternative remedy.

4.

Accordingly, Ext.P4 is quashed. The matter is remitted to the National Faceless Assessment Centre, for fresh consideration, in accordance with law, taking note of the above observations.

The writ petition is disposed of as above. GOPINATH P. JUDGE ajt

WP(C) NO. 35017 OF 2022 4

Appendix — schedule of exhibits
APPENDIX OF WP(C) 35017/2022 PETITIONER EXHIBITS Exhibit P1 TRUE COPY OF THE NOTICE DATED 07-12-2021 UNDER SECTION 142(1) OF THE ACT WAS ISSUED BY THE 1ST RESPONDENT FOR THE AY 2020-21 TO THE PETITIONER Exhibit P2 TRUE COPY OF REPLY DATED 22-02-2022 E-FILED BY THE PETITIONER IN RESPONSE TO TEH NOTICE U/S 142 (1) DATED 07-12-2021 ALONG WITH THE ACKNOWLEDGMENT Exhibit P3 TRUE COPY OF THE SHOW CAUSE NOTICE DATED 19- 03-2022 ISSUED BY THE 1ST RESPONDENT FOR THE AY 2020-21 Exhibit P4 TRUE COPY OF THE ASSESSMENT ORDER DATED 01- 08-2022 UNDER SECTION 143(3) R.W.S 144B OF THE ACT AND THE DEMAND NOTICE ISSUED BY THE 1ST RESPONDENT FOR THE AY 2020-21

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