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

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WP(C)/21318/2022HC KeralaKLHC01043888202230 June 2022Author: HONOURABLE MR. JUSTICE GOPINATH P.4 pages
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What did the High Court hold?

The High Court disposed of the writ petition by directing 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 court did not decide on the merits of the penalty or the appeal itself, but provided a procedural direction for seeking a stay.

What were the facts?

The petitioner, Kaithodu Rural Co-operative Society Ltd, is challenging an order of penalty (Ext.P1) and a notice of demand (Ext.P3) related to that penalty. The petitioner has filed an appeal (Ext.P2) against these orders. The petitioner seeks a direction for the disposal of their appeal and a stay on the demand pending the appeal's decision. The respondent Department argues 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, distinguishing this case from others where stays were granted. The Department contends 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 against the penalty order and notice of demand, considering the nature of the demand (unexplained cash deposits) and the applicability of Section 80P of the Income Tax Act. Assessee's Contention: The petitioner seeks a direction for the disposal of their appeal and a stay of the demand pending the appeal's decision, citing similar cases before the court. Revenue's Contention: The revenue argues that 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 stays granted in other cases and should seek a stay from the appellate authority based on the specific 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. 21318 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- 691 001. 3 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 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. 21318 OF 2022 2

JUDGMENT The petitioner is aggrieved by Ext.P1 order of penalty and Ext.P3 notice of demand in respect of the amount under Ext.P1 order of penalty. 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 other cases before this Court, 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 penalty 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 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.

3.

Having heard the learned counsel for the petitioner

WP(C) NO. 21318 OF 2022 3 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. 21318 OF 2022 4

Appendix — schedule of exhibits
APPENDIX OF WP(C) 21318/2022 PETITIONER EXHIBITS Exhibit P1 TRUE COPY OF THE PENALTY ORDER NO.ITBA/PNL/F/271ACC(1)/2021- 22/1042167769(1) DATED 30-03-2022 ISSUED FOR THE YEAR 2017-18 BY THE 2NDRESPONDENT TO THE PETITIONER. Exhibit P2 TRUE COPY OF THE APPEAL DATED 10-05- 2022 AGAINST THE PENALTY ORDER FILED FOR THE YEAR 2017-18 BEFORE THE 3RD RESPONDENT BY THE PETITIONER . Exhibit P3 TRUE COPY OF THE DEMAND NOTICE NO ITBA/PNL/S/156/2021-22/1042168829(1) DATED 30-03-2022 IN PENALTY ORDER ISSUED FOR THE YEAR 2017-18 BY THE 2ND RESPONDENT TO THE PETITIONER .

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