VENGANELLUR SERVICE CO-OP BANK LTD. NO.22, vs. THE INCOME TAX OFFICER

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WP(C)/8113/2021HC KeralaKLHC01021168202107 April 2021Author: HONOURABLE MR. JUSTICE A.M.BADAR4 pages
AI SummaryRemanded

What did the High Court hold?

The High Court of Kerala disposed of the writ petition with specific directions. It directed the respondents (revenue authorities) to decide the stay petitions (Exts.P2(a) and P4(a)) within a period of three months from the date of communication of the judgment by the petitioner. Crucially, the court ordered that until the disposal of these stay petitions, the recovery proceedings initiated pursuant to the assessment order (Ext.P1) shall be deferred. The court did not decide on the merits of the appeals themselves but focused on ensuring that the petitioner's right to have their stay applications heard and decided was protected, and that recovery was held back in the interim. The ratio decidendi is that pending the disposal of stay petitions before appellate authorities, recovery proceedings should be deferred to avoid prejudice to the assessee.

What were the facts?

The petitioner, Vengannellur Service Co-Op Bank Ltd., is challenging an assessment order dated December 7, 2016, for assessment year 2014-2015, passed under Section 143(3) of the Income Tax Act, 1961. The petitioner filed an appeal and a stay petition against this order. Subsequently, a rectification order under Section 154 was issued, which the petitioner also challenged by filing another statutory appeal and stay petition. The petitioner's primary grievance is that the revenue authorities are attempting to recover the tax demand arising from the assessment order while the stay petitions are still pending disposal. The petitioner seeks a stay on recovery proceedings until the disposal of these appeals.

What were the issues?

1. Whether the recovery of tax demand arising from the assessment order should be stayed pending the disposal of the statutory appeals and stay petitions before the Commissioner of Income Tax (Appeals)? (Question of law and fact, concerning the procedural fairness and the powers of the appellate authority). Assessee's Contention: The petitioner argued that recovery proceedings should be stayed pending the disposal of their stay petitions challenging both the assessment order and the rectification order. They sought a stay of recovery until the statutory appeals are decided. Revenue's Contention: The revenue submitted that the recovery of the amount determined under the assessment order cannot be stayed until the disposal of the appeals. However, they agreed that recovery proceedings could be deferred until the stay petitions are disposed of. They also suggested that the stay petitions should be disposed of within two to three months.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 154

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE A.M.BADAR WEDNE AY, THE 07TH DAY OF APRIL 2021 / 17TH CHAITHRA, 1943 WP(C).No.8113 OF 2021(L) PETITIONER: VENGANELLUR SERVICE CO-OP BANK LTD. NO.22, VENGANELLUR (P.O.), CHELAKKARA, THRISSUR-680 586. BY ADV. SRI.V.P.NARAYANAN RESPONDENTS: 1 THE INCOME TAX OFFICER WARD - 2(5), THRISSUR RANGE-2, AAYAKAR BHAVAN, SAKTHAN NAGAR, THRISSUR-680 001. 2 THE COMMISSIONER OF INCOME TAX (APPEALS), AAYAKAR BHAVAN, SAKTHAN NAGAR, THRISSUR-680 001. R1-2 BY ADV. SRI.P.K.RAVINDRANATHA MENON (SR.) R1-2 BY JOSE JOSEPH, SC, FOR INCOME TAX THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 07.04.2021, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

JUDGMENT Dated this the 7th day of April 2021 Heard the learned counsel appearing for the petitioner. He submits that the assessment order under Section 143(3) of the Income Tax Act, 1961 (Ext.P1) was passed for the assessment year 2014-2015 on 07.12.2016. Feeling aggrieved by the said assessment order, the petitioner preferred appeal along with stay petition (Exts.P2 and P2(a)) before the 2nd respondent- Commissioner of Income Tax (Appeals). In the meanwhile, rectification order under Section 154 of the Income Tax Act came to be issued vide Ext.P3 and the same has been challenged by the petitioner by filing statutory appeal along with stay petition, Exts.P4 and P4(a) before the concerned respondent.

2.

The grievance of the petitioner is to the effect that pending disposal of the stay petitions challenging the assessment order and rectification order, respondents are seeking to recover the amount determined as per the assessment order at Ext.P1. Learned counsel for the petitioner therefore prays for stay of recovery till disposal of the statutory appeals.

3.

Learned Standing Counsel appearing for respondents submits that the recovery of the amount determined under the assessment order cannot be stayed till disposal of the appeals but the recovery proceedings may be deferred till disposal of the stay petitions and the concerned authority be directed to dispose of the stay petitions either in two or three months.

4.

In this view of the matter, as the statutory appeals along with stay petitions are pending before the appellate authority, this writ petition is disposed of with the following directions: The respondents shall decide the stay petitions at Exts.P2(a) and P4(a) in appeals challenging the assessment order and rectification order within a period of three months from the date of communication of this judgment by the petitioner. Till disposal of the stay petitions, respondents are directed to defer the recovery proceedings commenced pursuant to the assessment order at Ext.P1. The petitioner to supply copy of this judgment to the concerned respondent for compliance. A.M.BADAR JUDGE smp

Appendix — schedule of exhibits
APPENDIX PETITIONER'S EXHIBITS: EXHIBIT P1 TRUE COPY OF ASSESSMENT ORDER DATED 7.12.2016 PASSED BY THE 1ST RESPONDENT ALONG WITH DEMAND NOTICE AND COMPUTATION OF INCOME. EXHIBIT P2 TRUE COPY OF THE MEMORANDUM OF APPEAL DATED 3.1.2017 FILED BY THE PETITIONER BEFORE THE 2ND RESPONDENT FOR AY-2014-15. EXHIBIT P2(a) TRUE COPY OF THE PETITION FOR STAY DATED 3.1.2017 FILED BY THE PETITIONER FOR AY- 2014-15 BEFORE THE 2ND RESPONDENT. EXHIBIT P3 TRUE COPY OF THE RECTIFICATION ORDER DATED 30.1.2020 PASSED BY THE 1ST RESPONDENT ALONG WITH DEMAND NOTICE AND COMPUTATION OF INCOME. EXHIBIT P4 TRUE COPY OF THE MEMORANDUM OF APPEAL DATED 19.10.2020 FILED BY THE PETITIONER BEFORE THE 2ND RESPONDENT FOR AY-2014-15. EXHIBIT P4(a) TRUE COPY OF THE PETITION FOR STAY DATED 19.10.2020 FILED BY THE PETITIONER BEFORE THE 2ND RESPONDENT. EXHIBIT P5 TRUE COPY OF THE JUDGMENT DATED 1.7.2019 IN W.A.NO.1536 OF 2019 OF THIS HON'BLE COURT. RESPONDENTS' EXHIBITS: NIL. True Copy P.S to Judge smp

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