BALARAMAURAM SERVICE CO OPERATIVE BANK LTD. vs. THE CENTRAL BOARD OF DIRECT TAXES

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WP(C)/7017/2021HC KeralaKLHC01018707202118 March 2021Author: HONOURABLE MR. JUSTICE A.M.BADAR4 pages
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What did the High Court hold?

The High Court considered the submissions of both parties. It was deemed appropriate to direct the 3rd respondent (Commissioner of Income Tax (Appeals)) to decide the stay petition (Ext.P5) filed in the pending statutory appeal (Ext.P3) within a period of two weeks from the date of communication of the judgment. As a consequence of the stay petition being pending, the Court directed the respondents to keep the recovery proceedings initiated vide the notice of demand (Ext.P4) in abeyance until the disposal of the stay petition. The Court also noted that the petitioner should cooperate with the 3rd respondent in the disposal of the stay petition. The petition was disposed of with these directions.

What were the facts?

The petitioner, Balaramauram Service Co Operative Bank Ltd., is challenging an assessment order for the assessment year 2018-19. The petitioner filed a statutory appeal against this order before the Commissioner of Income Tax (Appeals), who is the 3rd respondent. Along with the appeal, the petitioner also filed an application for stay of the assessment and the appeal proceedings. Despite the pendency of the appeal and the stay application, the respondents initiated recovery proceedings by issuing a notice of demand under Section 156 of the Income Tax Act, 1961. The petitioner approached the High Court seeking a stay on these recovery proceedings until the disposal of their appeal and stay petition.

What were the issues?

1. Whether the recovery proceedings initiated by the respondents should be stayed pending the disposal of the statutory appeal and stay petition filed by the petitioner before the Commissioner of Income Tax (Appeals)? (Question of law and fact, concerning the procedural fairness and the impact of pending statutory remedies). Assessee's Contentions: - The petitioner argued that recovery proceedings are being pursued despite the pendency of their statutory appeal and stay application before the 3rd respondent. - They prayed for a stay on the enforcement of the demand notice (Ext.P4) until the disposal of their petition and for a direction to the 3rd respondent to dispose of the appeal within a prescribed timeframe. Revenue's Contentions: - The learned standing counsel for the respondents suggested that instead of directing the disposal of the appeal, the 3rd respondent could be directed to decide the stay petition within two weeks. - They agreed that the demand could be stayed until the disposal of the stay petition.

Which sections of the Income-tax Act were involved?

Section 156

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 THUR AY, THE 18TH DAY OF MARCH 2021 / 27TH PHALGUNA, 1942 WP(C).No.7017 OF 2021(B) PETITIONER: BALARAMAURAM SERVICE CO OPERATIVE BANK LTD. NO T-14,BP 7/623, VIZHINJAM ROAD, BALARAMAPURAM P.O.THIRUVANANTHAPURAM-695 501, REPRESENTED BY ITS SECRETARY A.JAFFER KHAN. BY ADVS. DR.K.P.PRADEEP SHRI.HAREESH M.R. SRI.T.T.BIJU SMT.T.THASMI SMT.M.J.ANOOPA 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(2), AAYAKKAR BHAVAN, INCOME TAX, KOWADIAR, THIRUVANANTHAPURAM-695 003, (THROUGH INCOME TAX DEPARTMENT NATIONAL E-ASSESSMENT CENTE, DELHI). 3 COMMISSIONER OF INCOME TAX (APPEALS), OFFICE OF THE COMMISSIONER OF INCOME TAX (APPEALS), AAYAKKAR BHAVAN, INCOME TAX OFFICE, KOWADIAR, THIRUANANTHAPURAM-695 003. SC- SRI. CHRISTOPHER ABRAHAM THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 18.03.2021, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

WP(C).No.7017 OF 2021(B) 2 JUDGMENT Dated this the 18th day of March 2021 Heard the learned counsel for the petitioner.

2.

He argued that the petitioner has challenged the assessment order at Ext.P2 for the year 2018-19 by filing an appeal, Ext.P3 before the 3rd respondent. The petitioner, thereafter filed an application at Ext.P5 for stay to the assessment and the appeal as well as stay applications are pending for consideration before the 3rd respondent. It is further argued by the learned counsel for the petitioner that despite pendency of the statutory appeal as well as the stay petition, Ext.P5 filed therein, respondents are resorting to recovery of the amount determined under the assessment order at Ext.P2 by issuing notice of demand under Section 156 of the Income Tax Act, 1961, Ext.P4. With this, it is prayed that the enforcement of demand vide communication at Ext.P4 be stayed till disposal of the petition and the 3rd respondent be directed to dispose of the appeal within the prescribed time frame given by this Court.

3.

The learned standing counsel takes notice for all respondents and argued that instead of directing disposal of the appeal, the 3rd respondent can be directed to decide the stay petition, Ext.P5 within a period of two weeks and till disposal of the stay

WP(C).No.7017 OF 2021(B) 3 petition, the demand can be stayed.

4.

I have considered the submissions so advanced.

5.

As stated by the learned counsel appearing for respondents, it is appropriate to direct the 3rd respondent to decide the stay petition, Ext.P5 in the pending appeal at Ext.P3 within a period of two weeks from the date of communication of this judgment. As a consequence, as the statutory appeal with stay petition is pending for consideration of the 3rd respondent, respondents need to be directed to keep the recovery proceedings initiated vide notice of demand, Ext.P4 in abeyance till disposal of the stay petition. Hence the order.

6.

The 3rd respondent is directed to decide the stay petition, Ext.P5 in pending statutory appeal, Ext.P3 within a period of two weeks from the date of communication of this judgment. The petitioners to co-operate with the 3rd respondent in disposal of the stay petition. Till disposal of the stay petition, Ext.P5, respondents should keep recovery proceedings initiated by notice of demand under Section 156 of the Income Tax Act, 1961, Ext.P4 in abeyance. The petition stands disposed of. A.M.BADAR N //// PA TO JUDGE JUDGE

WP(C).No.7017 OF 2021(B) 4

Appendix — schedule of exhibits
APPENDIX PETITIONER'S/S EXHIBITS: EXHIBIT P1 TRUE COPY OF THE RETURN OF INCOME DATED 31.12.2018 FOR THE ASSESSMENT YEAR 2018-19 EXHIBIT P2 TRUE COPY OF THE ASSESSMENT ORDER NO ITBA/AST/S/143(3)/2020-21/1030913168(1) DATED 24.2.2021 ISSUED FOR THE YEAR 2018-19 EXHIBIT P3 TRUE COPY OF THE APPEAL DATED 10.3.2021 FOR THE YEAR 2018-19 EXHIBIT P4 TRUE COPY OF THE DEMAND NOTICE NO ITBA/AST/S/156/2020-21/1030913252(10 PAN DATED 24.2.2021 FOR THE YEAR 2018-19 EXHIBIT P5 TRUE COPY OF THE STAY APPLICATION FILED ON 10.3.2021 BEFORE THE 3RD RESPONDENT IN EXT P3 APPEAL

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