THE ARANATTUKARA ORIENTAL SERVICE CO-OPERATIVE BANK LTD NO.171 vs. THE COMMISSIONER OF INCOME TAX(APPEALS)

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WP(C)/10227/2020HC KeralaKLHC01026490202025 May 2020Author: HONOURABLE MR. JUSTICE AMIT RAWAL5 pages
AI SummaryRemanded

What did the High Court hold?

The High Court held that the petitioner's argument is in consonance with the findings rendered in the referred judgments and reiterated by the Division Bench. The Court stated that the assessing officer or the appellate authority, while exercising powers of appeal or stay under Section 226 of the Income Tax Act, are obligated to give regard and respect to the directions of the High Court. The Court clarified that it is not necessary that the payment of 20% can be dispensed with only if there is a specific order from the High Court in that particular case; the judgment of the Full Bench, followed by the Division Bench, has an 'enuring effect' on all authorities. Consequently, the Court directed the 1st respondent (Commissioner of Income Tax (Appeals)) to decide the appeal on merits within six months, without asking for 20% of the demanded amount, after affording an opportunity of hearing to the petitioner and the revenue, and to pass a reasoned and speaking order. No issue was expressly left undecided.

What were the facts?

The petitioner, The Aranattukara Oriental Service Co-operative Bank Ltd. No. 171, is a primary Co-operative Agricultural Credit Society. The Income Tax Officer (2nd respondent) issued a notice under Section 156 of the Income Tax Act for assessment year 2017-18. The petitioner filed an appeal before the Commissioner of Income Tax (Appeals) (1st respondent) along with a stay application. The petitioner contended that neither the appeal nor the stay petition had been considered, and they approached the High Court apprehending coercive action. The petitioner relied on a Division Bench judgment of the High Court which negated the requirement of depositing 20% of the demand as a condition precedent for considering an appeal, following a Full Bench decision.

What were the issues?

1. Whether the appellate authority is bound by the High Court's Full Bench and Division Bench judgments negating the requirement of depositing 20% of the demand as a condition precedent for considering an appeal, even without a specific High Court order in the present case? (Question of law, turning on the interpretation of High Court judgments and their applicability to all authorities). Assessee's contentions: The petitioner argued that the Division Bench judgment in Writ Appeal No. 1536/19, which followed the Full Bench decision in Mavilayi Service Co-operative Bank Ltd. Vs. Commissioner of Income Tax, has an 'enuring effect' on all authorities, and therefore, the 20% deposit requirement can be dispensed with. They relied on the Mavilayi Service Co-operative Bank Ltd. judgment. Revenue's contentions: The revenue argued that the order (presumably the assessment order or the inaction on appeal/stay) is in consonance with Section 144 of the Income Tax Act and Circular dated 31.7.2017, which mandates appellate authorities to ask for a 20% deposit for entertaining an appeal.

Which sections of the Income-tax Act were involved?

Section 156,Section 144,Section 226

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE AMIT RAWAL MONDAY, THE 25TH DAY OF MAY 2020 / 4TH JYAISHTA, 1942 WP(C).No.10227 OF 2020(C) PETITIONER/S: THE ARANATTUKARA ORIENTAL SERVICE CO-OPERATIVE BANK LTD NO.171 ARANATTUKARA, THRISSUR-680 618, REPRESENTEDBY ITS SECRETARY. BY ADV. SRI.P.C.SASIDHARAN RESPONDENT/S: 1 THE COMMISSIONER OF INCOME TAX(APPEALS) AAYAKAR BHAVAN, S.T. NAGAR, THRISSUR. 2 THE INCOME TAX OFFICER, WARD 2(1), THRISSUR, OFFICE OF THE INCOME TAX OFFICER, SHAKTHANTHAMPURAN NAGAR,THRISSUR-680 001 OTHER PRESENT: SRI JOSE JOSEPH SC THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 25.05.2020, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

WP(C).No.10227 OF 2020(C) 2 JUDGMENT Dated this the 25th day of May 2020 Petitioner is a primary Co-operative Agricultural Credit Society registered under the Kerala Co-operative Societies Act. Petitioner is an assesee on the file of the 2nd respondent. While so, the 2nd respondent issued a notice under Section 156 of the Income tax Act pertaining to the assessment year 2017-18. 2. Aggrieved by the assessment order petitioner preferred appeal before the 1st respondent along with a stay application. It is submitted that neither the appeal nor stay petition has been considered by the respondents. Apprehending coercive action, petitioner has approached this Court by filing this writ petition. In this regard he relied upon the judgment of the Division Bench of this Court in writ appeal No.1536/19 dated 1.7.2019 arising out of judgment dated 31.5.2019 W.P.(C)12843/19. The Division Bench after noticing the decision of the Full Bench of this Court in ITA No.97/16 and connected cases, decided on 19.3.2019 titled as Mavilayi Service Co-operative Bank Ltd. Vs. Commissioner of Income Tax 2019 (2) KHC 287, wherein for considering the WP(C).No.10227 OF 2020(C) 3 appeal the demand of 20% as a condition precedent has been negated.

4.

Issue notice before admission. Sri.Jose Joseph accepts notice on behalf of the income tax authorities. He submits that the order is in consonance with the provisions of Section 144 of the Income Tax Act and the Circular dated 31.7.2017 mandating the appellate authorities to ask for deposit 20% of the amount for the purpose of entertaining the adjudication of the appeal.

5.

Having heard learned Counsel for the parties and appraised the paper book, I am of the view that the argument of the petitioner is in consonance with findings rendered in the judgment referred to above and reiterated by the Division Bench. The assessing officer or the appellate authority while exercising the power of appeal or stay of the assessment proceedings under section 226 of the Income Act 1961 are enjoined obligation to give regard and respect to the directions of the Hon'ble High Court. In other words, it would not be necessary that the payment of 20% can be dispensed with only if there is an order of the high court. The judgment of the Full Bench followed by the Division Bench has an enuring effect on all the authorities. There will be a direction to the 1st respondent to decide the WP(C).No.10227 OF 2020(C) 4 appeal on merits within a period of six months, without asking for 20% of the demanded amount, after affording an opportunity of hearing to the petitioner and the revenue and pass a reasonable and speaking order. The writ petition is disposed of. AMIT RAWAL JUDGE Jm/

WP(C).No.10227 OF 2020(C)

Appendix — schedule of exhibits
APPENDIX PETITIONER'S/S EXHIBITS: EXHIBIT P1 TRUE COPY OF THE ASSESSMENT ORDER DATED 19.12.2019 ALONG WITH COMPUTATION SHEET. EXHIBIT P2 TRUE COPY OF DEMAND NOTICE DATED 19.12.2019. EXHIBIT P3 TRUE COPY OF THE APPEAL DATED 16.1.2020. EXHIBIT P4 TRUE COPY OF THE STAY PETITION DATED 18.03.2020. EXHIBIT P5 TRUE COPY OF THE JUDGMENT DATED 1.07.2019 IN W.A.1536 OF 2019.

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