ELOOR SERVICE CO OPERATIVE BANK LTD. vs. THE INCOME TAX OFFICER

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WP(C)/9658/2020HC KeralaKLHC01024762202005 May 2020Author: HONOURABLE MR. JUSTICE BECHU KURIAN THOMAS4 pages
AI SummaryRemanded

What did the High Court hold?

The High Court held that proceeding with coercive steps pending consideration of the statutory appeal would render the appeal redundant and cause severe difficulties to the petitioner. Therefore, the Court directed the respondents not to proceed with any coercive steps against the petitioner pending the disposal of appeals Exts. P3 and P4. Additionally, the Court directed the 2nd respondent (Commissioner of Income Tax (Appeals)) to consider and dispose of the appeals within a period of 6 months. The Court also directed that the appeals should be disposed of without insisting on the payment of 10% of the tax demanded, which is a common pre-condition for stay of demand in appeals.

What were the facts?

The petitioner, M/s. Eloor Service Co-op. Bank Ltd., is an income tax assessee. The dispute pertains to assessment years 2013-14 and 2017-18. The 1st respondent, the Income Tax Officer, disallowed the petitioner's claim for deduction under Section 80P of the Income Tax Act, demanding Rs. 2,36,86,840/- for AY 2013-14 and Rs. 3,43,97,528/- for AY 2017-18. The petitioner filed appeals (Exts. P3 and P4) before the 2nd respondent, the Commissioner of Income Tax (Appeals), challenging the disallowance. While these appeals were pending, recovery proceedings were initiated by the respondents.

What were the issues?

1. Whether coercive steps for recovery of tax demanded can be initiated pending disposal of statutory appeals against the disallowance of deduction under Section 80P of the Income Tax Act? Assessee's Contention: The assessee argued that initiating coercive steps while statutory appeals are pending would render the appeals redundant and cause severe difficulties. The assessee relied on the principle that the appellate process should not be frustrated by pre-emptive recovery actions. Revenue's Contention: The judgment does not record any specific contentions from the revenue regarding the initiation of recovery proceedings pending appeal. The standing counsel for income tax appeared and took notice.

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
W.P(C) NO.9658 OF 2020 1 IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE BECHU KURIAN THOMAS TUESDAY, THE 05TH DAY OF MAY, 2020/15TH VAISAKHA, 1942 W.P(C) NO.9658 OF 2020 PETITIONER M/S. ELOOR SERVICE CO-OP. BANK LTD. NO.E-103, CO-OPERATIVE BANK LTD. UDYOGAMANDAL, ERNAKULAM – 683 501 REPRESENTED BY ITS SECRETARY, SMT. M. K. PREMALATHA BY ADVS. SRI. V.P NARAYAN, SMT. NISHA JOHN, SMT.DIVYA RAVINDRAN AND SRI.BASKARAKRISHNAN .R RESPONDENTS 1. THE INCOME TAX OFFICER, WARD – 1, TPS, KAP COMMERCIAL COMPLEX O/O ADDITIONAL COMMISSIONER OF INCOME TAX ALUVA RANGE, R.S. ROAD, ALUVA – 683 101 2. THE COMMISSIONER OF INCOME TAX (APPEALS), 28/243, “POORNIMA”, NEAR MANORAMA JUNCTION, PANAMPILLY NAGAR,KOCHI – 682 036 BY SRI.JOSE JOSEPH, SC THIS WRIT PETITION HAVING COME UP FOR ADMISSION ON 05.05.2020, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: W.P(C) NO.9658 OF 2020 2

JUDGMENT

I have heard the counsel for the petitioner through video conferencing. I have also heard the standing counsel for income tax who has taken notice on behalf of respondents. In the facts and circumstances of the case, I deem it fit that this writ petition be disposed of.

2.

Petitioner is an income tax assessee and the issue relates to the assessment years 2013-14 and 2017-18. By Exts.P1 and P2, the 1st respondent disallowed petitioner’s claim for deduction under Section 80P of the Income Tax Act and demanded an amount of Rs.2,36,86,840/- and Rs.3,43,97,528 respectively as tax.

3.

Challenging the said assessment, petitioner has preferred Exts.P3 and P4 appeals contending that the reason for disallowing petitioner’s claim for deduction under section 80P is not tenable. While the appeal is pending, the W.P(C) NO.9658 OF 2020 3 respondents have initiated recovery proceedings to recover the tax allegedly due.

4.

I find force in the contention of the counsel for the petitioner that if the respondents proceed with coercive steps pending consideration of the statutory appeal, the same will be rendered redundant and petitioner will be put to severe difficulties.

5.

In such circumstances, I dispose of the writ petition by directing the respondents not to proceed with any coercive steps against the petitioner pending disposal of Exts.P3 and P4 appeals. I also direct the 2nd respondent to consider and dispose of Exts.P3 and P4 appeals within a period of 6 months without insisting on payment of 10% of the tax demanded. BECHU KURIAN THOMAS JUDGE vps

W.P(C) NO.9658 OF 2020 4

Appendix — schedule of exhibits
APPENDIX PETITIONERS EXTS: EXHIBIT-P1 – TRUE COPY OF ASSESSMENT ORDER DATED 28.03.2016 FOR AY-2013-14 ALONG WITH DEMAND NOTICE PASSED BY THE 1ST RESPONDENT. EXHIBIT–P2 – TRUE COPY OF ASSESSMENT ORDER DATED 30.12.2019 FOR AY-2017-18 ALONG WITH DEMAND NOTICE PASSED BY THE 1ST RESPONDENT. EXHIBIT-P3– TRUE COPY OF THE MEMORANDUM OF APPEAL DATED 27.04.2016 FILED BY THE PETITIONER BEFORE THE 2ND RESPONDENT FOR AY-2013-14. EXHIBIT-P3(A)– TRUE COPY OF THE STAY PETITION DATED 25.06.2019 FILED BY THE PETITIONER BEFORE THE 2ND RESPONDENT FOR AY-2013-14. EXHIBIT-P4 - TRUE COPY OF THE MEMORANDUM OF APPEAL DATED 24.01.2020 FILED BY THE PETITIONER BEFORE THE 2ND RESPONDENT FOR AY-2017-18. EXHIBIT-P4(A)- TRUE COPY OF THE STAY PETITION DATED 13.03.2020 FILED BY THE PETITIONER BEFORE THE 2ND RESPONDENT FOR AY-2017-18.

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