THE KODAKARA FARMERS SERVICE CO-OPERATIVE BANK LTD. NO.R761 vs. THE INCOME TAX OFFICER

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WP(C)/9641/2020HC KeralaKLHC01024740202005 May 2020Author: HONOURABLE MR. JUSTICE BECHU KURIAN THOMAS4 pages
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What did the High Court hold?

The High Court found merit in the petitioner's contention that proceeding with coercive steps while the statutory appeal was pending would render the appeal redundant and cause severe difficulties. Consequently, the Court disposed of the writ petition by directing the respondents not to proceed with any coercive steps against the petitioner pending the disposal of the appeal before the Commissioner of Income Tax (Appeals). Additionally, the Court directed the 2nd respondent (Commissioner of Income Tax (Appeals)) to consider and dispose of the appeal within a period of 6 months, without insisting on the payment of 10% of the tax demanded as a pre-condition for hearing the appeal. The ratio decidendi is that the efficacy of a statutory appeal must be preserved, and coercive recovery actions should be stayed if they risk making the appellate remedy nugatory.

What were the facts?

The petitioner, The Kodakara Farmers Service Co-operative Bank Ltd., is an income tax assessee. For the assessment year 2016-17, the Income Tax Officer (1st respondent) disallowed the petitioner's claim for deduction under Section 80P of the Income Tax Act, demanding Rs. 17,73,405/- as tax. The petitioner filed an appeal (Ext.P2) against this assessment order (Ext.P1) with the Commissioner of Income Tax (Appeals) (2nd respondent), arguing that the reason for disallowing the deduction was not tenable. While the appeal was pending, the respondents initiated recovery proceedings for the disputed tax amount. The petitioner filed a writ petition before the High Court of Kerala seeking to prevent coercive recovery steps during the pendency of their appeal.

What were the issues?

1. Whether the High Court should intervene in pending recovery proceedings when a statutory appeal is under consideration, and if so, under what conditions? (Question of law and fact, concerning the principles of natural justice and the efficacy of statutory remedies). Assessee's Contention: The petitioner argued that initiating coercive steps while their statutory appeal is pending would render the appeal redundant and cause severe hardship. They relied on the principle that statutory remedies should not be frustrated by premature recovery actions. Revenue's Contention: The judgment does not record any specific contentions made by the revenue regarding the initiation of recovery proceedings or their stance on the writ petition. 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.9641 OF 2020 1 IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE BECHU KURIAN THOMAS TUESDAY, THE 5TH DAY OF MAY, 2020/15TH VAISAKHA, 1942 W.P(C) NO.9641 OF 2020 PETITIONER : THE KODAKARA FARMERS SERVICE CO-OPERATIVE BANK LTD. NO. R761, KODAKARA, THRISSUR – 680 684, REPRESENTED BY ITS MANAGING DIRECTOR, V. D. BIJU, AGED 46, S/O.DEVASSYKUTTY. BY ADVS.HARISANKAR. V. MENON MEERA. V. MENON KRISHNA.K. RESPONDENTS: 1. THE INCOME TAX OFFICER, WARD 2(5), AAYAKAR BHAVAN, THRISSUR – 680 001. 2. THE COMMISSIONER OF INCOME TAX (APPEALS), SAKTHAN NAGAR, THRISSUR – 680 021. 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.9641 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 year 2016-17. By Ext.P1, the 1st respondent disallowed petitioner’s claim for deduction under Section 80P of the Income Tax Act and demanded an amount of Rs.17,73,405/- as tax.

3.

Challenging the said assessment, petitioner has preferred Ext.P2 appeal contending that the reason for disallowing petitioner’s claim for deduction under section 80P is not tenable. While the appeal is pending, the respondents have initiated recovery proceedings to recover the tax allegedly due.

W.P(C) NO.9641 OF 2020 3

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 Ext.P2 appeal. I also direct the 2nd respondent to consider and dispose of Ext. P2 appeal 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.9641 OF 2020 4

Appendix — schedule of exhibits
APPENDIX PETITIONER'S EXHIBITS : EXT.P1 : COPY OF ASSESSMENT ORDER ISSUED BY THE 1ST RESPONDENT FOR THE YEAR 2016-17 DATED 18-12-2018. EXT.P2 : COPY OF THE APPEAL FILED BEFORE THE 2ND RESPONDENT DATED 29-01-2019. EXT.P3 : COPY OF PETITION FOR CONDONATION OF DELAY FILED BEFORE THE 2ND RESPONDENT DATED 29-01-2019. EXT.P4 : COPY OF JUDGMENT OF THIS HON’BLE COURT IN W.P.(C).NO.9162/2020 DATED 23-03-2020. EXT.P4(A) : COPY OF JUDGMENT OF THIS HON’BLE COURT IN W.P.(C) NO.3525/2020 DATED 10-02-2020. EXT.P4(B) : COPY OF JUDGMENT OF THIS HON’BLE COURT IN W.P. (C) NO.5027/2020 DATED 25-02-2020. RESPONDENTS' EXHIBITS : NIL // TRUE COPY// P..S. TO JUDGE

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