THE VENGARA SERVICE CO-OPERATIVE RURAL BANK LIMITED, NO.1186, vs. THE COMMISSIONER OF INCOME TAX (APPEALS),

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WP(C)/6878/2020HC KeralaKLHC01018132202009 March 2020Author: HONOURABLE MR. JUSTICE AMIT RAWAL5 pages
AI SummaryRemanded

What did the High Court hold?

The High Court refrained from commenting on the merits or demerits of the rectification application. Prima facie, the Court was of the view that the rectification application did not appear to be a case of error apparent on record, especially as the orders sought to be recalled were based on the appreciation of evidence and accounts, noticing disbursement of amounts. However, without prejudice to any rights of the petitioner, the writ petition was disposed of with a direction to the Commissioner of Income Tax (Appeals) to decide the rectification application dated February 29, 2020, expeditiously, within a period of 45 days from the date of receipt of a copy of the judgment. The Court clarified that any observations made would not be construed as an expression of opinion on the merits if the petitioner chose to file an appeal.

What were the facts?

The petitioner, The Vengara Service Co-operative Rural Bank Limited, filed a writ petition under Article 226 of the Constitution of India. The petitioner sought directions to the Commissioner of Income Tax (Appeals) to consider a rectification application filed on February 29, 2020, against an order dated January 24, 2020. The petitioner also sought an interim stay of an order dated March 3, 2020, which raised a demand for outstanding dues. The petitioner argued that it is a Primary Agricultural Credit Society and should not be excluded from the exemption under Section 80P, stating the Commissioner's reasoning contained an error apparent on record. The respondent contended that the rectification application did not demonstrate an error apparent and that the petitioner failed to provide books of account to disprove findings regarding credit advancements for two assessment years. The respondent suggested the appropriate remedy was an appeal to the Income Tax Appellate Tribunal.

What were the issues?

1. Whether the Commissioner of Income Tax (Appeals) should be directed to consider the petitioner's rectification application dated February 29, 2020, against the order dated January 24, 2020, within a reasonable period, and grant an interim stay of the demand raised by the order dated March 3, 2020? (Question of procedure and interim relief) Assessee's contentions: The petitioner, a Primary Agricultural Credit Society, is eligible for exemption under Section 80P and the Commissioner's order suffers from an error apparent on record. They relied on various judgments to support their rectification application. Revenue's contentions: The rectification application does not establish an error apparent on record. The petitioner failed to produce books of account to disprove the findings of credit advancements for two assessment years. The proper remedy for the petitioner is to file an appeal before the Income Tax Appellate Tribunal.

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
IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE AMIT RAWAL MONDAY, THE 09TH DAY OF MARCH 2020 / 19TH PHALGUNA, 1941 WP(C).No.6878 OF 2020(H) PETITIONER/S: THE VENGARA SERVICE CO-OPERATIVE RURAL BANK LIMITED, NO.1186, VENGARA P.O., VENGARA, MALAPPURAM, PIN - 673 635, REPRESENTED BY ITS SECRETARY. BY ADV. SRI.O.D.SIVADAS RESPONDENT/S: 1 THE COMMISSIONER OF INCOME TAX (APPEALS), AYAKAR BHAVAN, KOZHIKODE - 673 001. 2 THE INCOME TAX OFFICER, WARD 3, TIRUR, MALAPPURAM DISTRICT, PIN - 676 001. OTHER PRESENT: SRI CHRISTOPHER ABRAHAM SC THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 09.03.2020, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C).No.6878 OF 2020(H) 2

JUDGMENT The petitioner, Primary Agricultural Credit Society, has approached this Court under Article 226 of the Constitution of India for issuance of directions to the Commissioner of Income (Appeals) for consideration of rectification application dated 29th of February 2020 preferred against the common order dated 24th January 2020 within a reasonable period and further seeking interim stay of the order dated 3rd March 2020, Exts.P7 and P8 raising the demand of outstanding dues.

2.

The learned counsel for the petitioner submits that the petitioner is not a Co-operative Bank and cannot be excluded from the exemption as enshrined under Section 80P. The reasoning assigned by the Commissioner of Income Tax is suffering from an error apparent on record and by noticing those errors, rectification application supported by various judgments is stated to be pending and prays for issuance of an appropriate direction.

3.

The learned counsel for the respondent points out that the contents of the rectification application do not make out any case of error apparent on record that it is only just

WP(C).No.6878 OF 2020(H) 3 reference to the judgments in the order of the Commissioner of Income Tax. While deciding the appeal preferred against the assessment orders, both the authorities found out advancement of the credit for two assessment years to the extent of 2.4 % and 1.7%. The petitioner failed to place on record any books of account to disbelieve such findings. The remedy is to prefer an appeal before the Income Tax Appellate Tribunal and prays for dismissal of the writ petition.

4.

I have heard the learned counsel for the parties and apprised the paper book, I would be refraining myself from commenting, regarding the merit or demerit of the rectification application, prima facie this Court is of the view that hardly any cases of rectification as the orders sought to be recalled on the basis of an error apparent on record based upon the appreciation of the evidence and accounts noticing the disbursement of the amount to be 100% percentage as referred to above. Be that as it may, without commenting upon any merit of the matter and may not prejudice to the rights, I dispose of the writ petition with a direction to the Commissioner of Income Tax (Appeals) to decide the rectification application, Ext.P6 dated 29th of February 2020

WP(C).No.6878 OF 2020(H) 4 as expeditiously as possible within a period of 45 days from the date of receipt of a copy of this judgment. The writ petition stands disposed of. Any observations hereinabove would not be construed as an expression of opinion on the merit, in case the petitioner chose to file an appeal. AMIT RAWAL sab JUDGE

WP(C).No.6878 OF 2020(H) 5

Appendix — schedule of exhibits
APPENDIX PETITIONER'S/S EXHIBITS: EXHIBIT P1 COPY OF THE ASSESSMENT ORDER DATED 26/12/2017 ISSUED BY THE 2ND RESPONDENT FOR THE PERIOD 2015-16. EXHIBIT P2 COPY OF THE ASSESSMENT ORDER DATED 22/12/2018 ISSUED BY THE 2ND RESPONDENT FOR THE PERIOD 2016-17. EXHIBIT P3 COPY OF THE APPEAL FILED BY THE PETITIONER BEFORE THE 1ST RESPONDENT FOR THE PERIOD 2015-16 DATED 28/01/2018. EXHIBIT P4 COPY OF THE APPEAL FILED BY THE PETITIONER BEFORE THE 1ST RESPONDENT FOR THE PERIOD 2016-17 DATED 20/01/2019. EXHIBIT P5 COPY OF THE COMMON ORDER DATED 24/01/2020 ISSUED BY THE 1ST RESPONDENT. EXHIBIT P6 COPY OF THE RECTIFICATION APPLICATION FILED BY THE PETITIONER BEFORE THE 1ST RESPONDENT DATED 29/02/2020. EXHIBIT P7 COPY OF THE ORDER DATED 3/03/2020 ISSUED BY THE 2ND RESPONDENT FOR THE PERIOD 2015-16. EXHIBIT P8 COPY OF THE ORDER DATED 3/03/2020 ISSUED BY THE 2ND RESPONDENT FOR THE PERIOD 2016-17.

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