KARUVANNUR SERVICE CO-OPERATIVE BANK LTD. vs. INCOME TAX OFFICER

While assailing the assessment order before the 3rd respondent, petitioner has sought to canvass that the judgment of the Supreme Court in Mavilayi Service Co- operative Bank Ltd. v. Commissioner of Income Tax [2021 (1) KLT 485] was not considered by the assessing officer, though the assessment order was rendered subsequent to the Supreme Court Judgment.

Since petitioner has already preferred an appeal as Ext.P2 and the same is pending consideration before the 3rd respondent, I deem it fit that this writ petition be disposed of directing the Appellate Authority to consider

Before parting with this case, this Court is compelled to observe and comment upon a disturbing practice being adopted by the Assessing Officers as can be seen in the Assessment order under consideration in this case. The Assessing Officers have been repeatedly ignoring the judgment of the Supreme Court in Mavilayi's case (supra).

In fact, a perusal of the assessment order reveals that the judgment of the Full Bench of this Court in ITA No.97/2016 dated 19.03.2019 [(2019) 2 KLT 597] has been relied upon by the Assessing Officer to impose liability on the assessee ignoring the Supreme Court Judgment in Mavilayi's case. The Supreme Court judgment in Mavilayi's case had overruled the Full Bench judgment of this Court. It does not augur well in the interest of the rule of law that Assessing Officers continue to ignore binding judgments of the Supreme Court and instead rely upon overruled judgments. Hence, I am of the view that the respondents must be imposed with a minimal cost.

After indicating the need and the inclination of the Court to impose costs on the respondents in five separate writ petitions, at the request of the learned Standing Counsel, the case was posted today for further consideration.

The learned Standing Counsel pleaded to avoid the imposition of costs and informed that the department has taken note of the apprehensions expressed by this Court on the last posting date. It was also pointed out that communications have been issued from the office of the Standing Counsel to the Senior Officers of the department intimating the intention of the Court to impose costs for disrespecting binding judgments of the Supreme Court and that necessary steps have been taken by the Department to avoid recurrence of such instances. It was pointed out that the impugned assessment orders failed to advert to the binding judgment solely on account of the failure of the assessees to file replies to the show-cause notices issued by the assessing officer in the case.

Though the above submissions of the learned Standing Counsel were impressive and to a large extent persuasive, still taking note of the fact that the decision in Mavilayi's case was rendered on 12.01.2021, the assessing officers could not have omitted or feigned ignorance of the said binding judgment, notwithstanding the same having not been brought to its notice by the respective assessees. To preserve the majesty of law, it is therefore essential to impose costs, in one case atleast, instead of the five cases, as a token reminder to the department, to always abide by the rule of law. I reiterate that the imposition of costs is a token and shall not be treated as a precedent for other assessment orders already issued.

Accordingly, there will be a direction to the 3rd respondent to dispose of Ext.P2 appeal, as expeditiously as possible, at any rate, within a period of six months from the date of receipt of a copy of this judgment, after granting an opportunity of hearing to the petitioner. Till then, all coercive proceedings against the petitioner pursuant to Ext.P1 shall be kept in abeyance. The writ petition is disposed of as above with a cost of Rs.1,000/- on the respondents, payable to the Kerala State Legal Services Authority, High Court of Kerala. The cost shall be paid within four weeks from the date of receipt of a copy of this judgment. BECHU KURIAN THOMAS JUDGE bpr