THE ELAVALLY SERVICE CO-OPERATIVE BANK LTD NO.F.1456 vs. THE COMMISSIONER OF INCOME TAX (APPEALS)

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WP(C)/26935/2021HC KeralaKLHC01067293202130 November 2021Author: HONOURABLE MR. JUSTICE BECHU KURIAN THOMAS7 pages
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What did the High Court hold?

The High Court held that it is essential under the principles of law for a party to be able to move applications for interim reliefs at any time when proceedings are pending. This right cannot be denied based on limitations created by technological advancements. The Court found that the absence of an electronic link preventing a litigant from accessing justice would mean that procedure becomes the mistress of justice, not its handmaid. Therefore, the respondents must make sufficient changes to their software to permit interim applications to be filed or uploaded by litigants during the pendency of proceedings. The Court directed that the stay petition filed before the jurisdictional Commissioner be transmitted to the National Faceless Appeal Centre and considered in accordance with law within three months. Until such consideration, coercive proceedings against the petitioner are stayed. The Court expressly left undecided the merits of the penalty order or the stay application itself, focusing solely on the procedural issue of filing the stay application.

What were the facts?

The petitioner, Elavally Service Co-operative Bank Ltd., is aggrieved by an order (Ext.P6) from the Assessing Officer directing a deposit of 20% of a Rs.1,50,000/- penalty. The petitioner attempted to file a stay petition before the National Faceless Appeal Centre (NFAC), where its appeal against the penalty order under Section 271B of the Income Tax Act, 1961, was pending. However, the stay petition could not be uploaded due to the absence of a separate electronic link for filing stay petitions apart from the memorandum of appeal. Subsequently, the petitioner filed a stay petition before the Principal Commissioner of Income Tax, who is the jurisdictional Commissioner. The petitioner contended that the lack of a link should not prevent the consideration of its stay petition, as it hinders access to justice.

What were the issues?

1. Whether the absence of a separate electronic link for filing stay petitions before the National Faceless Appeal Centre, when an appeal is pending, can be a ground to refuse consideration of such a petition, thereby affecting the assessee's access to justice and the principles of the Rule of Law? (Question of law and fact, concerning procedural fairness and access to justice). Assessee's Contentions: - The petitioner argued that the inability to upload a stay petition due to a missing electronic link is an unacceptable procedural hurdle that obstructs access to justice and violates the Rule of Law. - They contended that the absence of a link should not be a reason to deny consideration of a stay petition filed by an assessee. Revenue's Contentions: - The revenue submitted that once the petitioner invoked the jurisdiction of the assessing officer and obtained a conditional order, they cannot subsequently seek a stay before the appellate authority. - It was argued that the absence of a link clearly indicates that stay petitions cannot be filed separately from the appeal and must be filed together.

Which sections of the Income-tax Act were involved?

Section 271B

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 BECHU KURIAN THOMAS TUESDAY, THE 30TH DAY OF NOVEMBER 2021 / 9TH AGRAHAYANA, 1943 WP(C) NO. 26935 OF 2021 PETITIONER: THE ELAVALLY SERVICE CO-OPERATIVE BANK LTD NO.F.1456, P.O.VAKA, THRISSUR-680 602, REPRESENTED BY ITS SECRETARY. BY ADV P.C.SASIDHARAN RESPONDENTS: 1 THE COMMISSIONER OF INCOME TAX (APPEALS) NATIONAL FACELESS APPEAL CENTRE, ROOM NO.356, C.R.BUILDING, IP ESTATE, DELHI-110 002. 2 THE PRINCIPAL COMMISSIONER OF INCOME TAX, O/O.THE PRINCIPAL COMMISSIONER OF INCOME TAX, AYAKAR BHAVAN, MANANCHIRA, KOZHIKODE, KERALA-673 001. 3 THE INCOME TAX OFFICER, WARD 1 & TPS, CITY PLAZA, INCOME TAX OFFICE, WEST NADA, GURUVAYOOR, KERALA-680 101. ADV.JOSE JOSEPH, SC THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 30.11.2021, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C) NO. 26935 OF 2021 2 BECHU KURIAN THOMAS, J ========================== W.P.(C) No.26935 of 2021 --------------------------------------- Dated this the 30 th day of November, 2021

JUDGMENT The grievance of the petitioner is mainly against Ext.P6 order issued by the Assessing Officer for grant of a stay wherein petitioner was directed to deposit 20% of the total outstanding demand of Rs.1,50,000/- imposed as penalty.

2.

Petitioner complains that, pursuant to Ext.P6, petitioner attempted to move the Appellate Authority before whom

the appeal against the penalty order under Section 271B of the Income Tax Act, 1961 was pending consideration. Unfortunately, petitioner's stay petition was not accepted due to the absence of an electronic link permitting filing of such a stay petition, separately from the memorandum of appeal.

3.

The learned

counsel

for the petitioner, Adv.P.C.Sasidharan, submits that the stay petition could

WP(C) NO. 26935 OF 2021 3 not be uploaded before the National Faceless Appeal Centre where the appeal was pending consideration, since petitioner had not filed the stay petition along with the memorandum of appeal. Thereafter, petitioner filed Ext.P7 stay petition before the Principal Commissioner of Income Tax, who is the juri ictional Commissioner, under whom the normal appeals ought to have been filed and considered. Petitioner contends that the absence of a link to upload the stay petition cannot be a reason to refuse consideration of the same when it is filed by an assessee. If such hurdles are created, the assessees access to justice, will be affected and will amount to a blot on principles of Rule of law.

4.

I have heard the learned counsel for the petitioner as well as Adv. Jose Joseph, the learned Standing Counsel for respondents.

5.

The learned Standing Counsel submitted that once the petitioner invoked the juri iction of the assessing officer and obtained a conditional order, he cannot thereafter turn around and seek a stay before the appellate

WP(C) NO. 26935 OF 2021 4 authority. It was further submitted that the absence of a link clearly indicates the intention that the stay petition cannot be filed separate from the appeal and both should have been filed together at the same time.

6.

I have considered the rival contentions. It is essential under the principles of law that a party must be able to move applications for interim reliefs at any time when the proceedings are pending. The said right cannot be denied on the basis of any limitations created by technological innovations. Uploading documents through electronic link is an advancement in technology. Such an advancement in technology cannot hamper the cause of justice. If the absence of a link prevents a litigant from having access to justice, it will be a situation where the procedure becomes the mistress of justice and not the handmaid of justice. I, therefore, find that the respondents must make sufficient changes to its software to permit interim applications to be filed or uploaded by the litigants, during the pendency of proceedings to have opportunity to access the adjudicatory mechanism.

WP(C) NO. 26935 OF 2021 5

7.

Having regard to the circumstances that arose in this case, I am of the opinion that petitioner is entitled to have his application for stay considered by the appellate authority.

8.

Since the link to upload interim applications have not been made available till now, it is necessary that the application for interim stay filed before the jurisidictional Commissioner be transmitted to the National Faceless Appeal Centre and have the same considered in accordance with law, in a time bound manner.

9.

In view of the above deliberations, this Court directs the juri ictional Commissioner (Appeals) before whom petitioner has filed the stay petition to transmit the physical/soft copy of the stay petition to the National Faceless Appeal Centre. Thereafter, the National Faceless Appeal Centre shall issue the necessary notice to the petitioner after granting a reasonable opportunity of hearing and pass orders on the stay petition within an outer period of three months from the date of receipt of a copy of the stay petition.

WP(C) NO. 26935 OF 2021 6

10.

Needless to mention, till such consideration takes place; the coercive proceedings against the petitioner shall stand stayed. The writ petition is disposed of. BECHU KURIAN THOMAS,

JUDGE AMV/01/12//2021

WP(C) NO. 26935 OF 2021 7

Appendix — schedule of exhibits
APPENDIX OF WP(C) 26935/2021 PETITIONER EXHIBITS Exhibit P1 TRUE COPY OF THE JUDGMENT IN W.P(C)NO.8175/2020 DATED 17.03.2020. Exhibit P2 TRUE COPY OF THE ORDER DATED 23.08.2021 ISSUED BY THE 1ST RESPONDENT. Exhibit P3 TRUE COPY OF THE APPEAL DATED 23.09.2021 SUBMITTED BEFORE THE IST RESPONDENT. Exhibit P4 TRUE COPY OF THE ACKNOWLEDGEMENT OF RECEIPT OF FORM SHOWING THE DATE OF FILING AS 23.09.2021. Exhibit P5 TRUE COPY OF THE STAY PETITION DATED 25.09.2021 SUBMITTED BEFORE THE 3RD RESPONDENT. Exhibit P6 TRUE COPY OF THE ORDER ISSUED BY THE 3RD RESPONDENT DATED 16.11.2021. Exhibit P7 TRUE COPY OF THE STAY PETITION DATED 22.11.2021 SUBMITTED BEFORE THE 2ND RESPONDENT. RESPONDENTS EXHIBITS NIL TRUE COPY

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