NEERIKKODE SERVICE CO-OPERATIVE BANK LIMITED NO. 1682 vs. THE COMMISSIONER OF INCOME TAX (APPEALS)

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WP(C)/8880/2021HC KeralaKLHC01023360202107 April 2021Author: HONOURABLE MR. JUSTICE A.M.BADAR4 pages
AI SummaryRemanded

What did the High Court hold?

The High Court disposed of the writ petition with a direction to the respondent No. 1 (Commissioner of Income Tax (Appeals)) to decide the pending appeal on its merits in accordance with law. The Court specifically directed that the appeal should be decided without insisting on the payment of 20% of the tax demanded as per communication Ext.P3. The Court also ordered that recovery proceedings pursuant to the assessment order shall be kept in abeyance until a decision is taken on the appeal. The reasoning implicitly accepts the assessee's contention regarding the unjustified demand for pre-payment of tax, prioritizing the adjudication of the appeal on merits. The issue regarding the availability of Section 80P benefit was not decided by the High Court as it was part of the pending appeal.

What were the facts?

The petitioner, Neerikkode Service Co-operative Bank Limited, filed a writ petition before the High Court of Kerala challenging a communication (Ext.P3) from the Commissioner of Income Tax (Appeals) demanding 20% of the tax as a condition for entertaining its appeal against the assessment order for the assessment year 2017-2018. The petitioner argued that this demand was unjustified in light of settled law. The revenue contended that cash deposited during demonetisation, reflected in the assessment order, constituted unexplained income, disentitling the petitioner to the benefit of Section 80P. The appeal against the assessment order was pending adjudication before the Commissioner of Income Tax (Appeals).

What were the issues?

1. Whether the respondent No. 1 (Commissioner of Income Tax (Appeals)) was justified in demanding 20% of the tax as a condition for entertaining the appeal, contrary to settled law, particularly in light of the judgment in Mavilayi Service Co-operative Bank Vs. The Commissioner of Income Tax, Calicut (2019 (2) KHC 287)? (Question of law and fact, concerning procedural fairness and applicability of precedent). Assessee's contention: The demand of 20% of the tax as a pre-condition for entertaining the appeal is unjustified and contrary to the law settled by this Court in several judgments, including the Mavilayi Service Co-operative Bank case. Revenue's contention: The cash deposited during demonetisation, as reflected in the assessment order, is unexplained income, and therefore, the benefit of Section 80P is not available to the assessee.

Which sections of the Income-tax Act were involved?

Section 80P

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE A.M.BADAR WEDNE AY, THE 07TH DAY OF APRIL 2021 / 17TH CHAITHRA, 1943 WP(C).No.8880 OF 2021(H) PETITIONER: NEERIKKODE SERVICE CO-OPERATIVE BANK LIMITED NO. 1682 NEERIKKODE, (VIA) ALANGAD, ALUVA, ERNAKULAM DISTRICT, REPRESENTED BY ITS SECRETARY. BY ADV. SRI.O.D.SIVADAS RESPONDENTS: 1 THE COMMISSIONER OF INCOME TAX (APPEALS) AYAKAR BHAVAN, OFFICE OF COMMISSIONER, KOCHI-682018. 2 THE INCOME TAX OFFICER, WARD (3), ALUVA, ERNAKULAM DISTRICT, PIN-683101. OTHER PRESENT: SC- SRI.CHRISTOPHER ABRAHAM THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 07.04.2021, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

WP(C).No.8880 OF 2021(H) 2 JUDGMENT Dated this the 7th day of April 2021 Heard both sides.

2.

As against the assessment order at Ext.P1 for the year 2017-2018, the petitioner has preferred at appeal at Ext.P2 which is pending for adjudication before the 1st respondent. The learned counsel for the petitioner submits that in the light of law settled by this Court in series of judgments including the judgment in the matter of the Mavilayi Service Co-operative Bank Vs. The Commissioner of Income Tax, Calicut, reported in 2019 (2) KHC 287. The respondents were not justified in issuing the communication at Ext.P3 directing the petitioner to pay an amount of 20% of the demand as a condition for entertaining the appeal.

3.

The learned counsel for the respondents submits that the cash deposited during demonitisation reflected in the assessment order is an unexplained income and therefore benefit of section 80P is not available.

4.

Having considered the submissions so advanced, the petition is disposed of with a direction to the respondent No. 1 to decide the pending appeal in accordance with law after affording an opportunity of hearing to the petitioner within a period of three

WP(C).No.8880 OF 2021(H) 3 months from the date of receipt of copy of this judgment, without insisting on payment of 20% of the tax demanded as per communication at Ext.P3. Till such time a decision is taken on the appeal, recovery proceedings pursuant to the assessment order shall be kept in abeyance. The petition is disposed of accordingly. N //// PA TO JUDGE A.M.BADAR JUDGE

WP(C).No.8880 OF 2021(H) 4

Appendix — schedule of exhibits
APPENDIX PETITIONER'S/S EXHIBITS: EXHIBIT P1 COPY OF THE ASSESSMENT ORDER DATED 31.12.2019 ISSUED BY THE 2ND RESPONDENT FOR THE ASSESSMENT PERIOD 2017-18. EXHIBIT P2 COPY OF APPEAL FILED BY THE PETITIONER BEFORE THE 1ST RESPONDENT FOR THE PERIOD 2017-18 DATED 08.01.2020. EXHIBIT P3 COPY OF PROCEEDINGS DATED 22.03.2021 ISSUED BY THE 2ND RESPONDENT. EXHIBIT P4 TRUE COPY OF THE JUDGMENT DATED 01.07.2019 IN WA NO. 1536 OF 2019 RENDERED BY THIS HON'BLE COURT. EXHIBIT P5 TRUE COPY OF THE JUDGMENT DATED 17.03.2019 IN WPC NO. 8193 OF 2020 RENDERED BY THIS HON'BLE COURT. EXHIBIT P6 TRUE COPY OF THE JUDGMENT DATED 08.05.2020 IN WA NO.642 OF 2020 RENDERED BY THIS HON'BLE COURT.

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