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

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WP(C)/9637/2020HC KeralaKLHC01024739202005 May 2020Author: HONOURABLE MR. JUSTICE BECHU KURIAN THOMAS4 pages
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What did the High Court hold?

The High Court of Kerala, while disposing of the writ petition, found force in the petitioner's contention that coercive steps pending the statutory appeal would render the appeal redundant and cause severe difficulties. The Court directed the respondents not to proceed with any coercive steps against the petitioner pending the disposal of the appeal (Ext. P2). 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. The Court also directed that the disposal should not be insisted upon payment of 10% of the tax demanded, which is a common pre-condition for stay of demand in appeals. The core principle is that the appellate process should be allowed to function without being undermined by immediate recovery actions.

What were the facts?

The petitioner, The Kodakara Farmers Service Co-operative Bank Ltd., is an income tax assessee. For the assessment year 2012-13, the Income Tax Officer (1st respondent) disallowed the petitioner's claim for deduction under Section 80P of the Income Tax Act, demanding an amount of Rs. 1,04,66,470/- as tax. The petitioner challenged this assessment by filing an appeal (Ext. P2) with the Commissioner of Income Tax (Appeals) (2nd respondent), arguing that the disallowance was not tenable. While the appeal was pending, the respondents initiated recovery proceedings for the demanded tax. The petitioner filed a writ petition before the High Court of Kerala seeking to prevent coercive steps during the pendency of the appeal.

What were the issues?

1. Whether the initiation of recovery proceedings by the respondents for the tax demanded, while the statutory appeal filed by the petitioner is pending before the Commissioner of Income Tax (Appeals), would render the appeal redundant and cause severe difficulties to the petitioner? (Question of mixed law and fact, concerning the procedural fairness and effectiveness of the appellate process under the Income Tax Act). Assessee's Contention: The counsel for the petitioner argued that proceeding with coercive steps pending the statutory appeal would render the appeal redundant and put the petitioner to severe difficulties. The petitioner relied on the principle that appellate remedies should not be frustrated by pre-emptive recovery actions. Revenue's Contention: The judgment records that the standing counsel for income tax took notice on behalf of the respondents. No specific arguments or contentions were recorded for the revenue in the judgment.

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 BECHU KURIAN THOMAS TUESDAY, THE 5TH DAY OF MAY, 2020/15TH VAISAKHA, 1942 W.P(C). NO.9637 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. SRI.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. 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.9637 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 2012-13. 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.1,04,66,470/- 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.9637 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.9637 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 2012-13 DATED 29-10-2019. EXT.P2 : COPY OF THE APPEAL FILED BEFORE THE 2ND RESPONDENT DATED 30-11-2019. EXT.P3 : COPY OF PETITION FOR STAY FILED BEFORE THE 2ND RESPONDENT DATED 30-11-2019. 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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