THE KODAKARA FARMERS SERVICE vs. THE INCOME TAX OFFICER

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WP(C)/9647/2020HC KeralaKLHC01024747202005 May 2020Author: HONOURABLE MR. JUSTICE BECHU KURIAN THOMAS4 pages
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What did the High Court hold?

The High Court found merit in the petitioner's contention that proceeding with coercive steps pending the statutory appeal would render the appeal redundant and cause severe difficulties. Consequently, the writ petition was disposed of with a direction to the respondents not to proceed with any coercive steps against the petitioner pending the disposal of the appeal (Ext.P2). The Court further directed the second respondent (Commissioner of Income Tax (Appeals)) to consider and dispose of the appeal within a period of 6 months, without insisting on the payment of 10% of the tax demanded as a pre-condition for hearing the appeal. The primary relief granted was a stay on recovery proceedings and a time-bound disposal of the appeal.

What were the facts?

The petitioner, The Kodakara Farmers Service Co-operative Bank Ltd., is an income tax assessee. For the assessment year 2017-18, the Income Tax Officer (ITO), the first respondent, disallowed the petitioner's claim for deduction under Section 80P of the Income Tax Act, demanding a tax amount of Rs. 1,90,71,409/-. The petitioner challenged this assessment order by filing an appeal before the Commissioner of Income Tax (Appeals), the second respondent. 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 High Court should intervene in pending assessment and appeal proceedings by issuing a writ of mandamus or prohibition to stay recovery proceedings. (Question of law) The petitioner contended that initiating coercive recovery steps while the statutory appeal is pending would render the appeal redundant and cause severe hardship. The petitioner relied on the principle that the appellate process should not be rendered nugatory by pre-emptive recovery actions. The revenue, represented by the standing counsel, took notice but no specific arguments were recorded in the judgment regarding their stance on the recovery proceedings or the petitioner's plea for a stay, other than their participation in the hearing.

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 05TH DAY OF MAY, 2020/15TH VAISAKHA, 1942 W.P(C) NO.9647 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 SMT. MEERA V.MENON 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. BY SRI.JOSE JOSSEPH, 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.9647 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 2017-18. 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.1,90,71,409/- 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.

4.

I find force in the contention of the counsel for the petitioner that if the respondents proceed with coercive

W.P(C) NO.9647 OF 2020 ..3.. 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.9647 OF 2020 ..4.. APPENDIX PETITIONERS EXTS: EXT. P1. COPY OF ASSESSMENT ORDER ISSUED BY THE 1ST RESPONDENT FOR THE YEAR 2017-18 DATED 14-11-2019. EXT. P2. COPY OF THE APPEAL FILED BEFORE THE 2ND RESPONDENT DATED 19-12-2019. EXT. P3. COPY OF PETITION FOR STAY FILED BEFORE THE 2ND RESPONDENT DATED 19-12-2019. 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.

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