THE ASTHMICHIRA SERVICE CO-OPERATIVE BANK LTD.NO.325 vs. THE COMMISSIONER OF INCOME TAX(APPEALS0

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WP(C)/8796/2020HC KeralaKLHC01022583202028 April 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 while the statutory appeal is pending would render the appeal redundant and cause severe difficulties. Consequently, the Court disposed of the writ petition by directing 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 1st 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 ratio decidendi is that appellate remedies should not be rendered ineffective by coercive actions during their pendency, and the appellate authority should be directed to expedite the disposal of the appeal.

What were the facts?

The petitioner, The Asthmichira Service Co-Operative Bank Ltd., is an income tax assessee. For the assessment year 2017-18, the Income Tax Officer (2nd respondent) disallowed the petitioner's claim for deduction under Section 80P of the Income Tax Act, demanding an amount of Rs. 73,59,746/- as tax. The petitioner filed an appeal (Ext. P2) before the Commissioner of Income Tax (Appeals) (1st respondent), challenging the disallowance. 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 to prevent coercive recovery steps while a statutory appeal is pending before the Commissioner of Income Tax (Appeals)? (Question of procedure and equity) Assessee's Contentions: The petitioner argued that if coercive steps are taken pending the appeal, the appeal itself would become redundant and the petitioner would suffer severe difficulties. The petitioner relied on the principle that the appellate process should not be rendered nugatory. Revenue's Contentions: The judgment records that the standing counsel for income tax took notice on behalf of the respondents. No specific arguments were recorded for the revenue regarding the issues raised by the petitioner.

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 28TH DAY OF APRIL, 2020/8TH VAISAKHA, 1942 W.P(C) NO.8796 OF 2020 PETITIONER: THE ASTHMICHIRA SERVICE CO-OPERATIVE BANK LTD.NO.325, ASTHAMICHIRA PO, ASHTAMICHIRA, THRISSUR DIST., REP. BY ITS SECRETARY BY ADV. SRI. O.D.SIVADAS RESPONDENTS: 1.THE COMMISSIONER OF INCOME TAX (APPEALS) AYAKAR BHAVAN,SHKTAN NAGAR THRISSUR – 680 001 2. THE INCOME TAX OFFICER, WARD 2(1) SHAKTAN NAGAR, THRISSUR – 680 001 BY SRI.JOSE JOSEPH, SC THIS WRIT PETITION HAVING COME UP FOR ADMISSION ON 28.04.2020, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: 2 W.P.(C) No. 8796/2020

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.73,59,746/- 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 steps pending consideration of the statutory appeal, the same will be rendered redundant and petitioner will be put to severe difficulties.

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 1st 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 csl APPENDIX PETITIONERS EXTS: EXT. P1: COPY OF THE ASSESSMENT ORDER DTD. 23.12.2018 ISSUED BY THE 2ND RESPONDENT FOR THE PERIOD 2016-17 EXT.P2 COPY OF THE APPEAL FILED BY THE PETITIONER BEFORE THE 1ST RESPONDENT FOR THE PERIOD 2016-17 DTD 25.01.2019

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