THE EDARIKODE SERVICE CO-OPERATIVE BANK LIMITED NO.10739, vs. THE COMMISSIONER OF INCOME TAX (APPEALS)

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WP(C)/7002/2020HC KeralaKLHC01018598202009 March 2020Author: HONOURABLE MR. JUSTICE AMIT RAWAL5 pages
AI SummaryRemanded

What did the High Court hold?

The High Court refrained from commenting on the merit or demerit of the rectification application. Prima facie, the Court was of the view that the rectification application did not appear to be a case of error apparent on record, as the orders sought to be recalled were based on appreciation of evidence and accounts, noticing disbursement of amounts. However, without prejudice to the rights of the parties and without commenting on the merit of the matter, the writ petition was disposed of with a direction to the Commissioner of Income Tax (Appeals) to decide the rectification application, Ext.P6 dated February 26, 2020, as expeditiously as possible within 45 days from the date of receipt of a copy of the judgment. Any observations made in the judgment were not to be construed as an expression of opinion on the merit if the petitioner chose to file an appeal. No specific relief regarding the interim stay was granted.

What were the facts?

The petitioner, Edarikode Service Co-operative Bank Limited, a Primary Agricultural Credit Society, filed a writ petition before the High Court of Kerala. The petition challenged an order dated January 27, 2020, passed by the Commissioner of Income Tax (Appeals). The petitioner had filed a rectification application on February 26, 2020, against this order, which was received on February 22, 2020. The petitioner sought directions for the Commissioner to consider this rectification application within a reasonable period and also sought an interim stay of an order dated March 3, 2020, which raised demand for outstanding dues. The assessment years are not explicitly stated, but the dispute pertains to credit advancements made by the bank.

What were the issues?

1. Whether the Commissioner of Income Tax (Appeals) should be directed to consider the petitioner's rectification application dated February 26, 2020, within a reasonable period, considering the alleged error apparent on record in the common order dated January 27, 2020? (Question of law and fact, concerning the powers of rectification under the Income Tax Act). Assessee's contentions: The petitioner argued that it is a Co-operative Bank and should not be excluded from the exemption under Section 80P. The reasoning in the Commissioner's order suffers from an error apparent on record, supported by various judgments. The rectification application, highlighting these errors, is pending. Revenue's contentions: The respondent argued that the rectification application does not demonstrate an error apparent on record. The issue is merely a reference to judgments in the Commissioner's order. The assessment orders found credit advancements for two assessment years at 2.4% and 1.7%, and the petitioner failed to produce books of account to disprove these findings. The appropriate remedy for the petitioner is to prefer an appeal before the Income Tax Appellate Tribunal.

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 AMIT RAWAL MONDAY, THE 09TH DAY OF MARCH 2020 / 19TH PHALGUNA, 1941 WP(C).No.7002 OF 2020(A) PETITIONER/S: THE EDARIKODE SERVICE CO-OPERATIVE BANK LIMITED NO.10739, EDARIKODE P.O., MALAPPURAM, PIN-676 501, REPRESENTED BY ITS SECRETARY. BY ADV. SRI.O.D.SIVADAS RESPONDENT/S: 1 THE COMMISSIONER OF INCOME TAX (APPEALS) AYAKAR BHAVAN, KOZHIKODE-673 001. 2 THE INCOME TAX OFFICER, WARD 3, TIRUR, MALAPPURAM DISTRICT, PIN-676 001. OTHER PRESENT: SRI CHRISTOPHER ABRAHAM SC THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 09.03.2020, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C).No.7002 OF 2020(A) 2

JUDGMENT The petitioner, Primary Agricultural Credit Society, has approached this Court under Article 226 of the Constitution of India for issuance of directions to the Commissioner of Income (Appeals) for consideration of rectification application dated 26th of February 2020 preferred against the common order dated 27th January 2020, received on 22nd February 2020 within a reasonable period and further seeking interim stay of the order dated 3rd March 2020, Exts.P7 and P8 rising the demand of outstanding dues.

2.

The learned counsel for the petitioner submits that the petitioner is not a Co-operative Bank and cannot be excluded from the exemption as enshrined under Section 80P. The reasoning assigned by the Commissioner of Income Tax is suffering from an error apparent on record and by noticing those errors, rectification application supported by various judgments is stated to be pending and prays for issuance of an appropriate direction.

3.

The learned counsel for the respondent points out that the contents of the rectification application do not make

WP(C).No.7002 OF 2020(A) 3 out any case of error apparent on record that it is only just reference to the judgments in the order of the Commissioner of Income Tax. While deciding the appeal preferred against the assessment orders, both the authorities found out advancement of the credit for two assessment years to the extent of 2.4 % and 1.7%. The petitioner failed to place on record any books of account to disbelieve such findings. The remedy is to prefer an appeal before the Income Tax Appellate Tribunal and prays for dismissal of the writ petition.

4.

I have heard the learned counsel for the parties and apprised the paper book, I would be refraining myself from commenting, regarding the merit or demerit of the rectification application, prima facie this Court is of the view that hardly any cases of rectification as the orders sought to be recalled on the basis of an error apparent on record based upon the appreciation of the evidence and accounts noticing the disbursement of the amount to be 100% percentage as referred to above. Be that as it may, without commenting upon any merit of the matter and may not prejudice to the rights, I dispose of the writ petition with a direction to the Commissioner of Income Tax (Appeals) to decide the WP(C).No.7002 OF 2020(A) 4 rectification application, Ext.P6 dated 26th of February 2020 as expeditiously as possible within a period of 45 days from the date of receipt of a copy of this judgment. The writ petition stands disposed of. Any observations hereinabove would not be construed as an expression of opinion on the merit, in case the petitioner chose to file an appeal. AMIT RAWAL sab JUDGE

WP(C).No.7002 OF 2020(A) 5

Appendix — schedule of exhibits
APPENDIX PETITIONER'S/S EXHIBITS: EXHIBIT P1 COPY OF THE ASSESSMENT ORDER DATED 27.12.2017 ISSUED BY THE 2ND RESPONDENT FOR THE PERIOD 2015-16. EXHIBIT P2 COPY OF THE ASSESSMENT ORDER DATED 28.12.2018 ISSUED BY THE 2ND RESPONDENT FOR THE PERIOD 2016-17. EXHIBIT P3 COPY OF THE APPEAL FILED BY THE PETITIONER BEFORE THE 1ST RESPONDENT FOR THE PERIOD 2015-16 DATED 28.01.2018. EXHIBIT P4 COPY OF THE APPEAL FILED BY THE PETITIONER BEFORE THE 1ST RESPONDENT FOR THE PERIOD 2016-17 DATED 26.01.2019. EXHIBIT P5 COPY OF THE COMMON ORDER DATED 27.01.2020 ISSUED BY THE 1ST RESPONDENT. EXHIBIT P6 COPY OF THE RECTIFICATION APPLICATION FILED BY THE PETITIONER BEFORE THE 1ST RESPONDENT DATED 26.02.2020. EXHIBIT P7 COPY OF THE ORDER DATED 03.03.2020 ISSUED BY THE 2ND RESPONDENT FOR THE PERIOD 2015-16. EXHIBIT P8 COPY OF THE ORDER DATED 03.03.2020 ISSUED BY THE 2ND RESPONDENT FOR THE PERIOD 2016-17.

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