THE ARIYALLUR SERVICE CO OPERATIVE BANK LIMITED NO. F. 7730 vs. THE COMMISSIONER OF INCOME TAX (APPEALS)

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WP(C)/8814/2020HC KeralaKLHC01022694202028 April 2020Author: HONOURABLE MR. JUSTICE BECHU KURIAN THOMAS4 pages
AI SummaryRemanded

What did the High Court hold?

The High Court of Kerala held that if the respondents proceed with coercive steps pending consideration of the rectification petition, it will be rendered redundant and the petitioner will be put to severe difficulties. Therefore, the Court directed the Commissioner of Income Tax (Appeals) to consider the rectification petition within a period of six months. Until the rectification petition is disposed of, the tax purported to be due shall not be recovered, and all coercive steps shall be kept in abeyance. The Court did not decide on the merits of the rectification application itself, but rather on the procedural aspect of staying recovery pending its disposal.

What were the facts?

The petitioner, Ariyallur Service Co-operative Bank Limited, is an income tax assessee. For the assessment year 2016-17, the Income Tax Officer disallowed the petitioner's claim for deduction under Section 80P of the Income Tax Act, demanding Rs. 40,10,598/- as tax. The petitioner appealed this assessment order to the Commissioner of Income Tax (Appeals), which was dismissed. Subsequently, the petitioner filed a rectification application under Section 154 of the Income Tax Act, which was pending. While the rectification application was pending, the revenue initiated recovery proceedings for the disputed tax. The petitioner filed a writ petition before the High Court of Kerala seeking to stay recovery proceedings.

What were the issues?

1. Whether coercive steps for recovery of tax should be stayed pending the disposal of a rectification application filed under Section 154 of the Income Tax Act, when such proceedings could render the rectification application redundant. The assessee contended that if coercive steps are taken while the rectification petition is pending, it would render the petition redundant and cause severe difficulties. The revenue did not record any specific arguments in the judgment.

Which sections of the Income-tax Act were involved?

Section 80P,Section 154

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.8814 OF 2020 PETITIONERS:- 1. THE ARIYALLUR SERVICE CO-OPERATIVE BANK LIMITED NO.F 7730 ARIYALLUR PO, MALAPPURAM DISTRICT REPRESENTED BY ITS SECRETARY. BY ADVOCATE SRI O.D.SIVADAS RESPONDENTS:- 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 BY SRI.JOSE JOSEPH, SC THIS WRIT PETITION HAVING COME UP FOR ADMISSION ON 28/04/2020, THE COURT ON THE SAME DAY PASSED THE FOLLOWING:- W.P.(C) No.8814 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 nature of 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 2016-17. By Ext.P1, the 1st respondent disallowed petitioner’s claim for detection under Section 80P of the Income Tax Act and demanded an amount of Rs.40,10,598/- as tax.

3.

Challenging the said assessment, petitioner preferred Ext.P2 appeal. However, the same was dismissed by Ext.P3. Thereafter, petitioner filed Ext.P4 rectification under Section 154 of the Income Tax Act and the same is pending. It is submitted that in the meantime the disputed tax is attempted to be recovered.

4.

I find force in the contention of the counsel for the petitioner that if the respondents proceed with coercive steps pending consideration of Ext.P4, the same will be rendered redundant and petitioner will be put to severe

W.P.(C) No.8814 OF 2020 3 difficulties. In such circumstances, I dispose of the writ petition by directing the first respondent to consider Ext.P4 rectification petition within a period of six months. Till Ext.P4 rectification petition is disposed of, the tax purported to be due shall not be recovered and all coercive steps shall be kept in abeyance till such disposal. BECHU KURIAN THOMAS, JUDGE csl

W.P.(C) No.8814 OF 2020 4 APPENDIX EXT.P1:-COPY OF ASSESSMENT ORDER DT.28.12.2018 ISSUED BY THE 2ND RESPONDENT FOR THE PERIOD 2016-17 EXT.P2: COPY OF APPEAL FILED BY THE PETITIONER BEFORE THE 1ST RESPONDENT FOR THEPERIOD 2016-17 DT.12.1.2020. EXT.P3: COPY OF ORDER DT.25.2.2020 ISSUED BY THE 1ST RESPONDENT. EXT.P4: COPY OF RECTIFICATION APPLICATION FILED BY THE PETITIONER BEFORE THE 1ST RESPONDENT DT.16.3.2020.

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