KUNNUKARA SERVICE CO-OPERATIVE BANK LIMITED vs. THE INCOME TAX OFFICER

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WP(C)/8807/2020HC KeralaKLHC01022670202024 April 2020Author: HONOURABLE MR.JUSTICE N.NAGARESH4 pages
AI SummaryRemanded

What did the High Court hold?

The High Court held that if the respondents proceeded with coercive steps pending consideration of the rectification petitions, the statutory remedy available to the petitioner under Section 154 would be negated, and the petitioner would likely be put to difficulties. Therefore, the Court directed the respondents not to proceed with coercive steps against the petitioner pending the disposal of the rectification petitions (Exts. P7 to P9). The Court further directed that these rectification petitions should be considered and disposed of by the 2nd respondent (Commissioner of Income Tax (Appeals)) within a period of six months. The merits of the Section 80-P deduction disallowances were not decided in this writ petition, as the focus was on the procedural aspect of coercive recovery pending rectification.

What were the facts?

The petitioner, Kunnukara Service Co-operative Bank Limited, is an income tax assessee. For assessment years 2011-12, 2014-15, and 2015-16, the Income Tax Officer (1st respondent) disallowed the petitioner's claim for deduction under Section 80-P of the Income Tax Act, demanding significant amounts of tax: ₹32,52,018 for 2011-12, ₹30,11,950 for 2014-15, and ₹82,33,900 for 2015-16. The petitioner appealed these disallowances, arguing the reasoning was untenable. The appeals were dismissed by the Commissioner of Income Tax (Appeals) (2nd respondent). Subsequently, the petitioner filed petitions for rectification of mistakes under Section 154 of the Income Tax Act. While these rectification petitions were pending, the 1st respondent initiated coercive recovery proceedings.

What were the issues?

1. Whether the Income Tax Officer's disallowance of the petitioner's claim for deduction under Section 80-P of the Income Tax Act for assessment years 2011-12, 2014-15, and 2015-16 was legally tenable? (Question of law). The petitioner contended that the reasoning provided in the orders of disallowance (Exts. P1, P2, P3) was untenable. The revenue, through its Standing Counsel, appeared and took notice but no specific arguments were recorded in the judgment regarding the merits of the disallowance. 2. Whether the initiation of coercive proceedings by the Income Tax Officer pending the disposal of rectification petitions under Section 154 of the Income Tax Act would negate the statutory remedy available to the petitioner? (Question of mixed law and fact). The petitioner argued that proceeding with coercive steps would render their Section 154 remedy nugatory and cause them difficulties. The revenue did not present arguments on this point.

Which sections of the Income-tax Act were involved?

Section 80-P,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 N.NAGARESH FRIDAY, THE 24TH DAY OF APRIL 2020 / 4TH VAISAKHA, 1942 WP(C) NO. 8807 OF 2020 Petitioner:- Kunnukara Service Co-operative Bank Limited No.827, Kunnukara P.O, Ernakulam District, Pin-683578 represented by its Secretary . By Adv. Sri.C. A. JOJO. Respondents: 1. The Income Tax Officer, Ward-3, Aluva P.O, R.S Road, Pin- 683101 2. The Commissioner of Income Tax (Appeals)-II, Office of the Commissioner of Income Tax (Appeals), P Nagar, Kochi-682 036 By Standing Counsel Sri. Christopher Abraham, Income Tax This writ petition having come up for admission on 24.04.2020, the court on the same day passed the following: WPC.8807/2020 : 2 :

JUDGMENT ~ ~ ~ ~ ~ ~ Dated this the 24th day of April, 2020 Standing Counsel for Income Tax takes notice for respondents 1 and 2. 2. Petitioner is an income tax assessee. The assessment years in question are 2011-'12, 2014-'15 and 2015-'

16.

By Ext.P1, the 1st respondent disallowed petitioner's claim for deduction under Section 80-P of the Income Tax Act and demanded ₹32,52,018/- as tax. By Ext.P2, the 1st respondent disallowed petitioner's claim for deduction under Section 80-P of the Income Tax Act and demanded ₹30,11,950/- as tax. By Ext.P3, the 1st respondent disallowed petitioner's claim for deduction under Section 80-P of the Income Tax Act and demanded ₹82,33,900/- as tax. The petitioner filed appeals contending that reasoning given in Exts.P1, P2 and P3 is untenable. The appeals were dismissed as per Exts.P4 to P6. The petitioner thereupon filed petitions for rectification invoking : 3 : Section 154 of the Income Tax Act. Pending the petitions for rectification of mistakes, the 1st respondent initiated coercive proceedings as per Exts.P10 to P12. 3. Heard learned counsel for the petitioner and learned Standing Counsel for Income Tax.

4.

If the respondents proceed with coercive steps pending consideration of the petitions for rectification, the statutory remedy available to the petitioner under Section 154 will be negated and the petitioner is likely to be put to difficulties. In the circumstances, the writ petition is disposed of directing the respondents not to proceed with coercive steps against the petitioner pending disposal of Exts.P7 to P9 petitions for rectification of mistakes. Exts.P7 to P9 shall be considered and disposed of by the 2nd respondent within a period of six months. N. NAGARESH, JUDGE aks/24.04.2020 : 4 :

Appendix — schedule of exhibits
Appendix Petitioner’s Exhibits: Exhibit-P1 : A true copy of the assessment order for AY 2011-12 dated 27-12-2017 issued by the first respondent Exhibit P2 : A true copy of the assessment order for AY 2014-15 dated 16-12-2016 issued by the first respondent. Exhibit P3 . A true copy of the assessment order for AY 2015-16 dated 22-12-2017 issued by the first respondent. Exhibit P4 . A true copy of the appellate order for AY 2011-12 issued by the 2nd respondent dated 10.12.2019 Exhibit P5 . A true copy of the appellate order for AY 2014-15 issued by the 2nd respondent dated 10.12.2019 Exhibit P6: A true copy of the appellate order for AY 2015-16 issued by the 2nd respondent dated 10.12.2019 Exhibit P7: A true copy of the petition for Rectification of Mistake before the 2nd respondent dated 02.03.2020 for AY 2011-12 Exhibit P8: A true copy of the petition for Rectification of Mistake before the 2nd respondent dated 02.03.2020 for AY 2014-15 Exhibit P9: A true copy of the petition for Rectification of Mistake before the 2nd respondent dated 02.03.2020 for AY 2015-16 Exhibit P10:A true copy of the letter of demand issued by the 1st respondent dated 11.03.2020 for AY 2011-12 Exhibit P11: A true copy of the letter of demand issued by the 1st respondent dated 11.03.2020 for AY 2014-15 Exhibit P12: A true copy of the letter of demand issued by the 1st respondent dated 11.03.2020 for AY 2015-16 Exhibit P13: A true copy of the Judgment in WP(C) No.4115 of 2020 dated 13.02.2020 Exhibit P14: A true copy of the Judgment in WP(C) No.601 of 2020 dated 22.01.2020

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