THE MAKKARAPARAMBA SERVICE CO-OPERATIVE BANK LIMITED NO.P 576, vs. THE COMMISSIONER OF INCOME TAX(APPEALS),

WP(C)/11321/2020HC KeralaKLHC01029131202023 April 2020Author: HONOURABLE MR.JUSTICE N.NAGARESH4 pages

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What did the High Court hold?

The High Court of Kerala held that if the respondents proceed with coercive steps pending consideration of the statutory appeal, the statutory remedy available to the petitioner will be negated, and the petitioner is likely to be put to difficulties. Therefore, the Court disposed of the writ petition by directing the respondents not to proceed with coercive steps against the petitioner pending the disposal of the appeal (Ext.P2). Furthermore, the Court directed the 1st respondent (Commissioner of Income Tax (Appeals)) to consider and dispose of the appeal within a period of six months, without insisting on the payment of 20% of the demanded tax as a condition for the stay. The core principle established is that coercive action should not prejudice the assessee's right to a fair and timely adjudication of their statutory appeal.

What were the facts?

The petitioner, The Makkaraparamba Service Co-operative Bank Limited, is an income tax assessee. For the assessment year 2017-18, the Income Tax Officer (3rd respondent) disallowed the petitioner's claim for deduction under Section 80-P of the Income Tax Act, demanding ₹2,23,74,755/- 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 Income Tax Officer initiated coercive proceedings and issued a demand (Ext.P4) requiring 20% of the disputed tax as a condition to stay further action. The petitioner filed this writ petition before the High Court of Kerala challenging these coercive steps.

What were the issues?

1. Whether the initiation of coercive steps by the Income Tax Officer pending a statutory appeal before the Commissioner of Income Tax (Appeals) negates the statutory remedy available to the assessee? Assessee's Contention: The petitioner argued that proceeding with coercive steps while a statutory appeal is pending would render the appeal nugatory and cause significant difficulties. They relied on the principle that statutory remedies should not be undermined by premature enforcement actions. Revenue's Contention: The revenue, represented by the Standing Counsel, took notice of the petition. No specific arguments were recorded in the judgment regarding the revenue's stance on the coercive steps or the condition for stay.

Which sections of the Income-tax Act were involved?

Section 80-P

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 THURSDAY, THE 23RD DAY OF APRIL 2020 / 3RD VAISAKHA, 1942 WP(C) NO. 11321 OF 2020 Petitioner :- The Makkaraparamba Service Co-operative Bank Limited. No. P 576, Makkaraparamba P.O., Malappuram District. Pin: 676507, represented by its Secretary. By Adv. Sri. O.D. Sivadas Respondents: 1. The Commissioner of Income Tax (Appeals), Ayakar Bhavan, Kozhikode-Pin 673 001 2. The Principal Commissioner of Income Tax, Ayakar Bhavan, Tirur, Malappuram District, Pin - 676 001 3. The Income Tax Officer, Ward (4), Tirur, Malappuram District, Pin - 676 001 By Standing Counsel Sri.Christopher Abraham, Income Tax This writ petition having come up for admission on 23.04.2020, the court on the same day delivered the following: WPC.11321/2020 : 2 :

J U D G M E N T ~ ~ ~ ~ ~ ~ ~ ~ ~ Dated this the 23rd day of April, 2020 Standing Counsel for Income Tax takes notice for respondents 1 to 3. 2. Petitioner is an income tax assessee. The assessment year in question is 2017-'

18.

By Ext.P1, the 3rd respondent disallowed petitioner's claim for deduction under Section 80-P of the Income Tax Act and demanded ₹2,23,74,755/- as tax. The petitioner filed Ext.P2 appeal contending that reasoning given in Ext.P1 is untenable. Pending the appeal, the 3rd respondent initiated coercive proceedings. The 3rd respondent issued Ext.P4 demanding 20% of the disputed tax as a condition to stay further proceedings.

Heard learned counsel for the petitioner and learned Standing Counsel for Income Tax.

: 3 :

If the respondents proceed with coercive steps pending consideration of statutory appeal, the statutory remedy available to the petitioner 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 Ext.P2 appeal. Ext.P2 appeal shall be considered and disposed of by the 1st respondent within a period of six months, without insisting on payment of 20% of the demanded tax. N. NAGARESH, JUDGE aks/23.04.2020 : 4 :

Appendix — schedule of exhibits

Appendix Petitioner’s Exhibits: Ext. P1-. True copy of the assessment order dated 16.12.2019 issued by the 3rd respondent for the Assessment year 2017-18. Ext. P2 - True copy of the appeal dated 14.01.2020 filed by the petitioner before the 1st respondent for the assessment year 2017-18. Ext. P3 – True copy of the application dated 18.01.2020 or stay filed by the petitioner before the 3rd respondent for staying order for the assessment year 2017-18. Ext. P4- True copy of the proceeding dated 11.02.2020 issued by the 3rd respondent with respect to the assessment year 2017-18 Ext. P5 - True copy of the review petition dated 14.02.2020 filed by the petitioner before the 2nd respondent with respect to the assessment year 2017-18 Ext. P6-. True copy of the proceeding dated 19.03.2020 issued by the 2nd respondent with respect to the assessment year 2017-18.

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