THE GOVERNMENT SERVANTS CO-OPERATIVE SOCIETY LTD.A-245, vs. THE COMMISSIONER OF INCOME TAX (APPEALS),

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WP(C)/7549/2020HC KeralaKLHC01019802202012 March 2020Author: HONOURABLE MR.JUSTICE V.G.ARUN6 pages
AI SummaryRemanded

What did the High Court hold?

The High Court held that the insistence on payment of a proportion of the demand as a condition for granting stay pending appeal is unsustainable. This decision was based on the peculiar aspects involved and the prior ruling of the Division Bench in W.A.No. 1529 of 2019 and connected cases, which in turn considered the Full Bench decision in Mavilayi Service Co-operative Bank Ltd. v. Commissioner of Income Tax, Calicut. Consequently, the demand for remittance of 20% of the tax assessed pending consideration of the appeals cannot be sustained. The Court directed the Commissioner of Income Tax (Appeals) to consider the petitioner's appeal within three months. All coercive steps based on the demand for 20% tax were ordered to be kept in abeyance, and the order freezing the petitioner's account was to be lifted forthwith, permitting the petitioner to operate its accounts.

What were the facts?

The petitioner, a Co-operative Credit Society, filed an appeal against an assessment order. Pending the appeal, the Commissioner of Income Tax (Appeals) imposed a condition to pay 20% of the assessed tax. The petitioner alleges that due to non-compliance with this condition, its bank account was frozen, hindering its operations. The petitioner relies on a previous judgment by a Division Bench of the High Court of Kerala, which considered similar issues and a Full Bench decision. The petitioner is aggrieved by the 20% tax payment condition and the subsequent freezing of its accounts.

What were the issues?

1. Whether the insistence on payment of 20% of the tax assessed as a condition for granting stay pending appeal is legally sustainable? Assessee's Contention: The petitioner argues that the condition of paying 20% of the assessed tax pending appeal is unsustainable, citing the Division Bench judgment in W.A.No. 1529 of 2019 and connected cases, which held such insistence to be bad. They also refer to the Full Bench decision in Mavilayi Service Co-operative Bank Ltd. v. Commissioner of Income Tax, Calicut [2019 (2) KHC 287]. Revenue's Contention: The judgment does not record any specific contentions made by the revenue on this issue.

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 V.G.ARUN THURSDAY, THE 12TH DAY OF MARCH 2020 / 22ND PHALGUNA, 1941 WP(C).No.7549 OF 2020(P) PETITIONER/S: THE GOVERNMENT SERVANTS CO-OPERATIVE SOCIETY LTD.A-245, KAYAMKULAM, KATHIKAPPILLY, ALAPPUZHA, REPRESENTED BY ITS SECRETARY. BY ADV. SRI.O.D.SIVADAS RESPONDENT/S: 1 THE COMMISSIONER OF INCOME TAX (APPEALS), AYAKAR BHAVAN, KOTTAYAM, PIN-686001. 2 THE INCOME TAX OFFICER, WARD NO.5, ALAPPUZHA, PIN-688011. OTHER PRESENT: SC JOSE JOSEPH THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 12.03.2020, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: W.P.(C) No.7549 of 2020 2 Dated this the 12th day of March, 2020

JUDGMENT The petitioner, a Co-operative Credit Society, is aggrieved by the condition of payment of 20% of the tax assessed, imposed under Ext.P4, pending consideration of Ext.P2 appeal filed against Ext.P1 assessment order. It is submitted that pursuant to Ext.P4; alleging non-compliance of the direction in Ext.P4, the account of the petitioner has been frozen and the Society is not in a position to continue its activities. The issue regarding imposition of the condition of remittance of 20% of the tax demanded was considered and decided by the Division Bench of this Court and as per the judgment in W.A.No. 1529 of 2019 and connected cases. After taking note of the peculiar aspects involved and the decision of the Full Bench in Mavilayi Service Co-operative Bank Ltd. v. Commissioner of Income Tax, Calicut [2019 (2) KHC 287], the Division Bench held the insistence for payment of proportion of the demand as a condition for grant of stay to be bad.

In such circumstances, the demand for remittance of 20% of the tax assessed pending consideration of the appeals, cannot be sustained.

The writ petition is therefore disposed of, directing the first respondent to consider Ext.P2 appeal filed by the petitioner within a period of three months from the date of receipt of a copy of this judgment. In the meanwhile, all coercive steps based on Ext.P4 shall be kept in abeyance. The order freezing the petitioner's account shall be lifted forthwith and the petitioner permitted to operate its accounts. V.G.ARUN JUDGE Scl/12.03.2020

Appendix — schedule of exhibits
APPENDIX PETITIONER'S/S EXHIBITS: EXHIBIT P1 COPY OF THE ASSESSMENT ORDER DATED 23.12.2019 ISSUED BY THE 2ND RESPONDENT FOR THE PERIOD 2017-18. EXHIBIT P2 COPY OF THE APPEAL FILED BY THE PETITIONER BEFORE THE 1ST RESPONDENT FOR THE PERIOD 2017-18 DATED 16.1.2020. EXHIBIT P3 COPY OF THE STAY PETITION DATED 16.1.2020 FILED BY THE PETITIONER BEFORE THE 2ND RESPONDENT AGAINST EXT.P1 ORDER. EXHIBIT P4 COPY OF THE ORDER DATED 3.2.2020 ISSUED BY THE 2ND RESPONDENT. W.P.(C) No.7549 of 2020 5 APPENDIX PETITIONER'S/S EXHIBITS: EXHIBIT P1 COPY OF THE ASSESSMENT ORDER DATED 23.12.2019 ISSUED BY THE 2ND RESPONDENT FOR THE PERIOD 2017-18. EXHIBIT P2 COPY OF THE APPEAL FILED BY THE PETITIONER BEFORE THE 1ST RESPONDENT FOR THE PERIOD 2017-18 DATED 16.1.2020. EXHIBIT P3 COPY OF THE STAY PETITION DATED 16.1.2020 FILED BY THE PETITIONER BEFORE THE 2ND RESPONDENT AGAINST EXT.P1 ORDER. EXHIBIT P4 COPY OF THE ORDER DATED 3.2.2020 ISSUED BY THE 2ND RESPONDENT. W.P.(C) No.7549 of 2020 6

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