VADAYAR SERVICE CO-OPERATIVE BANK LTD. NO.266 vs. INCOME TAX OFFICER

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WP(C)/32586/2019HC KeralaKLHC01084990201902 December 2019Author: HONOURABLE DR. JUSTICE A.K.JAYASANKARAN NAMBIAR4 pages
AI SummaryRemanded

What did the High Court hold?

The High Court of Kerala, while not deciding the merits of the appeal concerning the disallowance of deduction under Section 80P, disposed of the writ petition by directing the Income Tax Appellate Tribunal (3rd respondent) to consider and pass orders on the petitioner's appeal (Ext.P4) within an outer time limit of six months from the date of receipt of the judgment. Crucially, the Court ordered that recovery steps pursuant to the demand notice (Ext.P6) for the amounts confirmed in the rectified order (Ext.P3) shall be kept in abeyance until such time as the Tribunal passes its orders and communicates them to the petitioner. The petitioner was directed to provide a copy of the writ petition and the judgment to the Tribunal for further action. The principle established is that pending appeal and stay, recovery should be held in abeyance to allow for a proper adjudication of the dispute.

What were the facts?

The petitioner, Vadayar Service Co-operative Bank Ltd., filed a writ petition before the High Court of Kerala challenging recovery steps initiated by the Income Tax Officer (respondent 1) pursuant to a rectified order. The petitioner had filed an appeal (Ext.P4) along with a stay petition (Ext.P5) before the Income Tax Appellate Tribunal (respondent 3) against the rectified order (Ext.P3) and a demand notice (Ext.P6). The petitioner contended that recovery steps were being taken even before their stay petition was considered. The core issue in the appeal concerned the disallowance of deduction claimed under Section 80P of the Income Tax Act.

What were the issues?

1. Whether the recovery steps taken by the revenue are premature and in violation of the petitioner's right to appeal and seek a stay on disputed amounts, particularly when the appeal and stay petition are pending before the Income Tax Appellate Tribunal? Assessee's Contention: The petitioner argued that recovery proceedings were initiated despite an appeal and stay petition being filed before the Tribunal. They relied on the principle that recovery should be stayed pending the disposal of the appeal, especially when the issue involves a substantial claim like deduction under Section 80P. Revenue's Contention: The judgment does not record any specific contentions made by the revenue in response to the writ petition. The learned Standing Counsel appeared for the respondents.

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 A.K.JAYASANKARAN NAMBIAR MONDAY, THE 02ND DAY OF DECEMBER 2019 / 11TH AGRAHAYANA, 1941 WP(C).No.32586 OF 2019(W) PETITIONER: VADAYAR SERVICE CO-OPERATIVE BANK LTD. NO.266 VADAYAR.P.O, THALAYOLAPARAMBU.P.O, KOTTAYAM-686605, REPRESENTED BY ITS SECRETARY,P.R.SAJI. BY ADVS. SRI.ANIL D. NAIR SRI.SREEJITH R.NAIR SMT. ARYA ANIL SHRI.GOKULRAJ L. SMT.SRI HARINI S.P. RESPONDENTS: 1 INCOME TAX OFFICER WARD-5,KOTTAYAM-686001. 2 THE COMMISSIONER OF INCOME TAX(APPEALS), KOTTAYAM-686001. 3 INCOME TAX APPELLATE TRIBUNAL, KOCHI-682037,REPRESENTED BY ITS REGISTRAR. BY ADV.SRI.JOSE JOSEPH, SC THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 02.12.2019, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C).No.32586 OF 2019(W) 2

JUDGMENT Against Ext.P3 rectified order under the Income Tax Act, the petitioner has preferred Ext.P4 appeal together with Ext.P5 stay petition before the 3rd respondent. Ext.P6 is the demand notice. It is the case of the petitioner that even prior to considering the stay petition, recovery steps are taken by the respondents against the petitioner for recovery of the amounts confirmed by Ext.P3 rectified order. It is stated by the learned counsel for the petitioner that the issue involved in the appeal pertains to dis-allowance of deduction claimed under Section 80P of the Income Tax Act.

2.

I have heard the learned counsel appearing for the petitioner and also the learned Standing counsel appearing for the respondents. On a consideration of the facts and circumstances of the case as also the submissions made across the Bar and taking note of the fact that in similar matters, this Court has directed the Appellate Authority to consider and pass orders in the appeal and stayed the recovery of disputed amounts pending disposal of the appeal, this Writ petition is disposed directing the 3rd respondent to consider and pass orders on WP(C).No.32586 OF 2019(W) 3 Ext.P4 appeal within an outer time limit of six months from the date of receipt of a copy of this judgment, after hearing the petitioner. Recovery steps pursuant to Ext.P6 demand notice for recovery of amounts confirmed against the petitioner shall be kept in abeyance till such time as orders are passed by the 3rd respondent as directed above and communicated to the petitioner. The petitioner shall produce a copy of the writ petition along with a copy of this judgment, before the 3rd respondent, for further action. A.K.JAYASANKARAN NAMBIAR

JUDGE mns

WP(C).No.32586 OF 2019(W) 4

Appendix — schedule of exhibits
APPENDIX PETITIONER'S/S EXHIBITS: EXHIBIT P1 TRUE COPY OF THE ASSESSMENT ORDER ASSESSMENT ORDER FOR THE A.Y 2012-13 DATED 12.03.2015 EXHIBIT P2 TRUE COPY OF THE ORDER DATED 28.02.2018 PASSED BY THE 2ND RESPONDENT EXHIBIT P3 TRUE COPY OF THE ORDER U/S.154 R.W.S 250 OF THE ACT DATED 30.09.2019 EXHIBIT P4 TRUE COPY OF THE STATUTORY APPEAL FILED BEFORE THE 3RD RESPONDENT FOR THE A.Y 2012-13 EXHIBIT P5 TRUE COPY OF THE STAY PETITION FOR THE YEAR 2012-13 FILED BY THE PETITIONER BEFORE THE 3RD RESPONDENT EXHIBIT P6 TRUE COPY OF THE DEMAND NOTICE DATED FOR A.Y 2012-13 ISSUED BY THE FIRST RESPONDENT. RESPONDENTS EXHIBITS:NIL //TRUE COPY// P.A TO JUDGE

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