THE PARATHODE SERVICE CO-OPERATIVE BANK LTD. NO. 3002 vs. THE CENTRAL BOARD OF DIRECT TAXES

WP(C)/8790/2020HC KeralaKLHC01022485202024 April 2020Author: HONOURABLE MR.JUSTICE N.NAGARESH4 pages

AI SummaryPartly Allowed

What did the High Court hold?

The High Court held that if respondents proceed with coercive steps pending consideration of a statutory appeal, the statutory remedy available to the petitioner will be negated, and the petitioner is likely to be put to difficulties. Therefore, the writ petition was disposed of with a direction to the respondents not to proceed with coercive steps against the petitioner pending the disposal of the appeal (Ext.P3). The Court further directed the Commissioner of Income Tax (Appeals) to consider and dispose of the appeal and the stay petition (Ext.P4) within six months, without insisting on the payment of 20% of the demanded tax. The ratio decidendi is that coercive steps should not be pursued when a statutory appeal is pending, as it undermines the appellate process and causes prejudice to the assessee.

What were the facts?

The petitioner, The Parathode Service Co-operative Bank Ltd., is an income tax assessee. For the assessment year 2017-18, the Income Tax Officer (ITO), Ward 3, disallowed the bank's claim for deduction under Section 80-P of the Income Tax Act, demanding ₹1,93,16,165/- as tax. The petitioner filed an appeal (Ext.P3) before the Commissioner of Income Tax (Appeals) challenging the ITO's order. While the appeal was pending, the ITO initiated coercive proceedings against the petitioner. The petitioner filed this writ petition before the High Court of Kerala seeking to prevent these coercive steps.

What were the issues?

1. Whether the Income Tax Officer can initiate coercive proceedings against an assessee pending disposal of a statutory appeal filed before the Commissioner of Income Tax (Appeals)? (Question of law and fact, concerning the efficacy of statutory remedies). Assessee's Contention: The initiation of coercive steps pending a statutory appeal negates the statutory remedy available to the petitioner and would cause undue hardship. The petitioner relies on the principle that statutory remedies should not be rendered nugatory. Revenue's Contention: The judgment records that the Standing Counsel for Income Tax took notice for the respondents, but it does not explicitly record any specific arguments made by the revenue regarding the initiation of coercive steps or the merits of the appeal.

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 FRIDAY, THE 24TH DAY OF APRIL 2020 / 4TH VAISAKHA, 1942 WP(C) NO. 8790 OF 2020 Petitioner:- The Parathode Service Co-operative Bank Ltd. No. 3002 Parathode P.O, Kottayam District - 686 512 Represented by its Secretary By Advs. Sri. Shaji Thomas Sri. Jen Jaison Respondents:- 1. The Central Board of Direct Taxes Department of Revenue, Ministry of Finance, Government of India, North Block New Delhi-110001 Represented by its Chairman 2. Income Tax Officer, Ward 3, Income Tax Office, Public Library Building, Shastri Road, Kottayam - 686 001 3. Commissioner of Income Tax (Appeals) Kottayam - 686 001 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.8790/2020 : 2 :

JUDGMENT ~ ~ ~ ~ ~ ~ Dated this the 24th 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 2nd respondent disallowed petitioner's claim for deduction under Section 80-P of the Income Tax Act and demanded ₹1,93,16,165/- as tax. The petitioner filed Ext.P3 appeal contending that reasoning given in Ext.P1 is untenable. Pending the appeal, the 2nd respondent initiated coercive proceedings.

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

If the respondents proceed with coercive steps pending consideration of statutory appeal, the statutory : 3 : 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.P3 appeal. Ext.P3 appeal and Ext.P4 stay petition shall be considered and disposed of by the 3rd respondent within a period of six months, without insisting on payment of 20% of the demanded tax. N. NAGARESH, JUDGE aks/24.04.2020 : 4 :

Appendix — schedule of exhibits

Appendix Petitioner’s Exhibits: Exhibit P1: True photo copy of the Assessment Order No.ITBA/AST/S/ 143(3)/2019-20/1022561801(1) dated 17.12.2019 for the year 2017-18 issued by the 2nd respondent Exhibit P2: True photocopy of the demand notice No. ITBA/AST/ S/156/2019-20/1022561958(1) dated 17.12.2019 issued by the 2nd respondent Exhibit P3: True photocopy of the Appeal dated 16.01.2020 filed for the year 2017-18 before the 3rd respondent Exhibit P4: True photocopy of the application for stay dated 06.02.2020 filed by the petitioner Exhibit P5: True photocopy of the letter dated 07.02.2020 issued by the 2nd respondent

Recent GST High Court judgments

Search GST case law →