PARAYAKAD SERVICE CO-OPERATIVE BANK LTD.NO.2869 vs. THE INCOME TAX OFFICER

WP(C)/8665/2020HC KeralaKLHC01022411202024 April 2020Author: HONOURABLE MR.JUSTICE N.NAGARESH4 pages

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What did the High Court hold?

The High Court of Kerala, in its writ jurisdiction, held that if the 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. Consequently, 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 2nd respondent, the Commissioner of Income Tax (Appeals), to consider and dispose of the appeal within a period of six months, without insisting on the payment of 10% of the demanded tax as a pre-condition for hearing the appeal. The Court did not decide on the merits of the disallowance under Section 80-P.

What were the facts?

The petitioner, Parayakad Service Co-operative Bank Ltd., an income tax assessee, is challenging an order for assessment year 2017-18. The 1st respondent, the Income Tax Officer, disallowed the petitioner's claim for deduction under Section 80-P of the Income Tax Act, demanding ₹1,26,55,451/- as tax. The petitioner filed an appeal (Ext.P3) against this order, contending its reasoning was untenable. While the appeal was pending, the 1st respondent initiated coercive proceedings and issued a demand (Ext.P5) requiring 10% of the disputed tax as a condition to stay further action. The petitioner filed this writ petition seeking relief from these coercive steps.

What were the issues?

1. Whether the Income Tax Officer's disallowance of the deduction under Section 80-P of the Income Tax Act for assessment year 2017-18 is legally sustainable? Assessee's Contention: The reasoning provided in Ext.P1 for disallowing the deduction under Section 80-P is untenable. Revenue's Contention: The revenue did not record any specific contentions regarding the merits of the disallowance in the judgment. However, they insisted on the payment of 10% of the disputed tax as a condition to stay further proceedings, as evidenced by Ext.P5. 2. Whether the initiation of coercive proceedings by the Income Tax Officer pending a statutory appeal is appropriate and will negate the statutory remedy available to the assessee? Assessee's Contention: The initiation of coercive steps pending appeal will negate the statutory remedy available to the petitioner and put them to difficulties. Revenue's Contention: The revenue did not record any specific contentions regarding the appropriateness of coercive steps pending 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. 8665 OF 2020 Petitioner:- Parayakad Service Co-operative Bank Ltd. No.2869, Represented by its Secretary, Parayakad, Cherthala, Alappuzha District-Pin-688 550. By Advs. T.R.Harikumar Arjun Raghavan Respondents :- 1. The Income Tax Officer, Ward-3, Office of the Income Tax Officer, Arattukulangara Complex, A.N.Puram, Alappuzha-Pin-688 011. 2. The Commissioner of Income Tax (Appeals), Public Library Building, Sastri Road, Kottayam-Pin-686 001. 3. The Kerala State Co-operative Bank, Alappuzha District Office, Represented by its General Manager, Alappuzha-Pin-688 011 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.8665/2020 : 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 1st respondent disallowed petitioner's claim for deduction under Section 80-P of the Income Tax Act and demanded ₹1,26,55,451/- as tax. The petitioner filed Ext.P3 appeal contending that reasoning given in Ext.P1 is untenable. Pending the appeal, the 1st respondent initiated coercive proceedings. The 1st respondent issued Ext.P5 demanding 10% 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.P3 appeal. Ext.P3 appeal shall be considered and disposed of by the 2nd respondent within a period of six months, without insisting on payment of 10% of the demanded tax. 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 the year 2017-2018 dated 28-12-2019. Exhibit-P2 A true copy of the notice issued under Section 156 of the Income Tax Act dated 28-12-2019. Exhibit-P3 A true copy of the online appeal dated 23-01-2020 filed by the petitioner before the 2nd respondent, against Ext-P1 assessment order. Exhibit-P4 A true copy of the stay petition filed by the petitioner in Ext-P3 appeal dated 10-02-2020. Exhibit-P5 A true copy of the order in ITBA No.10430/CIT(A)/ KTM/2019- 20 dated 09-03-2020, passed by the 2nd respondent in Ext-P4 stay petition. Exhibit-P6 A true copy of the judgment dated 19-07-2019 in W.A No.1639 of 2019. Exhibit-P7 A true copy of the judgment dated 17-02-2020 in WP(C) No.4433 of 2020.

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