THE ENGANDIYUR FARMERS SERVICE CO- vs. THE COMMISSIONER OF INCOME TAX (APPEALS),

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WP(C)/7911/2020HC KeralaKLHC01020652202013 March 2020Author: HONOURABLE MR.JUSTICE V.G.ARUN5 pages
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What did the High Court hold?

The High Court held that the insistence on payment of 20% of the tax demanded as a condition for granting a stay pending appeal is unsustainable. This decision was based on the Division Bench judgment in W.A.No. 1529 of 2019 and connected cases, which considered the peculiar aspects involved and the Full Bench decision in Mavilayi Service Co-operative Bank Ltd. v. Commissioner of Income Tax, Calicut. The Court quashed the order imposing the 20% payment condition (Ext.P4). The Court directed the first respondent (Commissioner of Income Tax (Appeals)) to consider the petitioner's appeal (Ext.P3) within three months. Pending consideration of the appeal, there was to be no insistence on payment of 20% as demanded, and further recovery proceedings pursuant to the assessment order (Ext.P1) were to be kept in abeyance.

What were the facts?

The petitioner, The Engandiyur Farmers Service Co-operative Bank, is a Primary Agricultural Credit Society. It is aggrieved by the assessment order for the assessment year 2017-18. The petitioner filed an appeal and a stay petition against the assessment order. The Commissioner of Income Tax (Appeals) passed an order on the stay petition, requiring the petitioner to remit 20% of the disputed tax as a condition for granting a stay. The petitioner filed a writ petition seeking expeditious consideration of its appeal or stay petition and to stay recovery proceedings, particularly the insistence on paying 20% of the disputed tax.

What were the issues?

1. Whether the insistence on remittance of 20% of the tax demanded as a condition for granting a stay pending appeal is legally sustainable? Assessee's Contention: The petitioner sought a stay of recovery proceedings and the condition imposed by the respondent for payment of 20% of the disputed tax. The petitioner relied on the Division Bench judgment in W.A.No. 1529 of 2019 and connected cases, and 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 records that the learned Standing Counsel for the Income Tax Department was heard, but does not detail the revenue's specific arguments regarding the 20% payment condition.

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 FRIDAY, THE 13TH DAY OF MARCH 2020 / 23RD PHALGUNA, 1941 WP(C).No.7911 OF 2020(L) PETITIONER/S: THE ENGANDIYUR FARMERS SERVICE CO- OPERATIVE BANK NO. F. 977, P.O. KUNDALIYUR THRISSUR 680 616, REPRESENTED BY ITS MANAGING DIRECTOR. BY ADV. SRI.P.C.SASIDHARAN RESPONDENT/S: 1 THE COMMISSIONER OF INCOME TAX (APPEALS), AAYAKAR BHAVAN, S.T. NAGAR, THRISSUR 680 001. 2 THE INCOME TAX OFFICER, WARD 1 AND TPS, GURUVAYOOR, OFFICE OF THE INCOME TAX OFFICER, GURUVAYOOR 680 101. OTHER PRESENT: GP DR.THUSHARA JAMES THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 13.03.2020, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: W.P.(C) No.7911 of 2020 2 Dated this the 13th day of March, 2020

JUDGMENT The petitioner, a Primary Agricultural Credit Society, is aggrieved by Ext.P1 assessment order for the year 2017-18 and has preferred Ext.P3 appeal and Ext.P5 stay petition. Ext.P4 is the order passed on the stay petition requiring the petitioner to remit 20% of the tax due, which is disputed in the appeal. The prayer in the writ petition is for expeditious consideration of either the appeal or the stay petition and to stay the recovery proceedings including the insistence to pay 20% of the amount as demanded under Ext.P4. 2. 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, 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 tax assessed as a condition for grant of stay to be bad.

3.

Heard the learned Standing Counsel for the Income Tax Department also. In view of the Division Bench decision, the demand for remittance of 20% of the tax assessed pending consideration of the appeals, cannot be sustained and accordingly, Ext.P4 is quashed. The writ petition is disposed of, directing the first respondent to consider Ext.P3 appeal within a period of three months from the date of receipt of a copy of this judgment. In the meanwhile, there shall not be any insistence for payment of 20% as demanded under Ext.P4 and further proceedings for recovery pursuant to Ext.P1 shall be kept in abeyance. V.G.ARUN JUDGE Scl/13.03.2020

Appendix — schedule of exhibits
APPENDIX PETITIONER'S/S EXHIBITS: EXHIBIT P1 TRUE COPY OF THE ASSESSMENT ORDER DATED 201//2019. EXHIBIT P2 TRUE COPY OF THE DEMAND NOTICE DATED 20/11/2019. EXHIBIT P3 TRUE COPY OF THE APPEAL DATED 13/12/2019. EXHIBIT P4 TRUE COPY OF THE ORDER DATED 14/1/2020. EXHIBIT P5 TRUE COPY OF THE STAY PETITION DATED 28/1/2020. EXHIBIT P6 TRUE COPY OF THE JUDGMENT DATED 1/7/2019 IN W.A. 1536 OF 2019.

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