THE THRISSUR DISTRICT CO-OPERATIVE BANK LIMITED vs. THE COMMISSIONER OF INCOME TAX (APPEALS)

WP(C)/5533/2020HC KeralaKLHC01014989202026 February 2020Author: HONOURABLE MR.JUSTICE S.V.BHATTI5 pages

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What did the High Court hold?

The High Court held that the issuance of notice (Ext.P12) by the Deputy Commissioner of Income Tax was not justified, considering that the petitioner had complied with the condition of depositing 20% of the tax demanded and a stay had been granted by the Commissioner of Income Tax (Appeals) until September 30, 2019, with the appeal (Ext.P4) still pending. The Court reasoned that enforcing the demand through Ext.P12 would render the appeal a futile exercise. To meet the ends of justice, the Court directed that the appeal (Ext.P4) be disposed of expeditiously, preferably within three months from the date of receipt of the judgment. Furthermore, the stay granted in Ext.P10 was extended until the appeal is disposed of and the order is communicated to the petitioner. The Court did not decide on the merits of the appeal itself.

What were the facts?

The petitioner, The Thrissur District Co-operative Bank Limited (now The Kerala State Co-operative Bank Ltd), filed an appeal (Ext.P4) against an assessment order (Ext.P1) for Assessment Year 2016-17, which determined a total income of Rs. 24,23,63,020/- and created a demand of Rs. 8,45,24,793/-. The petitioner also filed a stay petition (Ext.P6). After approaching the High Court for an expeditious disposal of the stay petition, an order (Ext.P10) was passed on July 18, 2019, granting stay for the balance 80% of the demand until September 30, 2019, after the petitioner paid 20% of the demand. Subsequently, the petitioner received a notice (Ext.P12) from the Deputy Commissioner of Income Tax calling for payment of the balance 80% tax. The petitioner then filed an application for extension of the stay and approached the High Court again.

What were the issues?

1. Whether the issuance of notice (Ext.P12) by the Deputy Commissioner of Income Tax calling for payment of the balance 80% of the tax demand was justified, given that a stay had been granted by the Commissioner of Income Tax (Appeals) until September 30, 2019, and the appeal was pending. Assessee's Contention: The petitioner contended that the notice (Ext.P12) was issued despite compliance with the condition of depositing 20% of the tax demand and the pendency of the appeal. They argued that enforcing the demand through Ext.P12 would render their pending appeal a mere academic exercise. Revenue's Contention: The judgment does not record specific arguments from the revenue regarding the issuance of Ext.P12. However, the issuance of the notice implies a contention that the demand was enforceable.

Which sections of the Income-tax Act were involved?

Section 143(3)

AI-generated summary — verify with the full judgment below

Heard together (2 matters)

WP(C).No.5533 OF 2020

W.P.(C) No.9506 of 2019

Read from the judgment's own cause title. This page is filed under one of them.

Cause title — parties, addresses and appearances

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE S.V.BHATTI WEDNESDAY, THE 26TH DAY OF FEBRUARY 2020 / 7TH PHALGUNA, 1941 WP(C).No.5533 OF 2020(N) PETITIONER/S: THE THRISSUR DISTRICT CO-OPERATIVE BANK LIMITED, (PRESENTLY THE KERALA STATE CO-OPERATIVE BANK LTD, DISTRICT OFFICE, THRISSUR) SAHAKARANA SATABDHI MANDIRAM, KOVILATHUMPADAM, THRISSUR-680 022, REPRESENTED BY ITS GENERAL MANAGER IN - CHARGE BY ADV. SRI.P.C.SASIDHARAN, SC, THRISSUR DISTRICT CO.OPERATIVE BANK LTD. RESPONDENT/S: 1 THE COMMISSIONER OF INCOME TAX (APPEALS), THRISSUR-680 001 2 THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 2 (1),RANGE-2,THRISSUR-680 001 3 THE STATE BANK OF INDIA, REPRESENTED BY ITS CHIEF MANAGER, MAIN BRANCH, THRISSUR-680 001 R1 & R2 BY SC JOSE JOSEPH R3 BY SRI. G.G.MANOJ, SC THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 26.02.2020, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C).No.5533 OF 2020 2 JUDGMENT Dated this the 26th day of February 2020 Heard Adv.P.C. Sasidharan for petitioner and Standing Counsel Jose Joseph for respondents. 2. The petitioner is a Co-operative Bank. The petitioner filed Ext.P4 appeal and also stay petition in Ext.P6 aggrieved by the order of assessment dated 29.12.2018 in Ext.P1. The petitioner apprehending coercive steps, approached this Court in W.P.(C) No.9506 of 2019 for direction to dispose of stay petition expeditiously. On 27.03.2019, W.P.(C) 9506 of 2019 was disposed of. In Ext.P10 dated 18.07.2019 the stay petition filed by the petitioner is disposed of. The operative portion reads thus: “In this case, assessment u/s 143(3) of the Income Tax Act, 1961 for the assessment year 2016-17 was completed on 29.12.2018, determining total income at Rs.24,23,63,020/- creating demand of Rs.845,24,793/-. Aggrieved with this order, the Appellant filed an appeal by electronically and paper copies were also filed in this office along with application for stay of recovery of demand. The stay petition was represented by Shri.P.Harikrishnanunni, C.A. WP(C).No.5533 OF 2020 3 and the matter was discussed with him. 2. The appellant has informed that 20% of demand is already paid. Therefore, in the circumstances of the case, stay is granted for the balance 80% of the demand upto 30th September, 2019.” 3. The cause of action for filing the writ petition is that respondent no.2 through Ext.P12 calls upon the petitioner to pay the balance of 80% tax under challenge in Ext.P4 appeal. The petitioner on 26.09.2019 filed application for necessary reliefs to continue to maintain the stay during the pendency of Ext.P4 appeal. 4. After chronologically taking note of the dates referred to above, this court is of the view that Ext.P12 ought not to have been issued once the petitioner has complied with the condition of depositing 20% of the tax demanded. It could be that, in Ext.P10 stay has been granted upto 30.09.2019 and the appeal in Ext.P4 is not yet heard. This Court is of the view that the amounts demanded through Ext.P12 if is carried out, the appeal filed by WP(C).No.5533 OF 2020 4 petitioner will be more in the nature of academic pursuit of objections. 5. Therefore, to meet the ends of justice, the writ petition stands disposed of by this judgment, in the circumstances of this case: (a) Ext.P4 appeal is disposed of as expeditiously as possible, preferably within three months from the

date of receipt of a copy of this judgment. (b) Stay granted in Ext.P10 order stands extended till the appeal is disposed of and order communicated to petitioner. (c) No order as to costs. S.V.BHATTI JUDGE uu/jjj

WP(C).No.5533 OF 2020 5 APPENDIX PETITIONER'S/S EXHIBITS: EXHIBIT P1OF THE ASSESSMENT ORDER DATED 29.12.2018 EXHIBIT P2OF THE DEMAND NOTICE DATED 29.12.2018 EXHIBIT P3OF THE COMPUTATION SHEET DATED 29.12.2018 EXHIBIT P4OF THE APPEAL DATED 16.1.2019 EXHIBIT P5OF THE ORDER DATED 14.3.2019 EXHIBIT P6OF THE STAY PETITION DATED 16.3.2019 EXHIBIT P7OF THE CHALLAN RECEIPT DATED 26.3.2019 EXHIBIT P8OF THE ORDER DATED 26.3.2019 EXHIBIT P9OF THE JUDGMENT DATED 27.3.2019 IN WPC 9506/17 EXHIBIT P10OF THE ORDER OF STAY ISSUED BY THE 1ST RESPONDENT EXHIBIT P11OF THE PETITION FOR EXTENSION OF STAY DATED 26.69.2019 EXHIBIT P12OF THE COMMUNICATION DATED 14.2.2020

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