AKAY FLAVOURS AND AROMATICS(P)LTD., vs. THE DEPUTY COMMISSIONER OF INCOME TAX,

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WP(C)/4533/2020HC KeralaKLHC01012336202018 February 2020Author: HONOURABLE MR. JUSTICE AMIT RAWAL4 pages
AI SummaryRemanded

What did the High Court hold?

The High Court, without expressing any opinion on the merits of the case, disposed of the writ petition. It directed the second respondent (Commissioner of Income Tax (Appeals)) to consider the petitioner's prayer for interim stay along with the appeal, in accordance with law. This consideration was to be done after affording an opportunity of hearing to the petitioner, and expeditiously, at any rate, within one month from the date of receipt of the judgment. Until the appellate authority adjudicated the interim application, the demand notice (Ext.P5) was ordered to be kept in abeyance, and the interim arrangement was to continue. The Court did not decide the validity of the Circular or the demand notice on merits.

What were the facts?

The petitioner, M/s. Akay Flavours and Aromatics (P) Ltd., filed a writ petition before the High Court of Kerala challenging the non-consideration of its appeal and interim application against an assessment order dated 20.12.2019 for assessment year 2017-18. Subsequently, a demand notice dated 12.02.2020 was issued, requiring the petitioner to pay 20% of the outstanding demand for stay. The petitioner argued that the demand notice was based on a Circular of March 2017, which was held invalid by a Division Bench of the High Court in Mavilayi Service Co-operative Bank Ltd. v. The Commissioner of Income Tax, Calicut. The petitioner also stated that their appeal and stay application had not yet been numbered.

What were the issues?

1. Whether the demand notice, based on a Circular of March 2017, is valid when the said circular has been held to be invalid by a Division Bench of the High Court in Mavilayi Service Co-operative Bank Ltd. v. The Commissioner of Income Tax, Calicut? (Question of law, concerning the validity of the demand notice and the applicability of the cited precedent). Assessee's Contentions: The demand notice is invalid as it relies on a March 2017 Circular that has been declared invalid by the High Court in Mavilayi Service Co-operative Bank Ltd. v. The Commissioner of Income Tax, Calicut. The appeal and stay application are still pending and unnumbered. Revenue's Contentions: The observations in the Mavilayi Service Co-operative Bank Ltd. judgment pertain only to cases involving co-operative societies claiming exemption under Section 80P of the Income Tax Act.

Which sections of the Income-tax Act were involved?

Section 80P

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE AMIT RAWAL TUESDAY, THE 18TH DAY OF FEBRUARY 2020 / 29TH MAGHA, 1941 WP(C).No.4533 OF 2020(N) PETITIONER/S: M/S. AKAY FLAVOURS AND AROMATICS(P)LTD., AMBUNAD, MALAIDAMTHURUTHU P.O., KIZHAKKAMBALAM, ERNAKULAM - 683 561, REPRESENTED BY ITS CHIEF FINANCIAL OFFICER MR. KJ. THANKACHAN BY ADVS. SRI.JOSEPH MARKOSE (SR.) SRI.V.ABRAHAM MARKOS SRI.ABRAHAM JOSEPH MARKOS SRI.ISAAC THOMAS SRI.P.G.CHANDAPILLAI ABRAHAM SHRI.VIPIN ANTO H.M. SHRI.ALEXANDER JOSEPH MARKOS SHRI.SHARAD JOSEPH KODANTHARA RESPONDENT/S: 1 THE DEPUTY COMMISSIONER OF INCOME TAX, DCIT CORPORATE CIR 1 (1), CENTRAL REVENUE BUILDING, I.S. PRESS ROAD, KOCHI - 682 018 2 THE COMMISSIONER OF INCOME TAX (APPEALS) G-51, PARAPPILLY LANE, MANORAMA JUNCTION, PANAMPILLY NAGAR, KOCHI - 682 036 OTHER PRESENT: SRI JOSE JOSEPH,SC THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 18.02.2020, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

WP(C).No.4533 OF 2020(N) 2 JUDGMENT Dated this the 18th day of February 2020 Petitioner, in the instant case, has sought for indulgence of this Court under Article 226 of the Constitution of India. He is aggrieved by non-consideration of appeal and interim application preferred against the order of assessment dated 20.12.2019 pertaining to the assessment year 2017 -18. During the interregnum, Ext.P5 demand notice dated 12.02.2020 was issued calling upon the petitioner to pay 20% of the demand outstanding for the purpose of stay.

2.

Learned counsel for the petitioner submits that the demand as raised in the demand notice is based upon a Circular of March, 2017, which is held to be invalid by a decision of the Division Bench of this Hon'ble Court in Mavilayi Service Co- operative Bank Ltd. v. The Commissioner of Income Tax, Calicut [2019 (2) KHC 287]. He added that, as of today, even

the appeal and the application for stay have not been numbered so far.

WP(C).No.4533 OF 2020(N) 3

3.

Sri. Jose Joseph, learned Standing Counsel for the Income Tax Department, submits that he has no dispute regarding the observations in the above-said judgment but added that the observations of the Court only pertains to the cases where assessment orders are passed in respect of Co-operative Societies, claiming exemption under Section 80P of the Income Tax Act. Having heard the learned counsel on both sides and perusing the materials on record, without expressing any opinion on merit, I dispose of this writ petition with a direction to the second respondent to consider the prayer for consideration of Ext.P4 interim stay along with appeal, in accordance with law, after affording an opportunity of hearing to the petitioner, as expeditiously as possible, at any rate, within one month from the date of receipt of a copy of this judgment. Till such time, Ext.P5 is ordered to be kept in abeyance and the interim arrangement shall be construed till the adjudication of the interim application by the appellate authority. AMIT RAWAL shg JUDGE

WP(C).No.4533 OF 2020(N) 4

Appendix — schedule of exhibits
APPENDIX PETITIONER'S/S EXHIBITS: EXHIBIT P1 TRUE COPY OF ASSESSMENT ORDER DATED 20/12/2019 FOR ASSESSMENT YEAR 2017-18 EXHIBIT P2 TRUE COPY OF RELEVANT CALCULATION OF DISALLOWANCES AND THE TAX EFFECTED ON THE PETITIONER DTD NIL EXHIBIT P3 TRUE COPY OF APPEAL DATED 20/01/2020 FILED BY THE PETITIONER BEFORE THE 2ND RESPONDENT EXHIBIT P4 TRUE COPY OF STAY PETITION DATED 28/01/2020 FILED BY THE PETITIONER BEFORE THE 2ND RESPONDENT EXHIBIT P5 TRUE COPY OF DEMAND NOTICE DATED 12/02/2020 ISSUED BY THE 1ST RESPONDENT

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