THE KIDANGOOR HOUSING CO-OPERATIVE SOCIETY LTD. NO. K 137, vs. THE COMMISSIONER OF INCOME TAX (APPEALS)

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WP(C)/3287/2020HC KeralaKLHC01009227202006 February 2020Author: HONOURABLE MR. JUSTICE ALEXANDER THOMAS5 pages
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What did the High Court hold?

The High Court, following a Division Bench judgment in W.A.No. 1529/2019 and other similar cases, ordered that the 1st appellate authority shall ensure the final disposal of Ext.P2 appeal after affording a reasonable opportunity of being heard to the petitioner, without much delay and within a time limit to be fixed by the appellate authority. Crucially, in the interest of justice, the Court ordered that until final orders are passed disposing of Ext.P2 appeal, all coercive steps for the enforcement of the assessment order impugned in the appeal shall be kept in abeyance. The reasoning is based on the principle that insistence on payment of a portion of the demanded amount as a condition for stay need not be insisted upon in such cases, and the appellate authority should decide the statutory appeal expeditiously, with coercive steps being held back in the interim. The ratio decidendi is that pending a statutory appeal, coercive recovery can be stayed to ensure effective adjudication, especially when guided by precedents on interim arrangements.

What were the facts?

The petitioner, The Kidangoor Housing Co-operative Society Ltd. No. K 137, represented by its Secretary, filed a Writ Petition (Civil) before the High Court of Kerala. The primary prayer was to direct the Commissioner of Income Tax (Appeals) to consider their appeal (Ext.P2) on merits and to restrain the respondents (Commissioner of Income Tax (Appeals) and Income Tax Officer) from initiating coercive proceedings against the society until an order is passed on the appeal. The petitioner sought this relief pending the disposal of their statutory appeal before the first appellate authority.

What were the issues?

1. Whether the 1st respondent (Commissioner of Income Tax (Appeals)) should be directed to consider Ext.P2 appeal on merits? (Question of law and fact, concerning the procedural fairness of the appellate process). 2. Whether coercive proceedings for recovery of the impugned tax should be restrained against the petitioner society until orders are passed in Ext.P2 appeal? (Question of law, concerning the powers of the High Court under Article 226 of the Constitution and the principles of natural justice pending statutory appeal). Assessee's Contention: The assessee sought a direction for the appellate authority to decide the appeal on merits and for a stay of coercive recovery proceedings pending the appeal's disposal. The assessee relied on the dictum laid down by a Full Bench of the High Court in Mavilayi Service Co-operative Service Bank Ltd. v. Commissioner of Income Tax, Calicut [2019 (2) KHC 287] and a Division Bench judgment in W.A.No. 1529/2019. Revenue's Contention: The judgment records no specific arguments made by the revenue.

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 ALEXANDER THOMAS THURSDAY, THE 06TH DAY OF FEBRUARY 2020 / 17TH MAGHA, 1947 WP(C).No.3287 OF 2020(I) PETITIONER: THE KIDANGOOR HOUSING CO-OPERATIVE SOCIETY LTD. NO. K 137, KIDANGOOR P.O., KIDANGOOR, KOTTAYAM, REPRESENTED BY ITS SECRETARY. BY ADV. SRI.O.D.SIVADAS RESPONDENTS: 1 THE COMMISSIONER OF INCOME TAX (APPEALS), AYAKAR BHAVAN, KOTTAYAM, PIN-686001. 2 THE INCOME TAX OFFICER, WARD NO.5, KOTTAYAM, PIN-686001. OTHER PRESENT: SRI.JOSE JOSEPH, SC THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 06.02.2020, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: W.P.(C)No.3287/2020 2 ALEXANDER THOMAS, J. ------------------------------------------- W.P.(C)No.3287 of 2020 ---------------------------------------------- Dated this the 6th day of February, 2020

JUDGMENT The main prayer in the above Writ Petition (Civil) is as follows: “1) Issue a writ of mandamus or other appropriate writ, order or direction to the 1st respondent to consider Ext.P2 appeal on merit and also restraining the respondents from initiating coercive proceedings against the petitioner society till orders are passed in Ext.P2 appeal on merti.”

2.

Heard Sri. O.D. Sivadas, learned counsel appearing for the petitioner and Sri.Jose Joseph, learned Standing Counsel for the Income Tax Department appearing for the respondents.

3.

In similar circumstances, a Division Bench of this Court in the judgment dated 1.7.2019 in W.A.No. 1529/2019 has taken the view that the insistence for payment of a portion of the amount demanded, as a condition for grant of stay, need not be insisted in cases as in the instant one and that the Division Bench, for reasons stated therein, has ordered that it is for the appellate authority to take a decision on the statutory appeal at the earliest and that until the final decision is rendered by the appellate authority in the statutory appeal, coercive steps for recovery and collection of the impugned tax shall be kept in abeyance in the light of the dictum laid down by the Full Bench of this Court in Mavilayi Service Co-operative Service Bank Ltd., v. Commissioner of Income Tax, Calicut [2019 (2) KHC 287]. The Division Bench in the abovesaid judgment dated 1.7.2019 in W.A.No. 1529/2019 has also dealt with the reasons for taking such a view for making such an interim arrangement pending disposal of the main appeal by the statutory appellate authority concerned. The said decision of the Division Bench of this Court in W.A.No. 1529/2019 has been followed by this Court in a series of other cases as in the judgment dated 10.1.2020 in W.P.(C).No.523/2020. Accordingly, following the line of directions and orders already passed by the Division Bench of this Court in the judgment dated 1.7.2019 in W.A.No. 1529/2019 as well as various other judgments rendered by this Court, following the said directions and orders of the Division Bench in the matter of the interim arrangement till the disposal of the main statutory appeal, etc., following orders and directions are issued: It is ordered that the 1st appellate authority shall ensure final disposal of Ext.P-2 appeal after affording reasonable opportunity of being heard to the petitioner without much delay and within a reasonable time limit that may be fixed appropriately by the said appellate authority. However, in the interest of justice it is ordered that until final orders are passed disposing of Ext.P-2 appeal, all coercive steps for the enforcement of the assessment order impugned in the abovesaid appeal shall be kept in abeyance. With these observations and directions, the Writ Petition (Civil) stands finally disposed of. ALEXANDER THOMAS, JUDGE acd

Appendix — schedule of exhibits
APPENDIX PETITIONER'S EXHIBITS: EXHIBIT P1 COPY OF THE ASSESSMENT ORDER DATED 30.12.2019 ISSUED BY THE 2ND RESPONDENT FOR THE PERIOD 2017-18. EXHIBIT P2 COPY OF THE APPEAL FILED BY THE PETITIONER BEFORE THE 1ST RESPONDENT FOR THE PERIOD 2017-18 DATED 28.1.2020. RESPONDENTS' EXHIBITS: NIL. True Copy P.S to Judge acd

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