THE CHIRAYINKEEZHU SERVICE CO-OPERATIVE BANK LTD. NO.1155 vs. THE INCOME TAX OFFICER

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WP(C)/2856/2020HC KeralaKLHC01008149202003 February 2020Author: HONOURABLE MR. JUSTICE ALEXANDER THOMAS7 pages
AI SummaryRemanded

What did the High Court hold?

The High Court, taking note of its previous judgment in WP(C).No.34119/2019, held that dismissing statutory appeals on technical grounds of limitation without considering the merits would not serve the interest of justice. The Court found that the impugned rejection orders warranted interdiction. Accordingly, the Court set aside the rejection orders and remitted the appeals and stay applications to the appellate authority for fresh consideration on merits. The petitioner was granted permission to file an additional memorandum of grounds within 10 days of receiving a certified copy of the judgment. The appellate authority was directed to consider the stay application after affording a reasonable opportunity of being heard, and to pass orders within six weeks of filing the additional grounds. Until orders were passed on the stay application, further coercive steps for recovery were ordered to be kept in abeyance. The Court clarified that these directions were for the preservation of the subject matter and did not express any opinion on the merits of the controversy.

What were the facts?

The petitioner, Chirayinkeezhu Service Co-operative Bank Ltd., is a primary agricultural credit society. The Income Tax Officer issued an order under Section 271B for Assessment Year 2015-16. The petitioner filed an appeal and a stay petition before the Commissioner of Income Tax (Appeals). The appellate authority informed the petitioner that the appeals were defective and required curing within 15 days. The petitioner filed the corrected appeal (Ext.P-4) 7 days after the stipulated time. Subsequently, a stay petition (Ext.P-5) was filed. The appellate authority dismissed the appeal (Ext.P-6) on the grounds that the defects were not cured within the prescribed time. The petitioner filed a Writ Petition (Civil) seeking to quash the dismissal order and to direct the respondents not to proceed with recovery until the appeal and stay petition are disposed of.

What were the issues?

1. Whether the dismissal of the statutory appeal on technical grounds of limitation for curing defects, without considering the merits, advances the interest of justice? 2. Whether the petitioner should be granted an opportunity to cure defects and have their appeal and stay application considered on merits? Assessee's Contentions: - The petitioner argued that dismissing statutory appeals on technical grounds of limitation leads to a failure of justice, citing the Supreme Court decision in State of Bihar v. Kameshwar Prasad Singh. - They contended that they should have been given more time to clear defects so that their appeals and stay applications could be considered and decided on merits. - The petitioner also sought permission to file an additional memorandum of grounds in support of their appeals and stay applications. Revenue's Contentions: - The judgment does not record any specific contentions made by the revenue.

Which sections of the Income-tax Act were involved?

Section 271B

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 MONDAY, THE 3RD DAY OF FEBRUARY 2020 / 14TH MAGHA, 1941 WP(C).No.2856 OF 2020(F) PETITIONER: THE CHIRAYINKEEZHU SERVICE CO-OPERATIVE BANK LTD. NO.1155, REPRESENTED BY ITS SECRETARY, CHIRAYINKEEZHU P.O., THIRUVANANTHAPURAM DISTRICT-695 304. BY ADVS. SRI.T.R.HARIKUMAR, SRI.ARJUN RAGHAVAN RESPONDENTS: 1 THE INCOME TAX OFFICER, WARD-2 (5), OFFICE OF THE JOINT COMMISSIONER OF INCOME TAX, RANGE-2, 1ST FLOOR, AYAKAR BHAVAN, KOWDIAR, THIRUVANANTHAPURAM DISTRICT-695 003. 2 THE COMMISSIONER OF INCOME TAX (APPEALS), AAYAKAR BHAVAN, KOWDIAR, THIRUVANANTHAPURAM-695 003. SRI.CHRISTOPHER ABRAHAM, STANDING COUNSEL THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 03.02.2020, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: ALEXANDER THOMAS, J. ------------------------------------- W.P.(C) No. 2856 of 2020 ------------------------------------- Dated this the 3rd day of February, 2020

J U D G M E N T The case projected in this Writ Petition (Civil) are as follows: The petitioner is a primary agricultural credit society registered as per the provisions of the KCS Act. Ext.P-1 order was issued under Sec.271 B for the assessment year 2015-16 against the petitioner. Aggrieved by the said order, the petitioner filed appeal and stay petition before the 2nd respondent. While awaiting orders on stay petition, it was informed vide Ext.P-2 communication that appeals are defective and defects have to be cured within 15 days. Ext.P-4 appeal was filed after curing the defects, after 7 days of the stipulated time. Later Ext.P-5 stay petition was also filed apprehending recovery proceedings. Ext.P6 is the order issued by the 2nd respondent dismissing the appeal stating that defects are not cured. It is in the light these averments and contentions that the petitioner has filed the instant Writ Petition (Civil) with the following prayers:

..3.. “ i. To issue a writ of certiorari calling for the records leading to the issuance of Exhibit P6 and quash the same; ii. To issue a writ of mandamus or any other writ, order or direction, directing the 1st respondent not to proceed with recovery of the demand based on Exhibit P1 penalty order for the assessment year 2015-2016, till Exhibit P4 appeal as well as Exhibit P5 stay petition are disposed of by the 2nd respondent; And iii. To grant such other reliefs as this Honourable Court may deem fit in the circumstances of this case.”

2.

Heard Sri.T.R.Harikumar, learned counsel appearing for the petitioner and Sri.Christopher Abraham, learned Standing Counsel appearing for the respondents.

3.

It is pointed out by the counsel appearing for the petitioner that in similar circumstances, this Court has rendered directions as the one covered by Ext.P-7 judgment 7.1.2020 in WP(C).No.34119/2019, etc. Paragraph Nos. 4 to 6 of Ext.P-7 judgment reads as follows:

“4. The learned counsel for the petitioner would urge that it is now well settled by a series of rulings of the Apex Court and various High Courts in decisions as in State of Bihar v. Kameshwar Prasad Singh [2000 (9) SCC 94] that dismissing the statutory appeals on technical grounds of limitation would not in any way advance the interest of justice but admittedly, result in failure of justice etc. It is pointed out that the impugned action of the respondents in dismissing the appeals in terms of the impugned Exts.P11 and P12 proceedings is per se illegal and improper and that some breathing time should have been given to the petitioner to clear all the defects, so that their appeals and stay applications could have been considered and decided on merits etc.

5.

Having heard both sides and after taking into account the facts and circumstances of the case, this Court is inclined to take the view that the impugned rejection orders Exts.P11 and P12 would warrant interdiction in these writ proceedings, so that the appeals ..4.. and stay applications could be decided on merits, after affording reasonable opportunity of being heard to the petitioner. Accordingly, it is ordered that the appeals filed by the petitioner as per Exts.P7 and P9 and the stay applications as per Exts.P8 and P10 will stand remitted to the 2nd respondent appellate authority for consideration and decision afresh and on merits. To effectuate such a remit, it is ordered that the impugned Exts.P11 and P12 rejection orders will stand set aside. Further the learned counsel for the petitioner would point out that the petitioner has not raised some of the relevant grounds in the appellate memorandum and permission may be granted to ensure that additional memorandum of grounds is filed by the petitioner in pursuance of the appeals filed as per Exts.P7 and P9 and this Court may grant reasonable time in that regard. Having regard to the facts and circumstances of the case, this Court is of the view that the said limited plea need not be declined.

6.

Accordingly, it is ordered that the petitioner may file additional memorandum of grounds in support of their Exts.P7 and P9 appeals as well as Exts.P8 and P10 stay applications, which the petitioner may appropriately file before the 2nd respondent appellate authority without much delay preferably within a period of ten days from the date notified for receiving a certified copy of this judgment. In case such additional memorandum of grounds is duly filed by the petitioner as aforestated, then the 2nd respondent appellate authority shall treat those additional grounds as part and continuation of the appeals and stay applications as already filed. Thereafter, the 2nd respondent may afford reasonable opportunity of being heard to the petitioner on the matters raised in Exts.P8 and P10 stay applications and orders may be passed on those stay applications without much delay preferably within a period of six weeks from the date of filing of the aforestated additional memorandum of grounds. It is only for the purpose of preservation of the subject matter of the lis, it is ordered that until orders are passed on Exts.P8 and P10 stay applications as aforedirected, further coercive steps for enforcing the impugned order may be kept in abeyance. It is made clear that the aforesaid directions have been issued by this Court only for the purpose of preservation of the subject matter of the list and shall not be construed in any manner as an opinion on the part of this Court regarding the merits of the controversy which would fall exclusively within the province of the 2nd respondent appellate authority for decision independently and on merits.”

4.

Taking note of the directions in said judgment, it is ordered that the petitioner may file an additional memorandum of grounds in support of Ext.P-4 appeal as well as Ext.P-5 stay ..5.. application before the 2nd respondent appellate authority, without much delay preferably within a period of 10 days from the date notified for receiving a certified copy of this judgment. In case such additional memorandum of grounds is duly filed by the petitioner as aforestated, then the 2nd respondent appellate authority shall treat those additional grounds as part and continuation of the appeal and stay application already filed. Thereafter, the 2nd respondent after affording reasonable opportunity of being heard to the petitioner on the matters raised in Ext.P-5 stay application, may pass orders on the stay application without much delay, preferably within a period of 6 weeks from the date of filing of the aforestated additional memorandum of grounds.

5.

It is only for the purpose of preservation of the subject matter of the lis, it is ordered that until orders are passed on Ext.P-5 stay application as aforedirected, further coercive steps for enforcement of the impugned order may be kept in abeyance. It is made clear that the aforesaid directions have been issued by this Court only for the purpose of preservation of the subject matter of the lis, and shall not be construed in any manner as an opinion on the part of this Court regarding the merits of the controversy which ..6.. would fall exclusively within the province of the 2nd respondent appellate authority for decision independently and on merits. With these observations and directions, the above Writ Petition (Civil) will stand finally disposed of. ALEXANDER THOMAS, JUDGE MMG ..7..

Appendix — schedule of exhibits
APPENDIX PETITIONER'S EXHIBITS: EXHIBIT P1 A TRUE COPY OF THE ORDER DATED 28.6.2018 ISSUED BY THE IST RESPONDENT UNDER SECTION 271 B OF THE INCOME TAX ACT, IMPOSING PENALTY FOR THE ASSESSMENT YEAR 2015-2016. EXHIBIT P2 A TRUE COPY OF THE COMMUNICATION DATED 8.11.2019, ISSUED BY THE 2ND RESPONDENT, FOR THE ASSESSMENT YEAR 2015-2016. EXHIBIT P3 A TRUE COPY OF THE COVERING LETTER DATED 18.11.2019 BY WHICH APPEAL WAS RE-SUBMITTED. EXHIBIT P4 A TRUE COPY OF THE ONLINE APPEAL ALONG WITH GROUNDS OF APPEAL DATED 20.11.2019, FILED BEFORE THE 2ND RESPONDENT FOR THE ASSESSMENT YEAR 2015-2016. EXHIBIT P5 A TRUE COPY OF THE STAY PETITION DATED 30.11.2019, FILED IN EXT-P4 APPEAL. EXHIBIT P6 A TRUE COPY OF THE ORDER DATED 29.11.2019 IN ITA NO.80/EF/TVM/CIT(A)/TVM/2018-19 OF THE 2ND RESPONDENT. EXHIBIT P7 A TRUE COPY THE JUDGMENT DATED 7.1.2020 IN WPC NO.34119 OF 2019.

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