MANAMBUR SERVICE CO-OPERATIVE BANK UNLIMITED vs. INCOME TAX OFFICER

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WP(C)/601/2020HC KeralaKLHC01001848202022 January 2020Author: HONOURABLE MR. JUSTICE ALEXANDER THOMAS7 pages
AI SummaryRemanded

What did the High Court hold?

The High Court of Kerala, while disposing of the Writ Petition, did not delve into the merits of the rectification proceedings or the eligibility for deduction under Section 80P. Instead, the Court directed the Commissioner of Income Tax (Appeals) to take up the pending rectification applications (Exts.P-8, P-15 & P-21) for consideration without delay. The Court mandated that the petitioner be afforded a reasonable opportunity of being heard and that orders be passed on these applications preferably within 4 to 6 weeks from the date of production of a certified copy of the judgment. Crucially, the Court ordered that further coercive steps for the enforcement of the impugned orders shall be kept in abeyance by the respondents concerned until orders are passed on the rectification applications. The operative direction was to dispose of the pending rectification petitions and stay recovery proceedings in the interim.

What were the facts?

The petitioner, Manambur Service Co-operative Bank Limited, filed its return of income for Assessment Year 2015-16, claiming deduction under Section 80P. The Assessing Officer disallowed this deduction, leading to a revised total income of Rs. 41,28,889 and a demand notice. The petitioner appealed to the Commissioner of Income Tax (Appeals), who initially allowed the deduction. However, the CIT(A) later initiated suo motu rectification proceedings under Section 154, disallowing the deduction again, despite the petitioner's objections and reliance on CBDT Circular No. 133/6 dated 9.5.2017. This led to a revised demand. Similar issues arose for Assessment Years 2013-14 and 2008-09. The petitioner filed rectification petitions for these years, which were pending, but coercive recovery steps were initiated. The petitioner filed a Writ Petition seeking to quash the rectification orders and demand notices, and to stay recovery proceedings until the rectification petitions were disposed of.

What were the issues?

1. Whether the Commissioner of Income Tax (Appeals) erred in initiating suo motu rectification proceedings under Section 154 of the Income Tax Act, 1961, after allowing the appeal on merits in favour of the assessee, thereby reopening a concluded assessment? Assessee's Contentions: - The CIT(A) had initially allowed the appeal, granting the deduction under Section 80P(2)(a)(i). - The subsequent suo motu rectification under Section 154 was an apparent mistake, as there was no apparent mistake of law or fact in the original appellate order. - The petitioner relied on CBDT Circular No. 133/6 dated 9.5.2017, which clarifies that co-operative societies are eligible for deduction under Section 80P irrespective of their classification. - Coercive steps for recovery were initiated despite pending rectification petitions. Revenue's Contentions: - The judgment does not record any specific contentions from the revenue regarding the rectification proceedings or the eligibility for deduction under Section 80P.

Which sections of the Income-tax Act were involved?

Section 80P,Section 154,Section 143(3),Section 156

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 WEDNESDAY, THE 22ND DAY OF JANUARY 2020 / 2ND MAGHA, 1941 WP(C).No.601 OF 2020(A) PETITIONER: MANAMBUR SERVICE CO-OPERATIVE BANK LIMITED, NO.2825, REPRESENTED BY ITS SECRETARY SHRI R. SAILENDRAKUMAR, AGED 55 YEARS, MANAMBUR P. O., THIRUVANANTHAPURAM DISTRICT, KERALA, PIN - 695 605. BY ADV. SRI.C.A.JOJO RESPONDENTS: 1 INCOME TAX OFFICER WARD - 2(5) KOWDIAR, TRIVANDRUM - 695 003. 2 THE INCOME TAX OFFICER WARD - 2(3) KOWDIAR, TRIVANDRUM - 695 003. 3 THE COMMISSIONER OF INCOME TAX (APPEALS) - 1 OFFICE OF THE COMMISSIONER OF INCOME TAX (APPEALS), TRIVANDRUM - 695 003. SRI.CHRISTOPHER ABRAHAM, STANDING COUNSEL THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 22.01.2020, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: ALEXANDER THOMAS, J. ------------------------------------- W.P.(C) No. 601 of 2020 ------------------------------------- Dated this the 22nd day of January, 2020

J U D G M E N T The facts projected in this Writ Petition (Civil) are as follows: The petitioner is a primary co-operative society who filed return of income for the assessment year 2015-16 declaring total income at Nil after claiming eligible deduction u/s 80P of the Income Tax Act, 1961. The assessing officer completed the assessment u/s 143(3) by Ext.P-1 order dated 29-11-2017 disallowing eligible deduction u/s 80(P)(2)(a)(i) of the Income Tax Act, 1961 and computed total income as Rs.41,28,889/- as against the declared income of Nil. Ext.P-2 demand notice u/s 156 for Rs.17,43,640/- also been issued. The assessment was done against the judgment of this Court in ITA.No.212/2013 dated 15.2.2016. The petitioner filed Ext.P3 statutory appeal before the 3rd respondent challenging Ext.P-1 assessment order. By Ext.P-4 order the 3rd respondent allowed the appeal by granting deduction u/s 80(P)(2)(d)(a)(i) of the Income Tax Act, 1961, by deleting the ..3.. tax amount assessed by the 1st respondent. After one year of Ext.P-4 order, the 3rd respondent suo motu initiated rectification proceedings u/s 154 of the said Act stating that there is apparent mistake. The petitioner filed objection and also enlightened the 3rd respondent the clarification Circular No.133/6 dated 9.5.2017 issued by the Central Board of Direct Taxes that a co-operative society, irrespective of its classification or nomenclature, is eligible for deduction u/s80P. But without considering any of the objections raised by the petitioner, the 3rd respondent unilaterally allowed the rectification petition as per Ext.P-6. Consequent to that, the 1st respondent issued Ext.P-7 order giving effect to the order of the 3rd respondent. Aggrieved by Ext.P-6 order, the petitioner filed Ext.P-8 petition for rectification of mistake u/s 154 of the Income Tax Act, 1961, which is pending before the 3rd respondent. Meanwhile, coercive steps are initiated to recover the disputed tax amount from the petitioner. The similar issues occurred for assessment years 2013-14 and 2008-09. The Exts.P-8, P-15 and P-21 statutory rectification petitions are pending before ..4.. the 3rd respondent. But the 1st respondent initiated coercive steps by by Exts.P-22, P-23 and P-24 letters of demand to recover the disputed tax amount. It is in the light of these averments and contentions that the petitioner has filed the instant Writ Petition (Civil) with the following prayers: “ i. To issue a writ of certiorari quashing Ext.P6, P13 and P19 rectification orders and P22, P23 and P24 letters of demand issued by the respondents. ii. To issue a writ, order or direction to the 1st respondent to keep in abeyance all the recovery proceedings pursuant to Ext.P22, P23 and P24 letters of demand till the final disposal of the appeals before the 3rd respondent. iii. To issue a writ of mandamus or other appropriate writ, order or direction to the 2nd respondent to consider the Exts.P8, P15 and P21 rectification petitions on merit and also restrain the respondents from initiating coercive proceedings against the petitioner society till the final orders are passed in Exts.P8, P15 and P21 by the 3rd respondent. iv. To grant such other reliefs which this Hon'ble Court may deem fit and proper in the circumstances of the case.”

2.

Heard Sri.C.A.Jojo, learned counsel appearing for the petitioner and Sri.Christopher Abraham, learned Standing Counsel for the Income Tax Department appearing for the respondents.

3.

Taking note of the facts and circumstances of the case, it is ordered that the rectification applications as per Exts.P-8, P-15 & P-21 will be taken up for consideration by R-3 without ..5.. much delay, and affording reasonable opportunity of being heard to the petitioner through authorised representative/counsel, if any, may pass orders thereon without much delay preferably within a period of 4 to 6 weeks from the date of production of a certified copy of this judgment. Until orders are passed on Exts.P-8, P-15 & P-21 as aforestated, further coercive steps for enforcement of the impugned orders shall be kept in abeyance by the respondents concerned. With these observations and directions, the above Writ Petition (Civil) stands finally disposed of.

ALEXANDER THOMAS, JUDGE MMG ..6..

Appendix — schedule of exhibits
APPENDIX PETITIONER'S EXHIBITS: EXHIBIT P1 A TRUE COPY OF THE ASSESSMENT ORDER DATED 29.11.2017 ISSUED BY THE FIRST RESPONDENT. EXHIBIT P2 A TRUE COPY OF THE DEMAND NOTICE DATED 29.11.2017 ISSUED BY THE FIRST RESPONDENT. EXHIBIT P3 A TRUE COPY OF THE E-FILED APPEAL FOR AY 2015-16 DATED 12.12.2017 FILED BEFORE THE 3RD RESPONDENT. EXHIBIT P4 A TRUE COPY OF THE APPELLATE ORDER ISSUED BY THE 3RD RESPONDENT DATED 10.7.2018. EXHIBIT P5 A TRUE COPY OF THE ORDER U/S 154 ISSUED BY THE 3RD RESPONDENT DATED 15.10.2019. EXHIBIT P6 A TRUE COPY OF THE ORDER U/S 154 ISSUED BY THE 3RD RESPONDENT DATED 15.10.2019. EXHIBIT P7 A TRUE COPY OF THE ORDER GIVING EFFECT ISSUED BY THE 1ST RESPONDENT DATED 15.11.2019. EXHIBIT P8 A TRUE COPY OF THE PETITION FOR RECTIFICATION OF MISTAKE BEFORE THE 3RD RESPONDENT DATED 10.12.2019. EXHIBIT P9 A TRUE COPY OF THE ASSESSMENT ORDER DATED 31.08.2015 ISSUED BY THE FIRST RESPONDENT. EXHIBIT P10 A TRUE COPY OF THE DEMAND NOTICE DATED 31.08.2015 ISSUED BY THE FIRST RESPONDENT. EXHIBIT P11 A TRUE COPY OF THE APPELLATE ORDER ISSUED BY THE 3RD RESPONDENT DATED 9.6.2016. EXHIBIT P12 A TRUE COPY OF THE OBJECTION BEFORE THE 3RD RESPONDENT DATED 9.10.2019. EXHIBIT P13 A TRUE COPY OF THE ORDER U/S 154 ISSUED BY THE 3RD RESPONDENT DATED 15.10.2019. W.P.(C) No. 601 of 2020 ..7.. EXHIBIT P14 A TRUE COPY OF THE ORDER ISSUED BY THE 1ST RESPONDENT DATED 20.11.2019. EXHIBIT P15 A TRUE COPY OF THE PETITION FOR RECTIFICATION OF MISTAKE BEFORE THE 3RD RESPONDENT DATED 10.12.2019. EXHIBIT P16 A TRUE COPY OF THE ASSESSMENT ORDER DATED 22.3.2014 ISSUED BY THE 2ND RESPONDENT. EXHIBIT P17 A TRUE COPY OF THE DEMAND NOTICE DATED 22.3.2014 ISSUED BY THE 2ND RESPONDENT. EXHIBIT P18 A TRUE COPY OF THE OBJECTION BEFORE THE 3RD RESPONDENT DATED 12.10.2019. EXHIBIT P19 A TRUE COPY OF THE ORDER U/S 154 ISSUED BY THE 3RD RESPONDENT DATED 15.10.2019. EXHIBIT P20 A TRUE COPY OF THE ORDER ISSUED BY THE 1ST RESPONDENT DATED 19.11.2019. EXHIBIT P21 A TRUE COPY OF THE PETITION FOR RECTIFICATION OF MISTAKE BEFORE THE 3RD RESPONDENT DATED 10.12.2019. EXHIBIT P22 A TRUE COPY OF THE LETTER OF DEMAND AY 2015-16 DATED 2.1.2020 ISSUED BY THE 1ST RESPONDENT. EXHIBIT P23 A TRUE COPY OF THE LETTER OF DEMAND AY 2013-14 DATED 2.1.2020 ISSUED BY THE 1ST RESPONDENT. EXHIBIT P24 A TRUE COPY OF THE LETTER OF DEMAND AY 2008-09 DATED 2.1.2020 ISSUED BY THE 1ST RESPONDENT. EXHIBIT P25 A TRUE COPY OF THE JUDGMENT OF THIS HON'BLE COURT IN WP(C) NO.33382/2019 DATED 6.12.2019.

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