KANIYAMBETTA SERVICE CO-OPERATIVE BANK LIMITED vs. THE INCOME TAX OFFICER
What did the High Court hold?
The High Court acknowledged that, under normal circumstances, the orders of the Joint Commissioner of Income Tax would not be considered unreasonable or arbitrary and thus not liable for interference under Article 226. However, taking note of the submissions that the statutory appeals against the penalty orders had been heard by the appellate authority and orders were pending, and considering the interim stay granted by the Court in March 2019, the Court decided to dispose of the writ petitions. The Commissioner of Income Tax (Appeals) was directed to expeditiously consider and pass orders on the pending appeals within three months of receiving a copy of the judgment. The stay granted by the High Court against the recovery of penalty amounts was continued pending the disposal of the appeals and communication of the appellate orders.
What were the facts?
The petitioners are Primary Agricultural Credit Societies, aggrieved by penalty orders passed under Sections 271D and 271E of the Income Tax Act for the assessment year 2015-16. The penalties were imposed for non-compliance with Sections 269SS by accepting cash deposits exceeding Rs. 20,000 from members. The penalty amounts ranged from approximately Rs. 36 Crores to Rs. 218 Crores. The societies appealed these penalty orders and also sought a stay of recovery from the Joint Commissioner of Income Tax under Section 226. The Joint Commissioner directed payment of 10% of the confirmed penalty amounts in two equal monthly installments as a condition for stay. The societies, citing financial hardship, filed these writ petitions challenging the Joint Commissioner's orders.
What were the issues?
1. Whether the orders of the Joint Commissioner of Income Tax directing the petitioners to pay 10% of the penalty amounts as a condition for stay of recovery are unreasonable or arbitrary, warranting interference under Article 226 of the Constitution of India. Assessee's contentions: The learned counsel for the petitioners argued that the societies are facing severe financial difficulties and are unable to pay even the reduced amount directed by the Joint Commissioner. They have approached the High Court under Article 226 due to this inability. Revenue's contentions: The judgment does not record specific contentions from the revenue regarding the reasonableness of the Joint Commissioner's order. However, the revenue was represented by the learned Standing Counsel.
Which sections of the Income-tax Act were involved?
Section 271D,Section 271E,Section 269SS,Section 226
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Heard together (7 matters)
Read from the judgment's own cause title. This page is filed under one of them.
Cause title — parties, addresses and appearances
JUDGMENT [ WP(C).6907/2019, WP(C).12007/2019, WP(C).6970/2019, WP(C).7259/2019, WP(C).7931/2019, WP(C).7959/2019, WP(C).7963/2019 ] Dated this the 11th day of October 2019 In all these writ petitions the petitioners, who are Primary Agricultural Credit Societies, are aggrieved by the penalty orders passed under the Income Tax Act against them during the assessment year 2015-16, in terms of Sections 271D and 271E of the Income Tax Act. The facts stated in the writ petitions would reveal that the petitioner societies had not complied with the requirements of Sections 269 SS and had accepted deposits from their members in excess of Rs.20,000/-, in cash. A penalty for the said action was imposed under Sections 271D and 271E of the Income Tax Act. The penalty amounts imposed on the petitioners range from approximately Rs.36 Crores to Rs.218 Crores.
It would appear that, against the penalty orders, the petitioners preferred appeals before the First Appellate Authority, and simultaneously moved the Joint Commissioner of Income tax, through petitions under Section 226 of the Income Tax Act for considering them as assessees not in default pending the disposal of the appeals by the appellate authority. The Joint Commissioner, after considering the case of the petitioners, directed them to pay 10% of the penalty amounts confirmed against them by the assessing authority in two equal monthly instalments, as a condition for stay of the recovery of the balance amounts confirmed against them. It is citing their poor financial condition, and inability to pay even the reduced amount directed by the 2nd respondent - the Joint Commissioner of Income Tax, that they have approached this Court through the present writ petitions, impugning the orders of the Joint Commissioner of Income Tax.
I have heard Sri.,Ashok Kumar and Sri.P.R.Venkatesh, the learned counsel for the petitioners and also the learned Standing Counsel for the respondents.
On a consideration of the facts and circumstances of the case and the submissions made across the Bar, while under normal circumstances, the orders of the Joint Commissioner of Income Tax impugned in these writ petitions cannot be seen as unreasonable or arbitrary and hence liable for interference by this Court in these proceedings under Article 226 of the Constitution of India, I take note of the submissions of the learned counsel for the petitioners, that the appeals preferred by them against the penalty orders have since been heard by the appellate authority, and orders are not passed in the appeals only because of the pendency of these writ petitions. I also note that when these writ petitions were admitted by this Court, this Court had by an interim order passed in March 2019, stayed the recovery of the penalty amounts from the petitioners during the pendency of the writ petitions. The writ petitions have been pending before this Court for over six months and a stay has also been operating in favour of the petitioners, in the meanwhile. Under the said circumstances, and taking note of the fact that the statutory appeals can now be disposed by the First Appellate Authority, I dispose these writ petitions by directing the Commissioner of Income Tax (Appeals) before whom the appeals preferred by the petitioners, against the orders of penalty passed against them under the Income Tax Act, are pending, to consider and pass orders on the same, expeditiously after hearing the petitioners, at any rate, within three months from the date of receipt of a copy of this judgment. It is made clear that pending disposal of the appeals by the Commissioner of Income Tax (Appeals), and communication of the appellate orders to the petitioners, the stay granted by this Court against recovery of penalty amounts from the petitioners shall continue to operate. A.K.JAYASANKARAN NAMBIAR
JUDGE
Appendix — schedule of exhibits
More judgments on Section 271D
- Sujatha Vaddanapu, Nalgonda vs ITO, Ward-1, NalgondaITA 2048/HYD/2026[2020-21]Status: Disposed16 Oct 2026AY 2020-21
- Inder Lal Ramrakhyani, Dhamtari vs ITO, DhamtariITA 694/RPR/2026[2014-15]Status: Disposed14 Oct 2026AY 2014-15
- Assistant Commissioner of Income Tax… vs Harshit Singhania Buildcon, RaipurITA 560/RPR/2026[2022-23]Status: Disposed14 Oct 2026AY 2022-23
- Shree Jalaram Finance, Borsad vs Income Tax Officer, Ward 1(3)(4), PetladITA 1785/AHD/2026[2000-01]Status: Disposed13 Oct 2026AY 2000-01
- Veera Mani Kumari Vattikooti, Hyderabad vs ITO, Ward -11(1), HyderabadITA 1218/HYD/2026[2016-17]Status: Disposed9 Oct 2026AY 2016-17
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