ARANATTUKARA ORIENTAL SERVICE CO-OPERATIVE BANK LTD. vs. THE INCOME TAX OFFICER
What did the High Court hold?
The High Court quashed the order of the Commissioner of Income Tax (Appeals) (Ext.P5) that imposed a 20% payment as a condition for stay. The Court directed the Commissioner of Income Tax (Appeals) to consider and pass orders on the petitioner's appeal (Ext.P2) within six months from the date of receiving the judgment, after hearing the petitioner. The Court clarified that until such orders are passed and communicated, recovery steps for the amounts confirmed by the assessment order (Ext.P1) would be kept in abeyance. The principle derived is that in cases involving the deduction under Section 80P(2) of the Income Tax Act, where there is a strong precedent in favour of the assessee and a clear direction from a higher bench, the appellate authority should grant a complete stay or at least reconsider the condition for partial stay in light of such pronouncements. The Court did not decide the merits of the appeal itself, but rather the procedural aspect of the stay order.
What were the facts?
The petitioner, Aranattukara Service Co-operative Bank Ltd., is challenging an assessment order (Ext.P1) for assessment year 2016-2017. The petitioner filed an appeal (Ext.P2) and a stay petition (Ext.P3) before the Commissioner of Income Tax (Appeals) (2nd respondent). The 2nd respondent, by order Ext.P5, granted a stay of 80% of the demand subject to payment of 20% of the disputed amount. The petitioner argues that the issue pertains to deduction under Section 80P(2) of the Income Tax Act, which has been decided in favour of assessees by this Court. The petitioner also brought to the court's notice a Division Bench direction for a complete stay in similar cases pending before the First Appellate Authority.
What were the issues?
1. Whether the condition imposed by the Commissioner of Income Tax (Appeals) for payment of 20% of the demand as a pre-condition for stay of the balance 80% is justified, considering the nature of the issue relating to deduction under Section 80P(2) of the Income Tax Act and the pronouncements of this Court. Assessee's Contentions: The assessee argues that the issue concerns deduction under Section 80P(2) of the Income Tax Act. They rely on the decision of this Court in Mavilayi Service Co-operative Bank Ltd. v. Commissioner of Income Tax, Calicut [2019 (2) KHC 287 [FB]], which they claim resolved the issue in favour of the assessee. Furthermore, the assessee points to a Division Bench direction in a writ appeal mandating a complete stay in all cases where the tax demand arises from the disallowance of deduction under Section 80P(2) and appeals are pending finalization before the First Appellate Authority. Revenue's Contentions: The judgment does not record specific contentions from the revenue.
Which sections of the Income-tax Act were involved?
AI-generated summary — verify with the full judgment below
Cause title — parties, addresses and appearances
JUDGMENT Against Ext.P1 assessment order for the assessment year 2016- 2017 under the Income Tax Act, the petitioner has preferred Ext.P2 appeal together with Ext.P3 stay petition before the 2nd respondent. In the stay petition, the 2nd respondent, by Ext.P5 order, directed a payment of 20% as a condition for grant of stay of the balance 80% that was demanded from the petitioner by Ext.P1 assessment order. It is the submission of the learned counsel for the petitioner that the issue relates to the deduction under Section 80P(2) of the Income Tax Act, and this Court has, in the decision reported in Mavilayi Service Co-operative Bank Ltd. v. Commissioner of Income Tax, Calicut [2019 (2) KHC 287 [FB]] resolved the issue in favour of the assessee.
It is also brought to my notice that another Division Bench of this Court in a writ appeal has directed the First Appellate Authority to grant a complete stay in all cases where the tax demand arises consequent to the disallowance of the deduction under Section 80P(2) and where appeals are pending finalization before the First Appellate Authority.
WP(C).No.25831 OF 2019 -3-
I have heard the learned counsel appearing for the petitioner and also the learned Standing Counsel appearing for the Income Tax Department.
On a consideration of the facts and circumstances of the case as also the submissions made across the Bar, I quash Ext.P5 order of the 2nd respondent, and direct the 2nd respondent to consider and pass orders on Ext.P2 appeal within an outer time limit of six months from the date of receipt of a copy of this judgment, after hearing the petitioner. It is made clear that till such time as orders are passed by the 2nd respondent as directed, and the order communicated to the petitioner, recovery steps for recovery of amounts confirmed against the petitioner by Ext.P1 assessment order shall be kept in abeyance. The petitioner shall produce a copy of the writ petition together with a copy of this judgment, before the 2nd respondent, for further action. The writ petition is disposed as above. A.K.JAYASANKARAN NAMBIAR JUDGE SJ
WP(C).No.25831 OF 2019 -4-
Appendix — schedule of exhibits
More judgments on Section 80P(2)
- The Mrutyunjaya Large Size Co Operative… vs Income Tax Officer, Ward-1, PalakolITA 839/VIZ/2025[2022-23]Status: Disposed24 Jul 2026AY 2022-23
- Surathkal Vyavasaya Seva Sahakari Bank… vs Income Tax Officer, Ward-1(1), MangaloreITA 2299/BANG/2025[2020-21]Status: Disposed11 May 2026AY 2020-21
- Surathkal Vyavasaya Seva Sahakari Sangha… vs Income Tax Officer, Ward-1(1), MangaloreITA 2298/BANG/2025[2018-19]Status: Disposed11 May 2026AY 2018-19
- Surathkal Vyavasaya Seva Sahakari Sangha… vs Income Tax Officer, Ward-1(1), MangaloreITA 2297/BANG/2025[2017-18]Status: Disposed11 May 2026AY 2017-18
- Mumbai Vidi Tambakhu Vyapari Sahakari… vs Income Tax Officer, Ward 22(2)(2), Piramal…ITA 1801/MUM/2026[2014-15]Status: Disposed7 May 2026AY 2014-15
Recent GST High Court judgments
Search GST case law →- Gagan Bihari Rout@Gagan Rout vs. State Of OdishaOrissa · 28 Oct 2026
- Biswanath Rana vs. The Commissioner, CT And GST, Odisha, CuttackOrissa · 28 Oct 2026
- Sushama Mishra vs. The Commissioner Of CT And GST, Odisha, KatakOrissa · 28 Oct 2026
- Saudamini Samantray vs. Assistant Commissioner Of State Tax, CT And GST, Bhubaneswar IiOrissa · 28 Oct 2026
- M/S. Keshav Rice Mill, Ganjam vs. Chief Commissioner, CT And GST, Odisha, KatakaOrissa · 28 Oct 2026
