THE KUTTIYERI SERVICE CO-OPERATIVE BANK LTD NO. 1266. vs. THE COMMISSIONER OF INCOME TAX (APPEALS)
What did the High Court hold?
The High Court disposed of the writ petition by directing the 1st respondent (Commissioner of Income Tax (Appeals)) to consider and pass orders on the petitioner's appeal (Ext.P2) on merits within six months from the date of receipt of the judgment. The Court clarified that until such orders are passed and communicated to the petitioner, recovery steps for the tax demand pursuant to the assessment order (Ext.P1) shall be kept in abeyance. The petitioner is directed to produce a copy of the writ petition and the judgment before the 1st respondent for further action. The specific question regarding the 20% stay condition was not directly ruled upon, but the operative direction effectively granted a stay of recovery pending the appeal's disposal.
What were the facts?
The petitioner, Kuttiyeri Service Co-operative Bank Ltd., filed its return for assessment year 2016-17 claiming deduction under Section 80P(2) of the Income Tax Act. The Assessing Authority completed the assessment at Rs. 32,16,495/-, rejecting the Section 80P(2) claim. The petitioner appealed this order (Ext.P1) and sought a stay of recovery from the Assessing Officer. The Assessing Officer forwarded this request to the Principal Commissioner of Income Tax, who, by Ext.P4 order, directed payment of 20% of the tax demand as a condition for staying recovery of the balance amount confirmed in the assessment order.
What were the issues?
1. Whether the impugned order (Ext.P4) directing payment of 20% of the tax demand as a condition for stay of recovery pending appeal is sustainable, considering the petitioner's contention that in similar cases, a complete stay has been granted based on the High Court's decision in Mavilayi Service Co-operative Bank Ltd. v. Commissioner of Income Tax, Calicut. Assessee's contention: The petitioner argued that based on the High Court's decision in Mavilayi Service Co-operative Bank Ltd. v. Commissioner of Income Tax, Calicut - [2019 (2) KHC 287 (FB)], they should be granted a complete stay of recovery of amounts demanded due to the disallowed deduction under Section 80P(2), pending the disposal of their appeal by the appellate authority. Revenue's contention: The judgment does not record any specific contentions from the revenue regarding this issue.
Which sections of the Income-tax Act were involved?
AI-generated summary — verify with the full judgment below
Cause title — parties, addresses and appearances
J U D G M E N T The petitioner, a Co-operative society registered under the Kerala Co-operative Societies Act, had furnished returns for the assessment year 2016-17, and claimed the benefit under Section 80P(2) of the Income Tax Act. The assessment was completed by the Assessing Authority finding that the total income for the assessment year was Rs.32,16,495/-. The claim for deduction under Section 80P(2) was rejected by stating that the petitioner was not entitled to the said benefit. Against Ext.P1 order of assessment, the petitioner preferred an appeal before the 1st respondent, and with a view to obtaining a stay of recovery, pending disposal of the appeal, the petitioner had approached the 3rd respondent under Section 220(6) of the Income Tax Act. The said application was forwarded by the 3rd respondent to the 2nd respondent, who passed Ext.P4 order directing the payment of 20% of the tax demand as a condition for stay of recovery of the balance amounts confirmed against the petitioner by Ext.P1 order.
In the writ petition, Ext.P4 order is impugned inter alia on W.P.(C).No.20331/2019 : 3 : the contention that, in similar matters, taking note of the decision of this Court in Mavilayi Service Co-operative Bank Ltd. v. Commissioner of Income Tax, Calicut - [2019 (2) KHC 287 (FB)], the assessee has been granted a complete stay of recovery of the amounts demanded pursuant to the disallowed deduction under Section 80(P)(2) pending disposal of the appeal by the Appellate authority. Taking cue from the said orders passed by this Court, I dispose the writ petition by directing the 1st respondent to consider and pass orders on Ext.P2 appeal preferred by the petitioner, on merits, 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 1st respondent, as directed, and the order communicated to the petitioner, recovery steps for recovery of tax, pursuant to 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 1st respondent, for further action. A.K.JAYASANKARAN NAMBIAR JUDGE prp/26/9/19
W.P.(C).No.20331/2019 : 4 :
Appendix — schedule of exhibits
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