THE KARANNUR SERVICE CO-OPERATIVE BANK LIMITED vs. INCOME TAX OFFICER

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WP(C)/3620/2019HC KeralaKLHC01009486201907 February 2019Author: HONOURABLE MR. JUSTICE A.MUHAMED MUSTAQUE4 pages
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What did the High Court hold?

The High Court acknowledged the petitioner's submission that the payment of such a huge amount would lead to the closure of the bank's business. However, it also noted that an absolute stay without any condition is not permissible. Taking into account the overall facts and circumstances, the Court modified the impugned order. The condition for stay was substituted with a payment of Rs. 2 Crores, to be paid in two installments: the first on February 25, 2019, and the second on March 25, 2019. Additionally, the Court directed that the appeals before the Commissioner of Income Tax (Appeals) should be disposed of within an outer limit of four months. The writ petition was disposed of with these directions.

What were the facts?

The petitioner, The Karanur Service Co-operative Bank Limited, filed a writ petition before the High Court of Kerala challenging an order passed by the Commissioner of Income Tax (Appeals) (third respondent). The order directed the petitioner to deposit Rs. 12 Crores as a condition for stay in two appeals. The petitioner had already paid Rs. 50 lakhs. The petitioner argued that paying the remaining amount would halt its entire business operations. The respondents, represented by the Standing Counsel, opposed the petition, contending that the discretion exercised by the appellate authority should not be interfered with by the High Court.

What were the issues?

1. Whether the High Court should interfere with the discretion exercised by the Commissioner of Income Tax (Appeals) in imposing a condition of deposit for stay, considering the financial implications on the petitioner's business? (Question of law and fact, concerning the principles of judicial review and the powers of appellate authorities under the Income Tax Act). Assessee's Contention: The petitioner argued that the imposed deposit of Rs. 12 Crores, in addition to the Rs. 50 lakhs already paid, would cripple its business operations, as it is a co-operative bank with limited jurisdiction. Revenue's Contention: The revenue argued that the discretion exercised by the third respondent (Commissioner of Income Tax Appeals) in imposing the condition for stay should not be interfered with by the High Court.

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 A.MUHAMED MUSTAQUE THURSDAY, THE 07TH DAY OF FEBRUARY 2019 / 18TH MAGHA, 1940 WP(C).No.3620 of 2019 PETITIONER/S: THE KARANNUR SERVICE CO-OPERATIVE BANK LIMITED, ELATHUR P.O, KOZHIKODE-673 303 BY MERCY M.C., SECRETARY. BY ADVS. SRI.P.RAGHUNATH SRI.PREMJIT NAGENDRAN RESPONDENT/S: 1 INCOME TAX OFFICER, WARD 1(2): AAYAKAR BHAVAN, KOZHIKODE-673 001. 2 JOINT COMMISSIONER OF INCOME TAX: RANGE 1, AAYAKAR BHAVAN, KOZHIKODE-673 001. 3 COMMISSIONER OF INCOME TAX (APPEALS), AAYAKAR BHAVAN, KOZHIKODE:673 001. BY SRI.CHRISTOPHER ABRAHAM, SC, IT THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 07.02.2019, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C).No.3620/2019 2

JUDGMENT The petitioner is a Co-operative Bank. They preferred appeals before the third respondent. The petitioner was directed to deposit Rs.12 Crores as a condition for stay in two appeals. The petitioner had already paid Rs.50 lakhs. The petitioner submits that if that amount is paid, the entire business of the Bank would come to a halt.

2.

The learned Standing Counsel appearing for the respondents opposed the prayers in the writ petition and would submit that the discretion exercised by the third respondent shall not be interfered by this Court.

3.

I have gone through the entire materials. The petitioner’s Bank is a Co- operative Bank having its operation within the limited jurisdiction in Calicut. I also agree with the learned senior counsel appearing for the petitioner that such huge amount is liable to be paid, the petitioner’s Bank will have to close the business. However, at the same time, there cannot be an absolute stay without any WP(C).No.3620/2019 3 condition. Taking note of the overall facts and circumstances, I am of the view that the impugned order has to be modified by substituting payment of sum of Rs.2 Crores in two instalments starting from 25.2.2019 and followed by 25.3.2019 The appeals shall also be disposed within an outer limit of four months. The writ petition is disposed of as above. A.MUHAMED MUSTAQUE JUDGE ln

WP(C).No.3620/2019 4

Appendix — schedule of exhibits
APPENDIX PETITIONER'S/S EXHIBITS: EXHIBIT P1 PHOTOCOPY OF ASSESSMENT ORDER DT. 13.12.2017 FOR 2015-16. EXHIBIT P2 PHOTOCOPY OF PENALTY ORDER DT. 26.07.2018 U/S 271D R/W SEC. 269SS FOR 2015-16. EXHIBIT P3 PHOTOCOPY OF PENALTY ORDER DT. 26.7.2018 U/S 271E, R/W SEC . 269T FOR 2015-16. EXHIBIT P4 PHOTOCOPY OF APPEAL FILED AGAINST EXT. P2. EXHIBIT P5 PHOTOCOPY OF APPEAL FILED AGAINST EXT. P3. EXHIBIT P6 PHOTOCOPY OF STAY PETITION IN EXT. P4 APPEAL. EXHIBIT P7 PHOTOCOPY OF STAY PETITION IN EXT. P5 APPEAL. EXHIBIT P8 PHOTOCOPY OF ORDER ON EXT. P6 STAY PETITION. EXHIBIT P9 PHOTOCOPY OF ORDER ON EXT. P7 STAY PETITION. EXHIBIT P10 PHOTOCOPY OF CHALAN DT. 30.01.2019 FOR RS. 10 LAKHS. EXHIBIT P11 PHOTOCOPY OF CHALAN DT. 30.01.2019 FOR RS. 20 LAKHS EXHIBIT P12 PHOTOCOPY OF CHALAN DT. 30.12.2019 FOR RS. 20 LAKHS. RESPONDENTS EXHIBITS:NIL. //TRUE COPY// P.A.TO JUDGE

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