SOORANAD GRAMODHARANA SERVICE CO- OPERATIVE BANK LTD, NO 3947 vs. THE CENTRAL BOARD OF DIRECT TAXES

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE DINESH KUMAR SINGH TUESDAY, THE 5TH DAY OF SEPTEMBER 2023 / 14TH BHADRA, 1945 WP(C) NO. 29098 OF 2023 PETITIONER: SOORANAD GRAMODHARANA SERVICE CO- OPERATIVE BANK LTD, NO 3947 AGED 37 YEARS SOORANAD NORTH, ANAYADI P.O, KOLLAM REPRESENTED BY ITS SECETARY DIVYA D.L, PIN - 690561 BY ADVS. K.P.PRADEEP HAREESH M.R. SANAND RAMAKRISHNAN T.T.BIJU T.THASMI M.J.ANOOPA RESPONDENTS: 1 THE CENTRAL BOARD OF DIRECT TAXES DEPARTMENT OF REVENUE, MINISTRY OF FINANCE GOVERNMENT OF INDIA, NORTH BLOCK NEW DELHI- REPRESENTED BY ITS CHAIRMAN, PIN - 110001 2 ASSESSMENT UNIT INCOME TAX DEPARTMENT NATIONAL FACELESS ASSESSMENT CENTRE, DELHI ROOM NO. 401, 2ND FLOOR, E-RAMP, JAWAHARLAL NEHRU STADIUM, DELHI, PIN - 110003 3 COMMISSIONER OF INCOME TAX (APPEALS) NATIONAL FACELESS APPEAL CENTRE (NFAC), DELHI, ROOM NO. 401, 2ND FLOOR, E-RAMP, JAWAHARLAL NEHRU STADIUM, DELHI, PIN - 110003 4 INCOME TAX OFFICER, KOLLAM CIRCLE AAYAKKAR BHAVAN, INCOME TAX OFFICE, NEAR KARBALA JUNCTION, RAILWAY STATION ROAD, KOLLAM- KERALA, 691001, PIN - 691001 ADV. CHRISTOPHER ABRAHAM - SC THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 05.09.2023, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

WP(C) No.29098 of 2023 2 JUDGMENT Dated this the 5th day of September, 2023 1. Heard Sri.K.P Pradeep, learned counsel for the petitioner as well as Sri.Christopher Abraham, learned Standing Counsel appearing for the respondents. 2. The present writ petition has been filed impugning Ext.P3 demand notice for recovery of the assessed tax as well as 20% of the demand for conditional stay in the appeal. 3. The petitioner is a co-operative society classified as Primary Agricultural Credit Society. Learned counsel for the petitioner submits that the petitioner society is entitled for a deduction of the income under Section 80(P) (2) (d) of the Income Tax Act, 1961. For the assessment year 2020-21, the petitioner had filed return after claiming deduction under Section 80P of the Income Tax Act. On the reason that the petitioner being a co-operative

WP(C) No.29098 of 2023 3 society, their income is exempted under the provisions of Section 80P. However, the assessing authority have rejected the claim of the petitioner and passed the assessment order Ext.P1. Learned counsel further submits that the petitioner’s case is covered by the judgment of the Hon’ble Supreme Court in Mavilayi Service Co-operative Bank’s case, [2021 (1) KHC 303]. He further submitted that even the interest which has been earned by the petitioner is from the District Co-operative Bank, which is run by the Co-operative Society. Learned counsel for the petitioner submits that the demand of 20% assessed tax for conditional stay is highly prejudicial in the interest of justice. The case of the petitioner is squarely covered by the judgment of the Hon’ble Supreme Court as mentioned above. He therefore submits that the appellate authority ie., the 3rd respondent be directed to decide the appeal without insisting upon the payment of 20% of the tax as assessed by Ext.P1.

WP(C) No.29098 of 2023 4 4. However, learned counsel for the respondents submits that for staying the recovery, the petitioners have to deposit 20% of the assessed tax and without making payment of the 20% of the demand, the stay cannot be granted in appeal. He further submits that so far as legal contentions of the learned counsel for the petitioner is concerned, this Court may not record any finding inasmuch as that would prejudice the case of the revenue before the appellate authority. 5. Considering the aforesaid submissions made above and also taking note of the fact that this Court has stayed the recovery of tax for the assessment year 2020-21 pending appeal, I find that this writ petition to be disposed of with a direction to the appellate authority to decide the appeal Ext.P2, within a period of three months without insisting upon pre-deposit of 20% of the assessed tax. The petitioner should co-operate in deciding the appeal

WP(C) No.29098 of 2023 5 expeditiously. Till the appeal is decided, the demand notice, Ext.P3 shall not be enforced. Sd/- DINESH KUMAR SINGH JUDGE AP

WP(C) No.29098 of 2023 6 APPENDIX OF WP(C) 29098/2023 PETITIONER EXHIBITS Exhibit P1 TRUE COPY OF THE ASSESSMENT ORDER NO ITBA/AST/S/143(3)/2022-23/1044988856(1) DATED 25-08-2022 ISSUED FOR THE YEAR 2020- 21 BY THE 2NDRESPONDENT TO THE PETITIONER Exhibit P2 TRUE COPY OF THE APPEAL DATED 16-03-2023 FILED FOR THE YEAR 2020-21 BEFORE THE 3RDRESPONDENT BY THE PETITIONER Exhibit P3 TRUE COPY OF THE DEMAND NOTICE NO. ITBA/AST/S/156/2022- 23/1044988869(1) DATED 25-08-2022 ISSUED FOR THE YEAR 2020-21 BY THE 2ND RESPONDENT TO THE PETITIONER Exhibit P4 TRUE COPY OF THE LETTER NO ITBA/COM/F/17/2023-24/1055270336(1) DATED 21-08-2023 ISSUED BY THE 4TH RESPONDENT TO THE PETITIONER Exhibit P5 TRUE COPY OF THE JUDGMENT DATED 24-07-2023 IN WPC NO 21407 OF 2023 Exhibit P6 TRUE COPY OF THE JUDGMENT DATED 23-02-2022 IN WPC NO 6109 OF 2022