CHENNITHALA THRIPERUMTHURA SERVICE CO-OPERATIVE BANK LTD. vs. UNION OF INDIA

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WP(C)/35593/2023HC KeralaKLHC01080382202331 October 2023Bench: HONOURABLE MR. JUSTICE D. K. SINGH7 pages
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What did the High Court hold?

The High Court of Kerala disposed of the writ petition with specific directions. The Court directed the petitioner to deposit 10% of the assessed tax within one month. Subject to this payment, further proceedings pursuant to the demand notice (Ext.P9) were stayed until a decision on the petitioner's stay application is taken by the 4th Respondent. The 4th Respondent was directed to decide the stay application expeditiously, preferably within two months, in accordance with the law. Any further deposit in pursuance of Ext.P9 would be subject to the outcome of the order on the stay application. The Court did not explicitly quash the recovery proceedings but stayed them pending the decision on the stay application. The principle established is that while a deposit may be a precondition for stay, the appellate authority must still decide the stay application expeditiously, and interim relief can be granted upon a partial deposit.

What were the facts?

The petitioner, Chennithala Thrip<bos>erumthura Service Co-operative Bank Ltd., filed an appeal and a stay application before the Commissioner of Income Tax (Appeals) - National Faceless Appeal Centre (4th Respondent). While the stay application was pending, the petitioner received a demand notice (Ext.P9) for recovery of arrears for the assessment year 2020-21. The petitioner had not remitted 20% of the disputed tax amount as a precondition for the stay. The petitioner approached the High Court of Kerala seeking a declaration that the 4th Respondent is duty-bound to decide the appeal and stay petition without insisting on the 20% deposit, and to quash the recovery proceedings, and to direct the 4th Respondent to decide the stay application on merits without insisting on the deposit. The petitioner also sought a stay on recovery measures until the appeal is decided.

What were the issues?

1. Whether the Commissioner of Income Tax (Appeals) - National Faceless Appeal Centre is duty-bound to decide an appeal and stay petition without insisting upon the deposit of 20% of the disputed amount as a precondition to grant of stay, turning on the interpretation of relevant provisions of the Income Tax Act, 1961 and procedural rules. 2. Whether the recovery proceedings initiated via Ext.P9 for the assessment year 2020-21 are liable to be quashed, considering the pendency of the appeal and stay application before the appellate authority. Assessee's Contentions: The petitioner argued that the 4th Respondent should decide the stay application on its merits without insisting on the 20% deposit. They contended that recovery proceedings were initiated prematurely while the stay application was pending. The petitioner sought a direction to stay recovery measures until the appeal is decided. Revenue's Contentions: The judgment does not record any specific contentions from the revenue.

Which sections of the Income-tax Act were involved?

Section 220,Section 249,Section 254

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF KERALA AT ERNAKULAM

PRESENT

THE HONOURABLE MR. JUSTICE DINESH KUMAR SINGH

TUESDAY, THE 31ST DAY OF OCTOBER 2023 / 9TH KARTHIKA, 1945

WP(C) NO. 35593 OF 2023

PETITIONER/S:

CHENNITHALA THRIPERUMTHURA SERVICE CO-OPERATIVE BANK LTD. REPRESENTED BY ITS SECRETARY, CHENNITHALA THRIPERUMTHURA SCB LTD. 3553, CHENNITHALA P.O., MAVELIKKARA, ALAPPUZHA, KERALA, PIN - 690105

BY ADVS. GEORGE VARGHESE(PERUMPALLIKUTTIYIL) NIMESH THOMAS MANU SRINATH

RESPONDENT/S:

1 UNION OF INDIA REPRESENTED BY ITS SECRETARY IN THE MINISTRY OF FINANCE, GOVERNMENT OF INDIA, NORTH BLOCK, CENTRAL SECRETARIAT, NEW DELHI, PIN - 110001 2 THE CENTRAL BOARD OF DIRECT TAXES REPRESENTED BY ITS CHAIRMAN, DEPARTMENT OF REVENUE, MINISTRY OF FINANCE, GOVERNMENT OF INDIA, NORTH BLOCK, CENTRAL SECRETARIAT, NEW DELHI, PIN - 110001 3 PRINCIPAL CHIEF COMMISSIONER OF INCOME TAX KERALA REGION MINISTRY OF FINANCE, GOVERNMENT OF INDIA, CENTRAL REVENUE BUILDINGS, I. S. PRESS ROAD, KOCHI, PIN - 682018 4 COMMISSIONER OF INCOME TAX (APPEALS) NATIONAL FACELESS APPEAL CENTRE, NORTH BLOCK, DELHI, PIN - 110001 5 ASSESSING OFFICER ASSESSMENT UNIT, INCOME TAX DEPARTMENT, ALAPPUZHA, GENERAL HOSPITAL JUNCTION, KODIVEEDU, ALAPPUZHA, KERALA, PIN - 688011

WPC No.35593/2023

6 INCOME TAX OFFICER INCOME TAX OFFICE, OFFICE OF ADDL. CIT, THIRUVALLA RANGE, VAISHNAVAM ARCADE, T K ROAD, THIRUVALLA, KERALA, PIN - 689101

THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 31.10.2023, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

WPC No.35593/2023

J U D G M E N T

The present writ petition under Article 226 of the Constitution of India has been filed with the following prayers: “i. declare that the 4th Respondent is duty bound to decide the Ext.P8 Appeal and Stay Petition without insisting upon the deposit of 20% of the disputed amount as precondition to grant of stay; ii. issue a writ in the nature of certiorari or any appropriate writ order or direction, calling for the records leading to Ext.P9 to the extent it seeks to recover the arrears for the assessment year 2020-21 and quash the same; iii. issue a writ in the nature of mandamus or any appropriate writ order or direction, directing the 4th Respondent to take up the Ext.P8 Appeal and Stay petition and to decide the same on its merits, without insisting upon the deposit of 20% of the disputed amount as precondition to grant of stay; iv. issue a writ in the nature of mandamus or any appropriate writ order or direction, directing the Respondents not to proceed with the recovery measures over Ext.P7 Order until the Ext.P8 Appeal is decided by the

WPC No.35593/2023

Appellate Authority; v. the petitioner also prays that this Hon’ble Court may be pleased to dispense with the translation of the documents produced in the vernacular language. vi. issue such other orders and directions as deemed fit to secure the ends of justice.”

2.

The petitioner has filed Ext.P8 appeal before the 4th respondent, along with the application for stay. During the pendency of the appeal and stay application, a demand notice (Ext.P9) has been issued.

3.

Learned Counsel for the petitioner submits that, on the one hand, the petitioner’s application for stay has not been considered, and on the other hand, the petitioner is facing recovery proceedings in Ext.P9 dated 14.09.2023. Admittedly, the petitioner has not remitted the 20% of the tax assessed.

4.

Considering the fact that the petitioner's application for stay is pending consideration before the 4th respondent, the petitioner is directed to deposit 10% of the

WPC No.35593/2023

assessed tax within a month. 4.1 Subject to making payment of 10% of the assessed tax, further proceedings in pursuance of Ext.P9 shall remain stayed till a decision on the application of the petitioner for stay is taken.

4.2 The 4th respondent is directed to take a decision on the stay application of the petitioner expeditiously, preferably within a period of two months in accordance with the law.

4.3 Further deposit in pursuance of Ext.P9 shall be subject to the outcome of the order on the application for stay.

With the aforesaid liberty and direction, the present writ petition stands disposed of. Sd/- DINESH KUMAR SINGH JUDGE jjj

WPC No.35593/2023

APPENDIX OF WP(C) 35593/2023

PETITIONER EXHIBITS

Exhibit P1 A TRUE COPY OF CERTIFICATE OF REGISTRATION NO. 3553 DATED 10.04.1956 ISSUED BY THE REGISTRAR OF CO-OPERATIVE SOCIETIES WITH ENGLISH TRANSLATION Exhibit P2 TRUE COPY OF THE ASSESSMENT ORDER DATED 21.09.2022 ISSUED BY THE LEARNED ASSESSING OFFICER - 5TH RESPONDENT Exhibit P3 TRUE COPY OF THE NOTICE OF DEMAND UNDER SECTION 156 OF THE INCOME TAX ACT, 1961 ISSUED BY THE LEARNED ASSESSING OFFICER - 5TH RESPONDENT TO THE PETITIONER DATED 01.08.2023 Exhibit P4 TRUE COPY OF THE APPEAL DATED 21.10.2022 PREFERRED BY THE PETITIONER BEFORE 4TH RESPONDENT ALONG WITH THE COPY OF THE STAY PETITION Exhibit P5 TRUE COPY OF THE JUDGMENT DATED 15.12.2022 IN WP(C) NO. 40690 OF 2022 PASSED BY THE HON'BLE HIGH COURT Exhibit P5A TRUE COPY OF THE ORDER DATED 10.03.2023 ISSUED BY THE 4TH RESPONDENT Exhibit P6 TRUE COPY OF THE LETTER DATED 17.07.2023 ISSUED BY THE PETITIONER TO THE 5TH RESPONDENT

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Exhibit P7 TRUE COPY OF THE ORDER DATED 01.08.2023 ISSUED BY THE 5TH RESPONDENT Exhibit P7A TRUE COPY OF THE COMPUTATION SHEET Exhibit P7B TRUE COPY OF THE DEMAND NOTICE DATED 01.08.2023 ISSUED BY THE 5TH RESPONDENT Exhibit P8 TRUE COPY OF THE APPEAL DATED 07.09.2023 PREFERRED BY THE PETITIONER BEFORE 4TH RESPONDENT ALONG WITH THE COPY OF THE STAY PETITION Exhibit P9 TRUE COPY OF THE NOTICE DATED 14.09.2023 ISSUED BY THE 6TH RESPONDENT ITO TO THE PETITIONER Exhibit P10 TRUE COPY OF THE JUDGMENT DATED 19.07.2019 IN W.A. NO.1639/2019 & CONNECTED MATTERS PASSED BY THE DIVISION BENCH OF THE HON'BLE HIGH COURT

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