THE MANKARA SERVICE CO-OPERATIVE BANK LTD. vs. THE INCOME TAX OFFICER

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WP(C)/9163/2020HC KeralaKLHC01023476202023 March 2020Bench: HONOURABLE MR.JUSTICE K.VINOD CHANDRAN7 pages
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What did the High Court hold?

The High Court of Kerala, in its writ jurisdiction, decided to grant a stay on the recovery proceedings. The Court noted that the appeals concerning the coverage of the petitioner under Section 80P of the Income Tax Act, 1961, were pending before the Income Tax Appellate Tribunal (ITAT). The Court specifically referred to the Full Bench decision in Mavilayil Service Co-Operative Bank Limited v. Commissioner of Income Tax, Calicut [2019 (2) KHC 287 (FB)] as the basis for adjudication on the Section 80P issue. Given that the appeals and stay petitions were pending before the ITAT, the Court was of the opinion that recovery should be stayed until the appeals are disposed of. The writ petitions were disposed of with this direction, explicitly stating that no observations were made on the merits of the matter.

What were the facts?

The petitioner, The Mankara Service Co-Operative Bank Ltd., filed three writ petitions challenging recovery proceedings initiated by the Income Tax Officer. The assessment years in dispute are 2016-17, 2010-11, and 2015-16. The core of the dispute revolves around the applicability of Section 80P of the Income Tax Act, 1961, concerning the petitioner's eligibility for deductions. The petitioner had filed second appeals before the Income Tax Appellate Tribunal (ITAT) along with stay petitions, which were pending. The High Court was considering these writ petitions against the recovery actions while the appeals were still before the ITAT.

What were the issues?

1. Whether the recovery proceedings initiated by the Income Tax Officer are valid while second appeals and stay petitions are pending before the Income Tax Appellate Tribunal, concerning the assessment years 2016-17, 2010-11, and 2015-16? (Question of law and fact, concerning the procedural fairness and the powers of recovery under the Income Tax Act). Assessee's Contention: The assessee argued that recovery should be stayed as their appeals and stay petitions were pending before the ITAT. They relied on the principle that recovery should not be pursued while appellate remedies are available and under consideration. Revenue's Contention: The judgment does not explicitly record any specific arguments made by the revenue regarding the recovery proceedings or the merits of the Section 80P issue. The revenue was represented by their Standing Counsel.

Which sections of the Income-tax Act were involved?

Section 80P

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Heard together (3 matters)

WP(C).No.9163 OF 2020
WP(C).9178/2020
WP(C).9179/2020

Read from the judgment's own cause title. This page is filed under one of them.

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN MONDAY, THE 23RD DAY OF MARCH 2020 / 3RD CHAITHRA, 1942 WP(C).No.9163 OF 2020 PETITIONER/S: THE MANKARA SERVICE CO-OPERATIVE BANK LTD., NO.P-363, MANKARA, PALAKKAD - 678 613, REPRESENTED BY ITS SECRETARY-IN-CHARGE, K.K.RADHAKRISHNAN, AGED 46, S/O.LATE P.K.KRISHNANKUTTY. BY ADVS. SRI.HARISANKAR V. MENON SMT.MEERA V.MENON RESPONDENT/S: 1 THE INCOME TAX OFFICER, WARD 1 AND TPS, AYAKAR BHAVAN, PALAKKAD - 678 014. 2 THE COMMISSIONER OF INCOME TAX (APPEALS) THRISSUR - 680 021. 3 THE INCOME TAX APPELLATE TRIBUNAL, AYAKAR BHAVAN, KAKKANADU, KOCHI - 682 030, REPRESENTED BY ITS REGISTRAR. OTHER PRESENT: R1 & R2 BY SRI.JOSE JOSEPH, SC, IT THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 23.03.2020, ALONG WITH WP(C).9178/2020, WP(C).9179/2020, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

WP(C).No.9163 of 2020 & - 2 - connected cases IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN MONDAY, THE 23RD DAY OF MARCH 2020 / 3RD CHAITHRA, 1942 WP(C).No.9178 OF 2020 PETITIONER/S: THE MANKARA SERVICE CO-OPERATIVE BANK LTD. NO.P-363, MANKARAI, PALAKKAD - 678 613, REPRESENTED BY ITS SECRETARY IN CHARGE, K. K. RADHAKRISHNAN, AGED 46, S/O. LATE P. K. KRISHNANKUTTY. BY ADVS. SRI.HARISANKAR V. MENON SMT.MEERA V.MENON SMT.K.KRISHNA RESPONDENT/S: 1 THE INCOME TAX OFFICER, WARD 1, AYAKAR BHAVAN, PALAKKAD - 678 014. 2 THE COMMISSIONER OF INCOME TAX (APPEALS) THRISSUR - 680 021. 3 THE INCOME TAX APPELLATE TRIBUNAL AYAKAR BHAVAN, KAKKANADU, KOCHI - 682 030, REPRESENTED BY ITS REGISTRAR. OTHER PRESENT: R1 & R2 BY SRI.JOSE JOSEPH, SC, IT THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 23.03.2020, ALONG WITH WP(C).9163/2020, WP(C).9179/2020, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

WP(C).No.9163 of 2020 & - 3 - connected cases IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN MONDAY, THE 23RD DAY OF MARCH 2020 / 3RD CHAITHRA, 1942 WP(C).No.9179 OF 2020 PETITIONER/S: THE MANKARA SERVICE CO-OPERATIVE BANK LTD., NO.P-363, MANKARAI, PALAKKAD - 678 613, REPRESENTED BY ITS SECRETARY IN CHARGE, K. K. RADHAKRISHNAN, AGED 46, S/O. LATE P. K. KRISHNANKUTTY. BY ADVS. SRI.HARISANKAR V. MENON SMT.MEERA V.MENON RESPONDENT/S: 1 THE INCOME TAX OFFICER WARD 1, AYAKAR BHAVAN, PALAKKAD - 678 014. 2 THE COMMISSIONER OF INCOME TAX (APPEALS) THRISSUR - 680 021. 3 THE INCOME TAX APPELLATE TRIBUNAL AYAKAR BHAVAN, KAKKANADU, KOCHI - 682 030, REPRESENTED BY ITS REGISTRAR. OTHER PRESENT: R1 & R2 BY SRI.JOSE JOSEPH, SC, IT THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 23.03.2020, ALONG WITH WP(C).9163/2020, WP(C).9178/2020, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

WP(C).No.9163 of 2020 & - 4 - connected cases K. Vinod Chandran, J. ------------------------------------- W.P(C) No.9163, 9178 and 9179 of 2020 ------------------------------------- Dated this the 23rd day of March, 2020 JUDGMENT These writ petitions are against the recovery initiated while appeals are pending. The issue is also with respect to the coverage of the petitioner under Section 80P of the Income Tax Act, 1961, which has to be adjudicated on the basis of the Full Bench decision in Mavilayil Service Co - operative Bank Limited v. Commissioner of Income Tax, Calicut [2019 (2) KHC 287 (FB)]. 2. In the present case, the demand is with respect to assessment years 2016-17, 2010-11 and 2015-16. Exhibit P3 second appeal along with Exhibit P4 stay petition in the respective writ petitions are pending before the Tribunal. In the circumstance of the case, I am of the opinion that there shall be a stay of recovery till the appeals are disposed of. The writ petitions are disposed of with the above direction, without any observation on the merits of the matter. Sd/- K.VINOD CHANDRAN JUDGE Vku/-

WP(C).No.9163 of 2020 & - 5 - connected cases APPENDIX OF WP(C) 9163/2020 PETITIONER'S/S EXHIBITS: EXHIBIT P1 COPY OF ASSESSMENT ORDER ISSUED BY THE 1ST RESPONDENT FOR THE YEAR 2016-17. EXHIBIT P2 COPY OF APPELLATE ORDER ISSUED BY THE 2ND RESPONDENT FOR THE YEAR 2016-17. EXHIBIT P3 COPY OF APPEAL FILED BY THE PETITIONER BEFORE THE 3RD RESPONDENT 2016-17. EXHIBIT P4 COPY OF STAY PETITION FILED BY THE PETITIONER BEFORE THE 3RD RESPONDENT.

WP(C).No.9163 of 2020 & - 6 - connected cases APPENDIX OF WP(C) 9178/2020 PETITIONER'S/S EXHIBITS: EXHIBIT P1 COPY OF ASSESSMENT ORDER ISSUED BY THE 1ST RESPONDENT FOR THE YEAR 2010-11. EXHIBIT P2 COPY OF APPELLATE ORDER ISSUED BY THE 2ND RESPONDENT FOR THE YEAR 2010-11. EXHIBIT P3 COPY OF APPEAL FILED BY THE PETITIONER BEFORE THE 3RD RESPONDENT 2010-11. EXHIBIT P4 COPY OF STAY PETITION FILED BY THE PETITIONER BEFORE THE 3RD RESPONDENT.

WP(C).No.9163 of 2020 & - 7 - connected cases APPENDIX OF WP(C) 9179/2020 PETITIONER'S/S EXHIBITS: EXHIBIT P1 COPY OF ASSESSMENT ORDER ISSUED BY THE 1ST RESPONDENT FOR THE YEAR 2015-16. EXHIBIT P2 COPY OF APPELLATE ORDER ISSUED BY THE 2ND RESPONDENT FOR THE YEAR 2015-16. EXHIBIT P3 COPY OF APPEAL FILED BY THE PETITIONER BEFORE THE 3RD RESPONDENT 2015-16. EXHIBIT P4 COPY OF STAY PETITION FILED BY THE PETITIONER BEFORE THE 3RD RESPONDENT. [TRUE COPY]

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