Kerala High Court Judgments — 2021

The High Court held that the assessment order for the assessment year 2017-18 was vitiated by a violation of the principles of natural justice. The Court found it compelling that the petitioner was actively participating in the assessment proceedings for AY 2018-19 during the same period but was completely unresponsive to any notices for AY 2017-18. This, juxtaposed with the fact that the primary email ID belonged to a former employee, strongly indicated the petitioner's unawareness of the proceedings. While acknowledging that sending notices to the secondary email ID was not strictly mandatory, the Court opined that in the peculiar circumstances, where repeated notices to the petitioner elicited no response, it would have been ideal to also issue notice to the secondary email ID. The Court further considered the technical glitches surrounding the Income Tax portal during that period, especially given the high-pitched nature of the assessment. Therefore, the Court concluded that the petitioner did not get an effective opportunity to present their response for AY 2017-18. The assessment order (Ext.P6) was set aside, and the petitioner was granted an opportunity to respond to all notices by January 14, 2022. The assessing officer was directed to consider the objections and pass fresh orders after hearing the petitioner by January 31, 2022. The writ petition was allowed.

The High Court directed the 1st respondent, the Commissioner of Income Tax (Appeals) III, to consider and pass orders on the petitioner's stay petition (Ext.P4) within a period of two months from the date of receipt of a copy of the judgment. Until a decision is taken on the stay petition, all coercive proceedings against the petitioner are to be kept in abeyance. The Court did not decide on the merits of the assessment order or the appeal itself, focusing solely on the procedural aspect of the stay petition. The principle established is that the appellate authority should be given a reasonable time to consider stay applications, and coercive steps should be halted during this period.

The High Court held that the observation of the Appellate Authority regarding the belated filing of the return was incorrect. The Court referred to Ext.P1, a CBDT order dated 30.11.2020, which extended the due date for filing returns for assessment year 2019-20 to 30.11.2020. Since the petitioner filed its return on 19.02.2020, it was within the extended due date. Consequently, the Appellate Authority failed to consider a valid return filed by the assessee. The Court found that the impugned order (Ext.P7) became a non-speaking order and was issued in violation of the principles of natural justice. Therefore, the order of the CIT (Appeals) dated 14.12.2021 was set aside. The Appellate Authority was directed to pass fresh orders after granting an opportunity of hearing to the petitioner, expeditiously, and within three months from the date of receipt of a copy of the judgment.

The High Court directed the competent authority among the respondents to consider and pass orders on the petitioner's stay petition (Ext.P2(a)) within a period of two months from the date of receipt of a copy of the judgment. Until a decision is taken on the stay petition, all coercive proceedings initiated against the petitioner were ordered to be kept in abeyance. The court found that this direction would adequately address the petitioner's apprehension of immediate coercive action pending the disposal of his stay application. The ratio decidendi is that a taxpayer facing potential coercive recovery should have their stay application considered expeditiously to prevent undue hardship, and coercive measures should be halted pending such consideration.

The High Court of Kerala did not decide the merits of the case. Instead, it directed the Appellate Authority (4th respondent) to consider and pass appropriate orders on the petitioner's pending appeal (Ext.P3) expeditiously. The Court also ordered that no coercive steps shall be initiated against the petitioner pursuant to the assessment order (Ext.P2) until the disposal of the appeal. The primary focus of the judgment was procedural, ensuring the appeal is heard and decided in a time-bound manner, and providing interim protection to the assessee. No specific finding on the Section 80P deduction or the applicability of the Mavilayi Service Co-operative Bank Ltd. judgment was made by the High Court in this writ petition.

The High Court directed the Commissioner of Income Tax (Appeals) to consider and pass orders on the petitioner's stay petition (Ext.P3) within a period of three months from the date of receipt of a copy of the judgment. Until a decision is taken on the stay petition, all coercive proceedings pursuant to the assessment order (Ext.P1, referred to as Ext.P5 in the operative part) against the petitioner are to be kept in abeyance. The writ petition is disposed of with this direction. No specific finding was made on the merits of the assessment order or the appeal itself, as the focus was on procedural relief pending adjudication.

The High Court did not decide the merits of the case. Instead, it noted that the petitioner had already preferred an appeal (Ext.P3) before the third respondent, the Commissioner of Income Tax (Appeals), which was pending consideration. Therefore, the Court deemed it appropriate to dispose of the writ petition by directing the Appellate Authority to consider the appeal in a time-bound manner. The Court directed the third respondent to consider and pass appropriate orders on Ext.P3 as expeditiously as possible. Furthermore, the Court ordered that no coercive steps shall be initiated against the petitioner pursuant to the assessment order (Ext.P2) until the disposal of the appeal. The issue regarding the applicability of the Supreme Court judgment and the validity of the Section 80P deduction was expressly left undecided by the High Court, as it was to be adjudicated by the appellate authority.

The High Court of Kerala directed the 2nd respondent, the Commissioner of Income Tax (Appeals), to consider and pass appropriate orders on the petitioner's stay petition (Ext.P3) within a period of three months from the date of receipt of a copy of the judgment. Until such a decision is taken by the appellate authority, all coercive proceedings initiated against the petitioner pursuant to the assessment order (Ext.P1) shall be kept in abeyance. The writ petition was disposed of with this direction. The court did not decide the merits of the assessment order or the stay petition itself, but rather ensured a timely consideration of the stay application and provided interim protection.

The High Court held that the demand for late fees under Section 234E for the period from 2012-13 up to the first quarter of the assessment year 2015-16 (i.e., until June 1, 2015) was without legal authority. The Court reasoned that Section 234E was introduced by the Finance Act, 2012, and the relevant provisions in Section 200A(1) that enabled the computation of such fees were amended effectively from June 1, 2015. Citing the precedent in M/s. Sarala Memorial Hospital v. Union of India and Another, the Court found that the amendment was prospective. Consequently, the intimations demanding late fees for the period before June 1, 2015, were quashed. The ratio decidendi is that statutory provisions imposing financial liabilities, especially those introduced or amended by finance acts, are prospective unless expressly stated otherwise, and demands must align with the operative dates of such provisions. The operative direction was to quash the intimations to the extent they demanded late fee under Section 234E for the period from 2011-12 till June 1, 2015.

The High Court held that the demand for late fee under Section 234E for the periods from 2012-13 to 2014-15 is legally unsustainable. The Court reasoned that although Section 234E was introduced in 2012, the mechanism for computing and levying such fees, as provided in Section 200A, was amended to include relevant clauses only with effect from June 1, 2015. Therefore, the amendment enabling the imposition of late fees is prospective. The Court followed its earlier decision in M/s. Sarala Memorial Hospital v. Union of India and Another, which held that the amendment to Section 200A was prospective. Consequently, the intimations demanding late fees for the period from 2011-12 till June 1, 2015, were quashed. The operative direction was to quash the impugned intimations to the extent they demanded late fee under Section 234E for the specified period.

The High Court of Kerala directed the 2nd respondent, the Commissioner of Income Tax (Appeals), to consider the statutory appeal (Ext.P2) filed by the petitioner within a period of six months from the date of receipt of a copy of the judgment. Furthermore, the Court ordered a stay of recovery proceedings pursuant to the assessment order (Ext.P1) until orders are passed on the petitioner's appeal. The reasoning is based on the facts and circumstances of the case, acknowledging the pendency of the statutory appeal. The operative direction is to consider the appeal and to stay recovery. No issue was expressly left undecided.

The High Court of Kerala directed the 2nd respondent, the Commissioner of Income Tax (Appeals), to consider and pass orders on Ext.P2 appeal within a period of four months from the date of receipt of a certified copy of the judgment. The Court further ordered a stay of all further recovery proceedings pursuant to Ext.P1 assessment order until such time as orders are passed on the appeal. The reasoning for the direction was based on the petitioner's grievance regarding the non-disposal of their statutory appeal and the apprehension of coercive steps. The principle established is that appellate authorities should dispose of pending appeals within a reasonable timeframe, and interim relief in the form of a stay on recovery can be granted pending such disposal.

The High Court noted that the appellant's counsel, Sri Christopher Abraham, sought liberty to withdraw the appeal, based on instructions received from the appellant. Consequently, the High Court ordered that the Income Tax Appeal No. 81 of 2019 stands dismissed as withdrawn. No findings were made on any substantive issues, and the reasoning is solely based on the appellant's request for withdrawal. No part of the appeal was decided on merits, and no operative directions were issued other than the dismissal of the appeal as withdrawn.

The High Court held that the petitioner's contention that the refusal to consider CBDT Circular No. 6/2016 amounts to a mistake apparent from the record, rectifiable under Section 154, has no merit. The Court noted that the petitioner had raised the very same issue in both the rectification application and the pending statutory appeal against the assessment order. The Court found that the petitioner's arguments in the rectification application touched upon the merits of the grounds raised in the statutory appeal, specifically concerning the applicability of the circular and whether the AO erred in disregarding it. Such questions require adjudication in the appeal, involving a hearing on questions of fact and law. Therefore, the issue raised in the rectification application was not a mistake apparent from the record that could be rectified under Section 154. The Court dismissed the writ petition but clarified that the statutory appeal against the assessment order should be considered and decided by the appellate authority in accordance with law, without being influenced by the observations in the impugned orders (Exts. P7 and P9). No order as to costs was made.

The High Court held that the demand for late fee under Section 234E for the period from 2011-12 till 01.06.2015 is bereft of authority and cannot be legally sustained. The reasoning is based on the petitioner's submission, supported by the decision in M/s. Sarala Memorial Hospital v. Union of India and Another, which established that the amendment to Section 200A, enabling the computation of late fees under Section 234E, took effect only from 1st June 2015 and was prospective. Consequently, the Court quashed the notice (Ext.P1) to the extent it demands fee under Section 234E for the period from 2011-12 till 01.06.2015. The operative direction is to quash the impugned notice for the specified period. No issue was expressly left undecided.

The High Court of Kerala did not decide the merits of the case. Instead, it directed the Appellate Authority (the first respondent) to consider and pass appropriate orders on the petitioner's pending appeal (Ext.P3) expeditiously. The Court also granted interim relief by directing that no coercive steps shall be initiated against the petitioner pursuant to the assessment order (Ext.P1) until the appeal is decided. The primary finding of the Court was procedural: that the appeal should be heard and decided in a time-bound manner. The issue of whether the deduction under Section 80P was rightly denied by the assessing officer remains undecided by the High Court, as it was left for the appellate authority to determine.

The High Court of Kerala, while acknowledging the pendency of the appeal filed by the petitioner (Ext.P3) before the Commissioner of Income Tax (Appeals), deemed it appropriate to dispose of the writ petition by directing the Appellate Authority to consider the appeal in a time-bound manner. The Court directed the 1st respondent (Commissioner of Income Tax (Appeals)) to consider and pass appropriate orders on Ext.P3 as expeditiously as possible. Furthermore, the Court ordered that no coercive steps shall be initiated against the petitioner pursuant to the assessment order (Ext.P1) until such time as the appeal is decided. The specific issue regarding the rejection of the Section 80P deduction was not decided on merits by the High Court, as the matter was remitted to the appellate authority for consideration.

The High Court of Kerala, while acknowledging that the petitioner had already filed an appeal (Ext.P3) before the 1st respondent (Commissioner of Income Tax (Appeals)), deemed it appropriate to dispose of the writ petition by directing the Appellate Authority to consider the appeal in a time-bound manner. The Court directed the 1st respondent to consider and pass appropriate orders on Ext.P3 as expeditiously as possible. Furthermore, the Court ordered that no coercive steps shall be initiated against the petitioner pursuant to the assessment order (Ext.P1) until the appeal is decided. The Court did not decide on the merits of the Section 80P deduction claim itself, but rather on the procedural aspect of ensuring the appeal is heard promptly.

The High Court held that the impugned order of assessment was liable to be set aside as it clearly infringed upon the mandate of section 144B of the Income Tax Act, 1961. The court found that the assessment order had varied the return filed by the petitioner, and the statutory provisions of section 144B clearly require the furnishing of a draft assessment order and a show-cause notice to the assessee, eliciting their explanation, before making any prejudicial variation. The failure to adhere to this statutory requirement amounted to a clear infringement of the principles of natural justice. The court relied on decisions from the Delhi High Court in DJ Surfactants v. National E-Assessment Centre and RMSI Private Limited v. National E-Assessment Centre. Consequently, the assessment order and the consequential penalty notice were set aside. The court directed the competent respondents to serve the draft assessment order along with a show-cause notice to the petitioner expeditiously and complete the proceedings in accordance with law.

The High Court held that the assessment order was vitiated by a violation of the prescribed procedure. It found that the Assessing Officer had decided to modify the return submitted by the petitioner. According to Clause 5(xvi)(b) of the Faceless Assessment Scheme, when a modification is proposed to the return, the assessee is entitled to be served with a show-cause notice to explain why the assessment should not be completed as per the draft assessment order. The Court observed that the assessment order revealed that the assessee was never served with a draft assessment order or the mandatory show-cause notice while proposing to modify the return. This constituted a clear violation of the procedure. Consequently, the Court set aside the impugned assessment order (Ext.P7) and directed the Assessing Officer to reconsider the case by issuing the draft assessment order and the necessary show-cause notice as contemplated under the Faceless Assessment Scheme. The Assessing Officer was further directed to pass fresh orders after eliciting the assessee's objections/explanations within a reasonable time, in accordance with law and in a time-bound manner.

The Tribunal held that the special rebate was availed for the previous period and the assessee did not claim any special rebate after opting for the compounded rate. Therefore, reversing the rebate was illegal.

The High Court noted that the petitioner's appeal against the assessment order was pending before the Commissioner of Income Tax (Appeals). The Court observed that in matters involving Section 80P of the Income Tax Act, it has been consistently directing the Appellate Authority to consider and pass orders on the appeal itself, rather than merely on the stay petition. Therefore, the Court deemed it fit to dispose of the writ petition by directing the Appellate Authority to consider the appeal expeditiously. The Court also directed that no coercive steps shall be initiated against the petitioner pursuant to the assessment order until the disposal of the appeal. The issue of whether the petitioner satisfied the ingredients of a Primary Agricultural Credit Society and whether the assessing officer correctly applied the Supreme Court judgment were not decided on merits by the High Court, but were left to be decided by the Appellate Authority.

The High Court of Kerala, while considering the writ petition, directed the 3rd respondent, the Commissioner of Income Tax (Appeals), to consider and pass orders on the petitioner's stay petition (Ext.P3) within a period of three months from the date of receipt of a copy of the judgment. Furthermore, the Court ordered that all coercive proceedings against the petitioner shall be kept in abeyance until a decision is taken on the stay petition. The judgment does not delve into the merits of the assessment order or the grounds of appeal. The primary focus was on ensuring that the stay petition is addressed promptly and that the petitioner is protected from immediate recovery actions.

The High Court held that since the petitioner had already paid the 20% of the disputed tax as directed by the appellate authority, it was reasonable for the interim order of stay to continue until the disposal of the appeals. The Court viewed the order directing the deposit of 20% as an exercise of discretion, and in light of this, no further deposit was warranted. Consequently, the interim order of stay, which was previously extended until the disposal of appeals, was confirmed to continue until such disposal. Furthermore, recognizing that the appeals for assessment years 2011-12, 2012-13, 2015-16, and 2016-17 were still pending, the Court directed the second respondent (CIT(A)) to dispose of these appeals expeditiously, at any rate, within a period of six months from the date of receipt of a copy of the judgment. The writ petition was disposed of with these directions.

The High Court held that the demand for late fee under Section 234E for the period from 2011-12 till 01.06.2015 was bereft of authority and not legally sustainable. The Court reasoned that while Section 234E was introduced in 2012, the mechanism for computing and levying such fees for non-filing of TDS statements was enabled by the amendments to Section 200A, which became effective only from 01.06.2015. The Court relied on the precedent set in M/s. Sarala Memorial Hospital v. Union of India and Another, which had already decided that the amendment was prospective. Consequently, the Court quashed the notice (Ext.P1) to the extent it demanded fee under Section 234E for the period from 2011-12 till 01.06.2015. The operative direction was to allow the writ petition to the extent of this relief.

The High Court held that it is essential under the principles of law for a party to be able to move applications for interim reliefs at any time when proceedings are pending. This right cannot be denied based on limitations created by technological advancements. The Court found that the absence of an electronic link preventing a litigant from accessing justice would mean that procedure becomes the mistress of justice, not its handmaid. Therefore, the respondents must make sufficient changes to their software to permit interim applications to be filed or uploaded by litigants during the pendency of proceedings. The Court directed that the stay petition filed before the jurisdictional Commissioner be transmitted to the National Faceless Appeal Centre and considered in accordance with law within three months. Until such consideration, coercive proceedings against the petitioner are stayed. The Court expressly left undecided the merits of the penalty order or the stay application itself, focusing solely on the procedural issue of filing the stay application.

The High Court found merit in the assessee's preliminary objection that the authorities below failed to comply with the specific directions issued by the ITAT in its order dated 25.10.2013 (Annexure-B). The Court observed that the subsequent orders indicated a non-consideration of the deemed dividend issue in the manner directed by the Tribunal, effectively disregarding the principle behind the remand. Consequently, the Court set aside the orders of the Assessing Officer, CIT(A), and the Tribunal (in the second round) and remitted the case back to the Assessing Officer for a fresh disposal. The Court did not decide on the merits of whether the advances constituted deemed dividend, focusing solely on the procedural non-compliance with the remand directions. The appeal was allowed for the limited purpose of setting aside the impugned orders and remanding the matter.

The High Court, after considering the submissions of both parties, decided to dispose of the writ petition with a specific direction. The court directed the second respondent, the Commissioner of Income Tax (Appeals), to consider and pass orders on the stay petition (Ext.P3) within a period of three months from the date of receipt of a copy of the judgment. Furthermore, the court ordered that all coercive proceedings against the petitioner shall be kept in abeyance until a decision is taken on the stay petition. The High Court did not decide the merits of the assessment order or the appeal itself, but rather focused on ensuring that the stay petition is adjudicated promptly and that the assessee is protected from coercive action during this period. The ratio decidendi is that when an assessee apprehends coercive action before the adjudication of a stay petition filed along with an appeal, the High Court can direct the appellate authority to expedite the decision on the stay petition and grant a stay on coercive proceedings pending that decision.

The High Court of Kerala did not decide the merits of the appeal. Instead, it directed the appellate authority (the 2nd respondent, Commissioner of Income Tax (Appeals), National Faceless Appeal Centre) to consider and pass appropriate orders on the petitioner's appeal (Ext.P2) expeditiously. The Court acknowledged that the appeal was pending. As an interim measure, the Court ordered that no coercive steps shall be initiated against the petitioner pursuant to the assessment order (Ext.P1) until the disposal of the appeal. The primary issue regarding the eligibility for deduction under Section 80P, based on the Mavilayi judgment, was left to be decided by the appellate authority. No specific finding was made on the interpretation of Section 80P or the definition of a Primary Agricultural Credit Society.

The High Court held that the rectification order passed by the Appellate Authority under Section 154 of the Income Tax Act, 1961, was patently incorrect. The Court reasoned that the Supreme Court's decision in Mavilayi Service Co-operative Bank Ltd. (2021) declared that the Full Bench decision of the High Court was not good law and restored the position as laid down in Chirakkal Service Co-operative Bank Ltd. The Supreme Court held that for Section 80P deduction, it is sufficient for the assessee to be a co-operative society, and further classification is unnecessary. The expression 'providing credit facilities to its members' is not limited to agricultural credit alone, and Section 80P should be construed to further the co-operative movement. Therefore, the rectification was invalid as the Supreme Court's declaration of law relates back to the time the section was in force. The original appellate order allowing the deduction was correct. The Court set aside the rectification order (Ext.P5) and stated that the original appellate order would revive, obviating the need for reconsideration.

The High Court held that the rectification order passed by the Appellate Authority under Section 154 of the Income Tax Act, 1961 (Ext.P5) was patently incorrect. The Court reasoned that the Supreme Court's declaration of law in Mavilayi 2021, which restored the position laid down in Chirakkal Service Co-operative Bank Ltd., has retrospective effect. Therefore, the Appellate Authority had no option but to follow the Supreme Court's ruling. The initial decision of the Appellate Authority, which allowed the deduction under Section 80P based on the Chirakkal judgment, was correct in light of the Supreme Court's final verdict. Consequently, the rectification order was set aside as it was against the law declared by the Supreme Court. The Court also noted that since Ext.P5 was being set aside, the original order of the Appellate Authority would revive, obviating the need for a reconsideration order.

The High Court held that the rectification order passed by the Appellate Authority under Section 154 of the Income Tax Act, 1961, was patently incorrect. The Court reasoned that the Supreme Court's judgment in Mavilayi Service Co-operative Bank Ltd. (2021) declared the correct law, which effectively relates back to the period when the relevant provisions were in force. Consequently, the Appellate Authority had no option to resort to Section 154 to rectify its earlier order, which had correctly allowed the deduction under Section 80P based on the Chirakkal Service Co-operative Bank Ltd. decision. The Supreme Court had held that for Section 80P deduction, an assessee merely needs to be a co-operative society, and further classification or the specific nature of credit facilities is not a prerequisite. Therefore, the rectification order (Ext.P5) was set aside as it was against the law declared by the Supreme Court. The Court also noted that since Ext.P5 was being set aside, the original order of the Appellate Authority allowing the deduction would revive, obviating the need for a remand.

The High Court directed the appellate authority (3rd respondent) to consider and pass appropriate orders on the stay petition (Ext.P9(a)) and the delay condonation petition (Ext.P9(b)) within an outer limit of three months from the date of receipt of a copy of the judgment. The Court clarified that the appellate authority is free to consider the appeal itself if circumstances warrant. An opportunity of being heard must be granted to the petitioner before passing any orders. To enable the consideration of the stay petition, all coercive proceedings against the petitioner shall be kept in abeyance for a period of three months. The writ petition is disposed of accordingly.

The High Court directed the second respondent, the Commissioner of Income Tax (Appeals), to consider and pass appropriate orders on the petitioner's stay petition (Ext.P3) within a period of three months from the date of receipt of a copy of the judgment. An opportunity of hearing was to be afforded to the petitioner. Crucially, the Court ordered that all coercive proceedings against the petitioner shall be kept in abeyance until a decision is taken on the stay petition. The writ petition was disposed of with these directions. No specific finding was made on the merits of the assessment or the appeal itself, as the focus was on the procedural aspect of the stay petition.

The High Court directed the 1st respondent, Assistant Commissioner of Income Tax, Aluva, to consider the petitioner's pending Rectification Petition (Ext.P9) after providing the petitioner with an opportunity of being heard. This consideration must be completed within two months from the date of receiving a copy of the judgment. Furthermore, the court ordered a stay on the recovery of amounts demanded under Exts.P6 and P8 until the aforesaid orders are passed on the rectification petition. The court did not decide on the merits of the proposed adjustment or the validity of the original intimation, focusing solely on the procedural aspect of hearing the rectification petition.

The High Court held that the rectification order passed by the Appellate Authority under Section 154 of the Income Tax Act, 1961, was patently incorrect. The Court reasoned that the Supreme Court's judgment in Mavilayi Service Co-operative Bank Ltd. v. Commissioner of Income Tax (2021) restored the law as declared in Chirakkal Service Co-operative Bank Ltd. v. Commissioner of Income Tax. This Supreme Court declaration of law is presumed to relate back to the time from which the section was in force. Therefore, the Appellate Authority's initial decision allowing the deduction under Section 80P, based on Chirakkal, was correct. The rectification, which denied the deduction based on a subsequently overruled High Court decision, was therefore unsustainable. The Court set aside the rectification order (Ext.P6), and as a consequence, the initial appellate order allowing the deduction stood revived. The operative direction was to set aside the rectification order, allowing the writ petition.

The High Court of Kerala did not decide the substantive issues of the appeal on merits. Instead, the Court noted that the petitioner had already preferred an appeal (Ext.P2) before the Commissioner of Income Tax (Appeals) (the 3rd respondent), which was pending. Therefore, the Court deemed it appropriate to dispose of the writ petition by directing the Appellate Authority to consider the pending appeal in a time-bound manner. The Court directed the 3rd respondent to consider and pass appropriate orders on Ext.P2 as expeditiously as possible. Additionally, the Court ordered that no coercive steps shall be initiated against the petitioner pursuant to the assessment order (Ext.P1) until the disposal of the appeal. No issue was expressly left undecided, as the Court deferred the decision on the merits to the appellate authority.

The High Court held that the Tribunal's findings on both the valuation of the gifted property and the ownership of the property by the assessee were concurrent findings of fact. The assessee failed to provide sufficient contra-evidence to dispute these findings.

The High Court of Kerala did not decide the merits of the case. Instead, it directed the Appellate Authority (the 1st respondent, Commissioner of Income Tax (Appeals)) to consider and pass appropriate orders on the pending appeals (Ext.P2 and Ext.P4) expeditiously. The Court deemed it fit to dispose of the writ petition by directing a time-bound consideration of the appeals, as the petitioner had already preferred them. The Court also granted a stay on coercive steps being initiated pursuant to the assessment orders (Ext.P1 and Ext.P3) until the disposal of the appeals. No issue was expressly left undecided; the court chose to defer the decision on the merits to the appellate authority.

The High Court of Kerala did not decide on the merits of the assessment orders or the applicability of the Supreme Court judgment. Instead, the Court noted that the petitioner had already preferred statutory appeals (Ext.P2 and Ext.P4) against the assessment orders (Ext.P1 and Ext.P3), and these appeals were pending before the 1st respondent (Appellate Authority). Therefore, the Court deemed it appropriate to dispose of the writ petition by directing the Appellate Authority to consider the pending appeals in a time-bound manner. The Court directed the 1st respondent to consider and pass appropriate orders on Ext.P2 and Ext.P4 appeals expeditiously. Furthermore, the Court granted a stay on coercive steps being initiated pursuant to Ext.P1 and Ext.P3 assessment orders until the disposal of the appeals. No issue was expressly left undecided, as the Court chose to defer the decision to the appellate forum.

The High Court of Kerala did not decide the merits of the case. Instead, it noted that the petitioner had already preferred an appeal (Ext.P4) which was pending before the appellate authority (additional 3rd respondent). Therefore, the Court deemed it fit to dispose of the writ petition by directing the appellate authority to consider the appeal expeditiously. The Court also directed that no coercive steps shall be initiated against the petitioner pursuant to the assessment order (Ext.P2) until the disposal of the appeal. The specific finding on the Section 80P deduction and the applicability of the Supreme Court judgment were left to be decided by the appellate authority.

The High Court did not decide the merits of the case. Instead, it noted that the petitioner had already preferred appeals against the assessment orders before the 4th respondent (National Faceless Appeal Centre) and that these appeals were pending. Consequently, the Court deemed it appropriate to dispose of the writ petition by directing the Appellate Authority to consider the pending appeals in a time-bound manner. The 4th respondent was directed to consider and pass appropriate orders on Ext.P2 and Ext.P4 expeditiously. Furthermore, the Court ordered that no coercive steps would be initiated pursuant to the assessment orders (Ext.P1 and Ext.P3) until the disposal of the appeals. No specific issue was left undecided, as the Court chose to defer the decision on the merits to the appellate authority.

The High Court, by following the judgment in Peravoor Range Kallu Chethu Vyavasaya Thozhilali Sahakarana Sangham v. Commissioner of Income Tax, answered substantial questions 1 and 2 in favour of the Revenue and against the assessee. The Tribunal was held to be right in its conclusion that the assessee society could not be considered as engaged in the collective disposal of labour of its members as contemplated under Section 80P(2)(a)(vi) of the Act, and thus not eligible for deduction. Regarding substantial question 3, concerning eligibility under Section 80P(2)(a)(iii), the Court noted the limited submissions and accepted the assessee's argument that the matter needed re-examination by the Tribunal. Consequently, substantial question 3 was remitted to the Tribunal for consideration and disposal. Substantial questions 4 and 5 were not taken up for consideration, and no view was expressed on them, as they were deemed not to arise given the decision on substantial question 3.

The High Court followed a previous judgment and held that the society was not eligible for deduction under Section 80P(2)(a)(vi). However, the issue of eligibility under Section 80P(2)(a)(iii) was remitted to the Tribunal for fresh consideration.

The High Court addressed the substantial questions of law. For questions 1 and 2, concerning eligibility under Section 80P(2)(a)(vi), the Court noted that both the assessee and the Revenue agreed that these questions were concluded by the judgment in *Peravoor Range Kallu Chethu Vyavasaya Thozhilali Sahakarana Sangham v. Commissioner of Income Tax*. Following this precedent, the questions were answered in favour of the Revenue and against the assessee. Regarding substantial question no. 3, concerning eligibility under Section 80P(2)(a)(iii), the Court acknowledged the limited submissions and agreed that the matter needed re-examination by the Tribunal to avoid delving into pure facts. Therefore, this question was remitted to the Tribunal for consideration and disposal in accordance with law, answering it in favour of the assessee to the extent of remittal. For substantial questions 4 and 5, the Court found that these questions might not arise given the decision on substantial question no. 3 and did not express any view on them. The judgment also noted that substantial questions in ITA No. 57/2019 and ITA No. 58/2019 were similar to those in ITA No. 44/2019 and were answered accordingly. The specific issue raised in question 5 of ITA 58/2019 concerning Section 80A(5) was not explicitly addressed in the provided excerpt, but the overall disposition suggests it was subsumed within the general reasoning.

The High Court of Kerala, while considering the writ petition, directed the Principal Commissioner of Income Tax (1st respondent) to consider and pass appropriate orders on the petitioner's representation (Ext.P14). The representation sought the release of one or more properties sufficient to satisfy the petitioner's claim. The court emphasized that the interest of justice demanded such consideration. The 1st respondent was instructed to afford an opportunity of hearing to the petitioner and to pass orders expeditiously, within two months from the date of receiving a copy of the judgment. The court did not decide on the merits of whether properties should be released, but rather on the procedural necessity of the authority considering the petitioner's request. The core principle is that a representation seeking partial release of attached property, when the value of attached property far exceeds the liability, warrants consideration by the competent authority after due hearing.

The High Court of Kerala held that the writ petition could be disposed of by directing the respondents to consider and pass appropriate orders on the compounding application in a time-bound manner. The Court issued a specific direction to the 3rd respondent (Director General of Income Tax (Investigation)) to consider and pass appropriate orders on the petitioner's application filed under Section 279 of the Income Tax Act, 1961, within a period of five months from the date of receipt of a copy of the judgment. This consideration is to be after affording an opportunity of hearing to the petitioner. Furthermore, the Court ordered that the criminal prosecution against the petitioner before the Additional Chief Magistrate (E.O.), Ernakulam, shall stand stayed until such orders are passed on the compounding application. The principle established is that the authorities must act expeditiously on compounding applications, and the court can intervene to ensure timely disposal and stay proceedings pending such decision.

The High Court held that the assessment orders (Ext.P10 and Ext.P18) were passed in violation of the principles of natural justice. The Court noted that it is elementary that every order must be rendered after granting a reasonable opportunity for responding and hearing. The grant of a reasonable opportunity to file a response is an element of the cherished principle of natural justice. The Court found that the show cause notices failed to provide sufficient opportunity to the petitioner to respond, and the violation of natural justice was manifest. Consequently, the assessment orders dated 22.09.2021 were set aside. The first respondent was directed to pass fresh assessment orders after granting a reasonable opportunity of being heard and sufficient time to file objections to the show cause notices. The petitioner was granted 15 days from the receipt of the judgment to file objections, and the assessing authority was directed to fix a hearing date thereafter. Consequential penalty notices (Exts.P19 & P20) were also set aside.

The High Court of Kerala, while acknowledging the existence of statutory remedies, found it appropriate to issue a direction in the present writ petition. The Court directed the 2nd respondent (Commissioner of Income Tax (Appeals)) or the competent authority to consider and pass orders on the petitioner's stay petition (Ext.P3) within a period of three months from the date of receipt of a copy of the judgment. Furthermore, the Court ordered that all coercive proceedings initiated against the petitioner shall be kept in abeyance until a decision is taken on the stay petition. The ratio of this decision is that in cases where an assessee apprehends immediate coercive action before the disposal of a stay petition, the High Court may intervene to direct the expeditious disposal of the stay petition and to maintain status quo in the interim.

The High Court directed the second respondent (Commissioner of Income Tax (Appeals)) to consider and pass appropriate orders on the petitioner's appeal (Ext.P3) expeditiously and in a time-bound manner. Pending the disposal of the appeal, all coercive proceedings pursuant to the assessment order (Ext.P1) were ordered to be kept in abeyance. The Court noted that the Office Memorandum of 2016 as revised in 2017 cannot control the discretionary powers of the appellate authority. The Court followed its consistent practice in similar cases involving Section 80P deductions, referencing the Supreme Court's decision in Mavilayi Service Co-operative Bank. The Court found no reason to depart from this practice. The issue of the merits of the Section 80P claim was not decided.