Ita/4/2014 Of Perinthalmanna Service Co-Operative Bank Limited v. Income Tax Officer

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HON'BLE THE CHIEF JUSTICE DR. MANJULA CHELLUR & THE HONOURABLE MR.JUSTICE A.M.SHAFFIQUE FRIDAY, THE 31ST DAY OF JANUARY 2014/11TH MAGHA, 1935 ITA.No. 4 of 2014 --------------------- AGAINST THE ORDER IN ITA 199/COCH/2013 of I.T.A.TRIBUNAL,COCHIN BENCH& MP NO. 106/COCH/2013. APPELLANT(S)/APPELLANT: ------------------------ PERINTHALMANNA SERVICE CO-OPERATIVE BANK LIMITED HOSPITAL ROAD, PERINTHALMANNA REPRESENTED BY ITS ASST.REGISTRAR/CHIEF EXECUTIVE OFFICER MR.JAMES M.VARGHESE. BY ADVS.SRI.K.ANAND (SR.) SMT.LATHA KRISHNAN SRI.JOSEPH SEBASTIAN (PARACKAL) RESPONDENT(S)/RESPONDENT: -------------------------- 1. INCOME TAX OFFICER WARD 2 OFFICE OF THE ASST. COMMISSIONER OF INCOME TAX TARIFF BAZAAR, TOWN HALL ROAD, TIRUR-676101. 2. THE COMMISSIONER OF INCOME TAX OFFICE OF THE COMMISSIONER OF INCOME TAX AAYAKAR BHAVAN, NORTH BLOCK, KOZHIKODE-673001. BY SRI.JOSE JOSEPH, SC, FOR INCOME TAX THIS INCOME TAX APPEAL HAVING COME UP FOR ADMISSION ON 31-01-2014, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: Manjula Chellur, C.J. & A.M. Shaffique, J.=-=-=-=-=-=-=-=--=-=-=-=-=-=-=-=-=-=I.T.A. No. 4 of 2014 =-=-=-=-=-=-=-=-=--=-=-=-=-=-=-=-=-=Dated this, the 31[st]day of January, 2014. J U D G M E N T Manjula Chellur, C. J. Heard learned counsel for the petitioner. 2.We have gone through the orders of assessingofficer, revisional authority and order of the Tribunal. Theentire controversy involved in this case is with regard tothe exact status of the appellant assessee, whether it is aco-operative bank or a primary co-operative credit society.This question arises in the light of the assessee claimingbenefits under Section 80P of the Income-tax Act. Once aclaim is made under Section 80P, necessarily the assessingofficer has to consider the implication of Section 80P(4)with reference to such claim depending upon the nature oftransactions conducted by the assessee irrespective of thenomenclature of the assessee. We are concerned with theassessment year 2009-2010. After referring to the detailsgiven by the assessee in the return of income, therevisional authority issued show cause notice why theassessment should not be re-opened as the orders of theassessing officer was not only erroneous but was prejudicialto the interest of the revenue. Of course, a detailedexplanation by way of reply was given by the presentappellant. The entire discussion of the revisional I.T.A. No. 4 of 2014 -: 2 :- authority is directed against the application of mind bythe assessing officer with reference to the nature ofbusiness conducted by the appellant-assessee. It is alsonot in dispute that assessing officer is required to applyhis mind and conduct proper enquiry and alsoverification at the time of assessment. Lack of thisexercise on the part of the assessing officer definitelyleads to erroneous order, which is prejudicial to theinterest of the respondent-revenue. 3. It is not in dispute the representative of theassessee who appeared before the revisionl authorityhad submitted lengthy arguments apart from writtensubmissions. After considering the entire material indetail, the revisioal authority has passed orders atAnnexure B. As a matter of fact, revisional authoritynarrated the factual situation right from the inceptionof the appellant-assessee how it got registered underSection 10 of the Madras Co-operative Societies Actand why the Banking Regulation Act is not applicableto the case of the assessee. It was also the case of theappellant-assessee that the case of the appellant has tobe considered only by looking into the Kerala State Co-operative Societies Act and nothing else. According tothem, certificate of registration would indicate their I.T.A. No. 4 of 2014 -: 3 :- I.T.A. No. 4 of 2014 -: 3 :- claim and also decide what exactly is the nature ofbusiness. The revisional authority was justified insaying, with the introduction of Section 80P(4)necessarily, an enquiry has to be conducted into thefactual situation whether co-operative bank isconducting the business as a primary agriculture creditsociety or a primary co-operative agricultural and ruraldevelopment bank and depending upon thetransactions, the assessing officer has to extend thebenefits available and not merely looking at theregistration certificate by the Kerala Co-operativeSocieties Act or the nomenclature. On going throughthe orders of the revisional authority and the Tribunal,we find the reasoning of the revisional authority wasnot merely based on the name of the appellant-assessee, but with reference to factual situation inrelation to an enquiry to arrive at a conclusion whetherbenefits can be extended or not in the light of Section80P(4) of the Act. As there was no discussion at all bythe assessing officer from this perspective, there wasjustification for the revisional authority to conclude thatorder of the assessing officer was not only erroneousbut prejudicial to the interest of the revenue. A verydetailed discussion giving the reasons why the matter I.T.A. No. 4 of 2014 -: 4 :- should be re-considered by the assessing officer cameto be passed by the revisional authority. After referringto relevant judgment in paragraph 7 of the order of therevisional authority, the Tribunal has upheld the opinionof the revisional authority. The only apprehensionseems to be, the assessing officermay without applyinghis mind independently, follow the observation ofrevisional authority as expressed by arguments oflearned counsel appearing for the assessee. Therevisional authority, no doubt, did observe that theassessing officer has to re-consider the matter in thelight of observation made in the order of the revisionby which it means what exactly should be the nature ofenquiry to be conducted by the assessing officer and itdoes not mean that he has to complete his assessmentproceedings after concluding the same similar to theconclusions arrived at by the revisional authority. As amatter of fact, the revisional order is an insight into thenature of enquiry or ascertainment of factual situationto be made by the assessing officer and nothing more. We find no erroneous observations made by therevisional authority. However, we direct the assessingofficer to pass fresh assessment orders after makingnecessary enquiries as observed in the orders of I.T.A. No. 4 of 2014 -: 5 :- revisional authority, untrammeled by any of the opinions expressed by the revisional authority.The appeal is disposed of with the aboveobservations. Sd/- Manjula Chellur, Chief Justice. Sd/- A.M. Shaffique, Judge. Tds/ [True copy] P.S to Judge.