M/S Kalapet Primary Agricultural Co-Op. Credit Society Ltd., P-96Rep.by Its Administrator, Sri A.irysappanson Of Sri M.adhimulamkalapet Postpondicherry 605 014 v. Https://Hcservices.ecourts.gov.in/Hcservices

IN THE HIGH COURT OF JUDICATURE AT MADRAS M/s Kalapet Primary Agricultural Co-op. Credit Society Ltd., P-96rep.by its Administrator, Sri A.IrysappanSon of Sri M.AdhimulamKalapet PostPondicherry 605 014 ..Petitioner -vs- Petition under Article 226 of the Constitution of India, prayingfor the issue of a Writ of Certiorarified Mandamus, calling for therecords in PAN: dated 18.05.2015 relating to assessmentyear 2009-10 on the file of the first respondent and quash the sameand further forbearing the first respondent from initiating orcontinuing with any proceedings for recovery of the disputed demandpursuant to the order of assessment in P.A.No./G.I.R.No.AAAAK1570Gdated 10.03.2015 relating to assessment year 2009-10 passed by thefirst respondent. This writ petition has been directed against the impugned orderdated 18.05.2015 passed by the first respondent-Income Tax Officer,Ward-4, Pondicherry in PAN: relating to the assessment year2009-10, to quash the same with a further direction to forbear thefirst respondent from initiating or continuing with any proceedingsfor recovery of the disputed demand pursuant to the order of https://hcservices.ecourts.gov.in/hcservices/ assessment in P.A.No./G.I.R.No.AAAAK1570G dated 10.03.2015 relatingto the assessment year 2009-10. This writ petition has been directed against the impugned orderdated 18.05.2015 passed by the first respondent-Income Tax Officer,Ward-4, Pondicherry in PAN: relating to the assessment year2009-10, to quash the same with a further direction to forbear thefirst respondent from initiating or continuing with any proceedingsfor recovery of the disputed demand pursuant to the order of https://hcservices.ecourts.gov.in/hcservices/ assessment in P.A.No./G.I.R.No.AAAAK1570G dated 10.03.2015 relatingto the assessment year 2009-10. 2. Dr.Anita Sumanth, learned counsel for the petitionersubmitted that the petitioner, being a primary agriculturalcooperative credit society, maintains regular books of accounts andhas been filing the returns of income regularly in terms of theprovisions of the Income Tax Act within the statutory period, hence,assessments were also completed by the department with the co-operation of the petitioner. While so, when the petitioner filed thereturn of income claiming deduction under Section 80P of the IncomeTax Act for the assessment year 2009-10, the claim of the petitionerwas rejected holding that the petitioner did not satisfy thedefinition of 'agricultural credit society' set out in terms of theExplanation to Section 80P(4) of the Act. Yet another grievance ofthe petitioner is that when the impugned assessment order dated10.3.2015 was passed under Section 143(3) effecting disallowance ofRs.91,92,883/- under Section 40(a)(ia) for the alleged violation ofSection 194A and Rs.3,20,686/- and Rs.27,500/- as disallowances underSection 40(a)(ia) for the alleged violation of Section 194H andSection 194J of the Act, the order of re-assessment under Section 143(3) read with Section 147 erroneously resulted in the determinationof the income of the petitioner at Rs.1,28,87,139/- and the taxpayable thereon at Rs.59,79,550/-. Aggrieved by the same, an appealhas been filed before the second respondent-Commissioner of IncomeTax (Appeals), Chennai and the said appeal is pending after issuanceof notice dated 4.2.2015. In this background, the grievance of thepetitioner is that when the petitioner is a primary agriculturalcredit society and comes under the exclusion of Section 194A(viia),the disallowance brought under Section 40(a)(ia) is wholly unfounded.In any event the issue raised in the present writ petition has beendecided in favour of the assessee by the jurisdictional bench of theIncomeTaxAppellateTribunal'D'Bench,ChennaiinI.T.A.No.197/Mds/2013 dated 11.2.2014 (Income Tax Officer, Ward-II(3), Coimbatore v. M/s Veerakeralam Primary Agricultural CooperativeCredit Society, Coimbatore) in respect of the very same assessmentyear, therefore, the assessing authority cannot pass the assessmentorder nor refuse to grant stay during the pendency of the appeal, forthe simple reason that when the petitioner, aggrieved by the impugnedorder of reassessment dated 10.3.2015, has preferred an appeal beforethe Commissioner of Income Tax (Appeals), Chennai and along with theappeal, when the petitioner has filed a petition before the assessingauthority, the first respondent herein under Section 220(6) of theIncome Tax Act on 15.4.2015 for being treated as 'not in default'during the pendency of appeal before the appellate authority, theassessing authority arbitrarily passed an order directing thepetitioner to pay 50% of the demand raised for the assessment year2009-10 as preliminary measure even before the disposal of the staypetition. Such an approach is a clear violation of the procedure andalso running contrary to the issue decided in favour of the assesseeby the jurisdictional Bench of the Tribunal as mentioned supra. 3. Continuing her arguments, Dr.Anitha Sumanth contended that inspite of bringing to the notice of the assessing authority that thepetitioner is falling within the exclusion of Section 194A(vii)(a)being a primary agricultural credit society and the issue has beendecided in favour of the assessee by the jurisdictional bench of theTribunal in I.T.A.No.197/Mds/2013 dated 11.2.2014, moreparticularly, that the petitioner society does not have the resourcesto make any portion of the demand raised, the assessing authority hasneither considered the same nor followed the instructions of theCentral Board of Direct Taxes in File No.404/10/2009-ITCC dated1.12.2009 affirming Instruction No.1914 dated 2.12.93, which mandatesthat stay of recovery is liable to be granted if the issue covered byorders of the superior authority, directly applicable to the presentcase. In support of her submissions, she also brought to the noticeof this Court the various decisions of the Income Tax AppellateTribunal, Panaji and Chennai Benches in (1) I.T.A.Nos.1 to3/PNJ/2012 dated 30.3.2012 (Deputy Commissioner of Income Tax,Central Cirlce, Panaji, Goa v. M/s Jayalakshmi MahilaVividodeshagala); (2) in I.T.A.No.174/Mds/2013 dated 23.8.2013(Income Tax Officer v. Kasipalayam Primary Agricultural Co-operativeBank Ltd.) and (3) in I.T.A.No.197/Mds/2013 dated 11.2.2014 (IncomeTax Officer v. M/s Veerakeralam Primary Agricultural CooperativeCredit Society), for the proposition that if the assessee isadmittedly not a credit cooperative bank, but a credit cooperativesociety, the exclusion clause of sub-section (4) of Section 80P,therefore, would not apply. 4. Taking support from the above decisions, it was contendedthat when the petitioner had filed an appeal against the assessmentorder and the same is also pending consideration before the appellateauthority, in the meanwhile, as against the demand of entire tax bythe first respondent, a petition for stay was moved before the firstrespondent-assessing officer seeking to grant an order of stay ofrecovery till such time the appeal is finally heard and disposed ofby the appellate authority. However, by a communication dated20.4.2015, the petitioner was informed that the stay petition wouldbe taken up only subject to the payment of 50% of the tax demand atonce or on a proposal for making the payment of demand ininstallments. It was also further informed that in case of failure torespond to the said communication within a week, the stay petitionwould be treated as rejected and necessary coercive measures would betaken to recover the entire demand. The learned counsel furthersubmitted that aggrieved by the demand of 50% tax as a conditionprecedent even for consideration of the stay petition, the petitioneragain approached the second respondent-appellate authority seeking anabsolute stay of the recovery proceedings pending appeal. When theappeal/stay petition has been pending consideration before the secondrespondent-appellate authority, the first respondent has wronglyrejected the stay petition by order dated 18.5.2015 directing thepetitioner to pay the demand at once. On this basis, the learned counsel sought the indulgence of this Court for an appropriatedirection to the appellate authority to decide the appeal on merits,as otherwise irreparable loss would be caused to the petitioner. counsel sought the indulgence of this Court for an appropriatedirection to the appellate authority to decide the appeal on merits,as otherwise irreparable loss would be caused to the petitioner. 5. On the other hand, Mr.T.Pramod Kumar Chopda, learned seniorstanding counsel for the respondents submitted that the writ petitioncannot be entertained for the simple reason that when the order dated18.5.2015 passed by the first respondent is explicitly clear that amere pendency of the appeal would not be a ground for the petitionerto escape from the payment of the disputed liability, it is not opento the petitioner to bypass the pending appeal to maintain thepresent writ petition. The learned senior standing counsel alsosubmitted that if at all the petitioner wants an early disposal ofthe matter, a direction may be issued to the second respondent-appellate authority to take up the stay petition and dispose of thesame on merits expeditiously. 6. Replying to the said submission, the learned counsel for thepetitioner requested this Court to direct the second respondent-appellate authority to take up the appeal itself in I.T.A.No.327/CIT(A)PDY/2013-14 for final hearing on merits expeditiously, as thepetitioner had already received the notice dated 4.2.2015 fixing thedate of hearing on 16.2.2015, since adjourned to subsequent date. 7. Heard the learned counsel on either side. 8. The circular issued by the Central Board of Direct Taxes inFile No.404/10/2009-ITCC dated 1.12.2009 affirming InstructionNo.1914 dated 2.12.93 clearly enlightens the duty, responsibility andthe guidelines cast on the assessing authority for staying demand. Inthis context, it is appropriate to extract the relevant portions ofthe Instruction No.1914 dated 2.12.93, as follows:- ''A. Responsibility(i) It shall be the responsibility of theAssessing Officers and the TRO to collect everydemand that has been raised, except thefollowing: (a) Demand which has not fallen due;(b) Demand which has been stayed by a Court orITAT or Settlement Commission;(c) Demand for which a proper proposal for writeoff has been submitted;(d) Demand stayed in accordance with paras B & Cbelow...... B. Stay petitions(i) Stay petitions filed with the AssessingOfficers must be disposed of within two weeks ofthe filing of petition by the taxpayer. Theassessee must be intimated of the decision without delay. (ii) Where stay petitions are made to theauthorities higher than the Assessing Officer(DC/CIT/CC), it is the responsibility of thehigher authorities to dispose of the petitionswithout any delay, and in any event within twoweeks of the receipt of the petition. Such adecision should be communicated to the assesseeand the Assessing Officer immediately. (iii) The decision in the matter of stay ofdemand should normally be taken by AssessingOfficer/TRO and his immediate superior. A highersuperior authority should interfere with thedecision of the AO/TRO only in exceptionalcircumstances e.g. where the assessment orderappears to be unreasonably highpitched or wheregenuine hardship is likely to be caused to theassesee. The higher authorities should discouragethe assessee from filing review petitions beforethem as a matter of routine or in a frivolousmanner to gain time for withholding payment oftaxes. C. Guidelines for staying demand (i) A demand will be stayed only if there arevalid reasons for doing so. Mere filing an appealagainst the assessment order will not besufficient reason to stay the recovery of demand.A few illustrative situations where stay could begranted are-- C. Guidelines for staying demand (i) A demand will be stayed only if there arevalid reasons for doing so. Mere filing an appealagainst the assessment order will not besufficient reason to stay the recovery of demand.A few illustrative situations where stay could begranted are-- (a) If the demand in dispute relates to issuesthat have been decided in assessee's favour by anappellate authority or Court earlier; or(b) if the demand in dispute has arisen becausetheAssessingOfficerhadadoptedaninterpretation of law in respect of which thereexist conflicting decisions of one or more HighCourts (not of the High Court under whosejurisdiction the Assessing Officer is working);or(c) If the High Court having jurisdiction hasadopted a contrary interpretation but theDepartment has not accepted that judgment......“ 9. A careful reading of the above guidelines clearly shows thatit shall be the duty of the assessing authority to collect everydemand which has not fallen due or has been stayed by a Court orTribunal etc. It appears that the jurisdictional Income TaxAppellate Tribunal 'D' Bench in I.T.A.No.197/Mds/2013 dated 11.2.2014(Income Tax Officer, Ward-II(3), Coimbatore v. M/s Veerakeralam https://hcservices.ecourts.gov.in/hcservices/ Primary Agricultural Cooperative Credit Society, Coimbatore), whiledealing with a similar issue, placing reliance on the judgment of theGujarat High Court in the case of Commissioner of Income Tax v.Jatari Momin Vikas Cooperative Credit Society Ltd., 2014 (2) TMI 28,has held as follows:- ''7. From the above clarification, it can begathered that sub-section (4) of Section 80P willnot apply to an assessee which is not a co-operative bank. In the case clarified by CBDT,Delhi Coop Urban Thrift & Credit Society Ltd., wasunder consideration. Circular clarified that thesaid entity not being a cooperative bank, section80P(4) of the Act would not apply to it. In viewof such clarification, we cannot entertain theRevenue's contention that section 80P(4) wouldexclude not only the co-operative banks other thanthose fulfilling the description contained thereinbut also credit societies, which are notcooperative banks. In the present case, respondentassessee is admittedly not a credit cooperativebank but a credit cooperative society. Exclusionclause of sub-section (4) of Section 80P,therefore, would not apply. In the result, TaxAppeals are dismissed. The Revenue has tried to establish that theassessee although a credit cooperative society iscarrying on banking business and is thus noteligible. In our opinion, the assessee is not acooperative bank...'' 10. The above observation, prima facie, brings the case of thepetitioner under the guidelines-C(i)(a) for staying demand, whichsays that if the demand in dispute relates to issues that have beendecided in assessee's favour by an appellate authority or Courtearlier, the demand will be stayed. While the issue appears to beclear, this Court does not find any justification why the assessingauthority has not considered the guidelines under the InstructionNo.1914 dated 2.12.93. Moreover, it is well settled legal positionthat all authorities, civil, criminal and judicial, coming within theterritory of the High Court, shall act in the aid of the High Court.While so, the assessing authority is bound by the order passed by thejurisdictional Tribunal without taking any stand that the Tribunal orHigh Courts of other States are taking a different view. 11. Be that as it may, when the appeal has been filed by thepetitioner before the appellate authority along with stay petition,keeping in mind that any further observation would have a cascadingeffect on the pending appeal of the petitioner, with all hesitation,is restraining to express anything on the merits, therefore, in thefitness of things, this Court, accepting the request made by the https://hcservices.ecourts.gov.in/hcservices/ 11. Be that as it may, when the appeal has been filed by thepetitioner before the appellate authority along with stay petition,keeping in mind that any further observation would have a cascadingeffect on the pending appeal of the petitioner, with all hesitation,is restraining to express anything on the merits, therefore, in thefitness of things, this Court, accepting the request made by the https://hcservices.ecourts.gov.in/hcservices/ learned counsel for the petitioner for a direction to dispose of themain appeal itself, as the petitioner had received the notice dated4.2.2015, hereby directs the second respondent-appellate authority todispose of the appeal in I.T.A.No.327/CIT(A)PDY/2013-14 on its ownmerits within a period of three months from the date of receipt of acopy of this order. Needless to mention that till then, the firstrespondent shall not proceed with the recovery, as it is well settledlaw that during the pendency of the appeal before the appellateauthority, the department is not entitled to initiate the recoveryproceedings. With the above direction, the writ petition standsdisposed of. Consequently, M.P.No.1 of 2015 is closed. No costs. -s/d- Assistant RegistrarTrue Copy Sub-Assistant RegistrarssTo1. The Income Tax Officer Ward-4 Pondicherry 2. The Commissioner of Income Tax (Appeals)-15 121, Mahatma Gandhi Road Nungambakkam Chennai 600 034 +1 cc to Mr.T.PramodKumar Chopda sr.26998+1 cc to Dr.AnitaSumanth Sr.no.26847 W.P.No.15959 of 2015 rv(co)aa13/07/2015 https://hcservices.ecourts.gov.in/hcservices/