M/S.the Pallipalayam Farmers Service Cooperative Society Limited v. Income Tax Officer, Ward 1(4)

IN THE HIGH COURT OF JUDICATURE AT MADRAS Dated : 22-08-2019 Coram THE HONOURABLE MR. JUSTICE M.SUNDAR W.P.Nos.3397, 4824 and 13168 of 2019 And W.M.P.Nos.3678, 3679, 5479, 5480, 13292 to 13294 of 2019 M/s.PE 44 Erode Taluk Revenue OfficialsCo-operative Thrift and Credit Society,Represented by its Secretary,258/10, Collectorate,Erode – 638 011PAN : AACAP5925E.. Petitioner in WP 3397/2019 K.464, Unjalur KolathupalayamPrimary Agricultural Cooperative CreditSociety Ltd., Represented by its President,K.P.Rajkumar, M/47S/o.K.S.Palanisamy,Kolathupalayam,Erode District... Petitioner in WP 4824/2019 M/s.The Pallipalayam Farmers ServiceCooperative Society Limited,Represented by its Secretary,S.N.208, Pallipalayam,Tiruchengode,Namakkal-638 006,PAN : .. Petitioner in WP 13168/2019vs. Income Tax Officer,Ward 1(4),No.15, Gandhiji Road,Erode-638 001... Respondent in WP 3397/2019 1/14 The Assistant Commissioner of Income Tax,Ward-2(3), Erode,Income Tax Office, No.15, Gandhiji Road,Erode,Erode District. .. Respondent in WP 4824/2019 The Assistant Commissioner of Income Tax,Circle-1,Namakkal .. R-1 in WP 13168/2019 The Chief Manager,State Bank of India,SME Branch,Pallipalayam (03358),Erode – 638 006. .. R-2 in WP 13168/2019 WP 3397 of 2019 is filed under Article 226 of the Constitution of India praying for issuance of a Writ of Certiorari, calling for the records of the respondent herein in Order No.ITBA/AST/S/143(3)/ 2018-19/1014670886(1) passed by the respondent for the Assessment Year 2016-17 and quash the Order dated 31.12.2018 passed therein. WP 4824 of 2019 is filed under Article 226 of the Constitution of India praying for issuance of a Writ of Certiorari, calling for the entire records relating to the impugned order passed by the respondent in Order No.ITBA/AST/S/143(3)/2018-19/1014637639(1) dated 28.12.2018 and quash the same. WP 13168 of 2019 is filed under Article 226 of the Constitution of India praying for issuance of a Writ of Certiorarified Mandamus, calling for the records of the first respondent in his proceedings in Communication Reference No.CPC/1415/A5/ 2/14 WP Nos.3397, 4824 and 13168 of 2019 1542254955 for the assessment year 2014-15 and quash the impugned order dated 25.02.2016 passed therein and further direct the first respondent to dispose of the rectification petition filed under Section 154 of IT Act dated 02.06.2016. For Petitioner in WPs 3397 and 13168 of 2019 : Mr.B.Raveendran For Petitioner in WP 4824 of 2019 : Ms.R.Hemalatha for Mr.C.Prakasam For Respondent in WPs 3397 & 4824 of 2019 and for R-1 in WP 13168 of 2019 : Mr.A.P.Srinivas, Senior Standing Counsel for Income Tax. For R-2 in WP 13168 of 2019 : No Appearance C O M M O N O R D E R Ms.R.Hemalatha, learned counsel representing Mr.C.Prakasam counsel on record for writ petitioner in one of these writ petitions viz., WP No.4824 of 2019 and Mr.B.Raveendran, learned counsel on record in two of these writ petitions viz., WP Nos.3397 and 13168 of 2019 on behalf of writ petitioners are before this Court. On behalf of respondent in WP Nos.3397 and 4824 of 2019 and on behalf of first respondent in WP No.13168 of 2019, Mr.A.P.Srinivas, learned Senior Standing Counsel for Income Tax is before this Court. 3/14 WP Nos.3397, 4824 and 13168 of 2019 2. It is submitted without any disputation or disagreement by both the learned counsel that these three writ petitions are covered by an earlier order made by this Court being order dated 18.07.2019 in WP No.3385 of 2019 and WMP No.3666 of 2019. The said order dated 18.07.2019 reads as follows: 'Mr.B.Raveendran, learned counsel on recordforwritpetitionerand Mr.A.N.R.Jayaprathap,learnedJunior Standing counsel (Income Tax) on behalf of lone official respondent are before this Court. 2. With consent of learned counsel on both sides, main writ petition is taken up and is being disposed of. 3/14 WP Nos.3397, 4824 and 13168 of 2019 2. It is submitted without any disputation or disagreement by both the learned counsel that these three writ petitions are covered by an earlier order made by this Court being order dated 18.07.2019 in WP No.3385 of 2019 and WMP No.3666 of 2019. The said order dated 18.07.2019 reads as follows: 'Mr.B.Raveendran, learned counsel on recordforwritpetitionerand Mr.A.N.R.Jayaprathap,learnedJunior Standing counsel (Income Tax) on behalf of lone official respondent are before this Court. 2. With consent of learned counsel on both sides, main writ petition is taken up and is being disposed of. 3. Owing to the nature of the trajectory which the hearing has taken today, the entire writ petition now turns on a very narrow compass. Therefore, it may not be necessary to set out facts in great detail. 4. Suffice to say that the writ petitioner is a Primary Agricultural Cooperative Credit Society, registered under 'Tamil Nadu Cooperative Societies Act, 1983' ['TNCS Act' for brevity] 5. The instant writ petition has been filed, assailing an order dated 24.12.2018 made by the lone official respondent and this WP Nos.3397, 4824 and 13168 of 2019 order bears reference Order No:ITBA/ AST/S/143(3)/2018-19/1014536712(1). This order dated 24.12.2018 bearing reference 'OrderNo:ITBA/AST/S/143(3)/2018-19/ 1014536712(1)', shall hereinafter be referred to as 'impugned order'. To be noted, impugned order is an assessment order, pertaining to Assessment Year 2016-17 qua writ petitioner and the impugned order has been made by the lone official respondent under Section 143(3) of 'Income Tax Act, 1961' ['IT Act' for brevity]6. The pivotal submission is that the writ petitioner being a Cooperative Society, is entitled to various deductions enlisted / adumbrated under Section 80P of IT Act. That Cooperative Societies akin to the writ petitioner, which are registered under TNCS Act are entitled to claim deductions under various heads adumbrated under Section 80P of IT Act has been laid down by this Court in Commissioner of Income Tax, Salem Vs. Tiruchengode Agricultural Producers Cooperative Marketing Society Ltd., [hereinafter'TiruchengodeAgricultural Producers Cooperative Marketing Society case'for brevity] vide order dated 02.08.2016 made in Tax Case Appeal Numbers.484 to 487 and 490 of 2016. 'Tax Case Appeals' shall be referred to as 'TCAs' for the sake of brevity. 7.TheaforesaidTiruchengode Agricultural Producers Cooperative Marketing Society case was rendered by Hon'ble Division Bench based on M/s. Veerakeralam Primary Agricultural Co-operative Credit Societyprinciple being principle laid down by another Hon'ble Division Bench vide judgment in Commissioner of Income Tax Vs.M/s.VeerakeralamPrimary Agricultural Co-operative Credit Society dated 05.07.2016 made in Tax Case Appeal Nos.735, 755 of 2014 and 460 of 2015 [hereinafter 'VeerakeralamPrimary Agricultural Co-operative Credit Society principle' for brevity]. 8. In the aforesaid cases, Hon'ble Division Bench addressed itself to the question as to whether Primary Agricultural Societies carrying on the business of providing credit facilities to its members are entitled to claim deductions under Section 80P of IT Act and the same was answered in the affirmative. WP Nos.3397, 4824 and 13168 of 2019 9. Reverting to the case on hand, a perusal of the impugned order reveals that it turns on three heads, the same as set out in the impugned order reads as follows: '(i) Deduction under chapter VIA (ii) Investments/advances/loans (iii) High cash in hand shown in balance sheet as compared to preceding year' [hereinafter 'VeerakeralamPrimary Agricultural Co-operative Credit Society principle' for brevity]. 8. In the aforesaid cases, Hon'ble Division Bench addressed itself to the question as to whether Primary Agricultural Societies carrying on the business of providing credit facilities to its members are entitled to claim deductions under Section 80P of IT Act and the same was answered in the affirmative. WP Nos.3397, 4824 and 13168 of 2019 9. Reverting to the case on hand, a perusal of the impugned order reveals that it turns on three heads, the same as set out in the impugned order reads as follows: '(i) Deduction under chapter VIA (ii) Investments/advances/loans (iii) High cash in hand shown in balance sheet as compared to preceding year' 10. With regard to (i) supra, as the Hon'ble Division Bench of this Hon'ble Court has already held that Cooperative Societies akin to the writ petitioner are entitled to claim deductions under various heads adumbrated under Section 80P of IT Act, the same does not survive. However, this Court is informed that Income Tax Department is carrying both Tiruchengode Agricultural Producers Cooperative Marketing Society case and Veerakeralam Primary Agricultural Co-operative Credit Society TCAs to Hon'ble Supreme Court. On this basis, this Court has passed an order dated 27.06.2019 in W.P.No.2552 of 2019 & etc., batch interalia to the effect that this question is subject to the outcome of the Special Leave Petitions said to have been filed by the department. To be noted, this aforesaid order dated WP Nos.3397, 4824 and 13168 of 2019 27.06.2019 in W.P.No.2552 of 2019 & etc., batch came to be passed by this Court as that was the lone issue therein, but in the instant case, that issue is dovetailed with two other issues namely (ii) and (iii) supra. 11. In the aforesaid backdrop, learned counsel for writ petitioner submitted that the writ petitioner will opt for the alternate remedy of a statutory appeal with regard to those aspects of the impugned orders excluding the aforesaid issue, which is coveredbyVeerakeralamPrimary Agricultural Co-operative Credit Society and TiruchengodeAgriculturalProducers Cooperative Marketing Society principles. 12. This takes us to the alternate remedy aspect. Alternate remedy is available to the writ petitioner by way of an appeal under Section 246A of IT Act. 13. There is a time limit of 30 days prescribed for preferring an appeal under Section 246A of IT Act, which lies to Commissioner (Appeals). 14. At the request of writ petitioner, time that has been spent in the instant writ petition i.e., time from the date of filing of instant writ petition to the date on which this WP Nos.3397, 4824 and 13168 of 2019 order is made available shall stand excluded for computing limitation for filing an appeal under Section 246A of IT Act. Even after such exclusion, if there is a delay, it is open to the writ petitioner to seek condonation of the same under Section 249(3) of IT Act and such a prayer for condonation of delay shall be dealt with by the Appellate Authority on its own merits. 15. Before parting with this case, it is necessary to mention that alternate remedy rule qua exercise of writ jurisdiction is a self imposed restraint. It is a rule of discretion and it is not a rule of compulsion. Though it is not an absolute rule, Hon'ble Supreme Court inSatyawati Tandon Case [United Bank of India Vs. Satyawati Tondon and others reported in (2010) 8 SCC 110] held that it should be exercised with greater rigour in fiscal law statutes. More importantly, in Satyawati Tondon case, Hon'ble Supreme Court held that such a rule has to be applied with utmost rigour when it comes to cases involving taxes, cess, fees etc., In other words, when it comes to fiscal statutes, these rules have to be applied with greater rigour and it is to be applied very WP Nos.3397, 4824 and 13168 of 2019 WP Nos.3397, 4824 and 13168 of 2019 strictly with regard to recovery of taxes, CESS, fess etc., Satyawati Tondon principle was reiterated by Hon'ble Supreme Court in K.C.Mathew case [Authorized Officer, State Bank of Travancore Vs. Mathew K.C. reported in (2018) 3 SCC 85]. Relevant paragraph in K.C.Mathew case is paragraph 10 and the same reads as follows: '10. In Satyawati Tondon the High Court had restrained further proceedings under Section 13(4) of the Act. Upon a detailed consideration of the statutory scheme under the SARFAESI Act, the availability of remedy to the aggrieved under Section 17 before the Tribunal and the appellate remedy under Section 18 before the Appellate Tribunal, the object and purpose of the legislation, it was observed that a writ petition ought not to be entertained in view of the alternate statutory remedy available holding: (SCC pp.123 & 128, Paras 43 & 55) “43. Unfortunately, the High Court overlooked the settled law WP Nos.3397, 4824 and 13168 of 2019 that the High Court will ordinarily not entertain a petition under Article 226 of the Constitution if an effective remedy is available to the aggrieved person and that this Rule applies with greater rigour in matters involving recovery of taxes, cess, fees, other types of public money and the dues of banksandotherfinancial institutions. In our view, while dealing with the petitions involving challenge to the action taken for recovery of the public dues, etc., the High Court must keep in mind that the legislations enacted by Parliament and State Legislatures for recovery of such dues are a code unto themselves inasmuch as theynotonlycontain comprehensive procedure for recovery of the dues but also envisage constitution of quasi-judicial bodies for redressal of the grievance of any aggrieved person. Therefore, in all such cases, the High Court must insist WP Nos.3397, 4824 and 13168 of 2019 that before availing remedy under Article 226 of the Constitution, a person must exhaust the remedies available under the relevant statute. 55. It is a matter of serious concern that despite repeated pronouncement of this Court, the High Courts continue to ignore the availability of statutory remedies under the DRT Act and the SARFAESI Act and exercise jurisdiction under Article 226 for passing orders which have serious adverse impact on the right of banksandotherfinancial institutions to recover their dues. We hope and trust that in future the High Courts will exercise their discretion in such matters with greatercaution,careand circumspection.' 16. This writ petition is disposed of, leaving it open to the writ petitioner to avail alternate remedy of statutory appeal to Commissioner (Appeals) under Section 246A of IT Act, in the manner set out supra in this WP Nos.3397, 4824 and 13168 of 2019 order. 17. This writ petition is disposed of with the above observations. No costs. Consequently, connected miscellaneous petition is closed.' 3. In the light of the aforesaid undisputed position, these three writ petitions also are disposed of in terms of the earlier order of this Court made in WP No.3385 of 2019 and WMP No.3666 of 2019 dated 18.07.2019 (extracted supra). There shall be no order as to costs. Consequently, connected miscellaneous petitions are closed. 22-08-2019 Speaking/Non Speaking Order.Internet : Yes/No.Index: Yes/No.Svn 13/14 M.SUNDAR.J., To 1.Income Tax Officer, Ward 1(4), No.15, Gandhiji Road, Erode-638 001. 2.The Assistant Commissioner of Income Tax, Ward-2(3), Erode, Income Tax Office, No.15, Gandhiji Road, Erode, Erode District.3.The Assistant Commissioner of Income Tax, Circle-1, Namakkal4.The Chief Manager, State Bank of India, SME Branch, Pallipalayam (03358), Erode – 638 006. WPs 3397, 4824 and 13168 2019 22-08-2019 14/14