Sivagangai District Central Cooperative Bank v. The Income Tax Officer, Tds Ward,Kulamangalam Road,Meenambalpuram,Madurai - 625 002

BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT DATED: 14.10.2020CORAM: THE HONOURABLE MR.JUSTICE ABDUL QUDDHOSEW.P.(MD)Nos.6604 and 6610 of 2020and W.M.P(MD)Nos.5953, 5954, 5958 & 5959 of 2020 W.P.(MD)No.6604 of 2020 Sivagangai District Central Cooperative Bank,represented by its General Manager,K.R.Balaraja,Sarugani Branch,2/354, East Street,Thondi Main Road,Sarugani - 630 302Devakottai Taluk,Sivagangai District. Vs ... Petitioner The Income Tax Officer, TDS Ward,Kulamangalam Road,Meenambalpuram,Madurai - 625 002.... Respondent PRAYER :Petition filed under Article 226 of the Constitution ofIndia to issue a Writ of Certiorari to call for the recordspertaining to the impugned order, dated 12.03.2020 inITBA/COM/F/17/2019-20/ 1026521959(1) and subsequent corrigendumorder dated 19.03.2020 in DIN and Letter No. ITBA/COM/F/17/2019-20/1026784975(1) issued by the respondent and quash the same asillegal, arbitrary, baseless and without jurisdiction. W.P.(MD)No.6610 of 2020 Sivagangai District Central Cooperative Bank,represented by its General Manager,K.R.Balaraja,Nehru Bazaar Branch,No.2, Nehru Bazaar Street,Sivagangai Taluk,Sivagangai District - 630 561.Vs The Income Tax Officer, TDS Ward,Kulamangalam Road,Meenambalpuram,Madurai - 625 002.https://hcservices.ecourts.gov.in/hcservices/ ... Petitioner ... Respondents PRAYER :Petition filed under Article 226 of the Constitution ofIndia to issue a Writ of Certiorari to call for the recordspertaining to the impugned order, dated 11.03.2020 in TAN MRIS07002C,Assessmentyear2020-21,DINandLetterNo.ITBA/COM/F/17/2019-20/ 1026435003(1) and TAN MRIS 07002C,Assessment year 2020-21, DIN and Letter No.ITBA/COM/F/17/2019-20/1026434562(1) issued by the respondent and quash the same asillegal, arbitrary, baseless and without jurisdiction. In both writ petitions For Petitioner : Mr.K.VinayaganFor Respondent : Mrs.S.SrimathySenior Standing Counsel COMMON ORDER These writ petitions have been filed challenging the impugnedorders passed by the respondent under Section 194N of the Income TaxAct. 2. The contention of the petitioners is that transaction inquestion is outside the purview of Section 194N of the Income TaxAct. 3. Heard Mr.K.Vinayagan, learned counsel appearing for the writpetitioners and Mrs.S.Srimathy, learned Senior Standing Counselappearing for the respondent. 4. According to the petitioners, they are Co-operative Banksand the respondent ought not have retrospectively enforced the saidprovision by taking into account the transactions that had takenplace even prior to the said date. It is also contended by therespective petitioners that the sums withdrawn by the member societywould not constitute ''income'' at the hands of the society.Therefore, the question of liability to pay or deduct the IncomeTax would not raise. It is also the contention of the respectivepetitioners that primary co-operative societies had acted ascorrespondents for Bankers and therefore, they would stand exemptedfrom the provision of Section 194N of the Income Tax Act. It isalso contended by the writ petitioners that the impugned ordershave been passed without giving sufficient opportunity to the writpetitioners to put forward their contentions. Hence, according tothem, principles of natural justice have been violated. 5. The very same issue raised by these petitioners wasconsidered by a co-ordinate Bench of this Court in a batch of writpetitions in W.P. (MD) No.6102 of 2020 batch. In the batch of writpetitions involving an identical issue after considering Section194N of Income Tax Act and Section 201 of Income Tax Act, the co-https://hcservices.ecourts.gov.in/hcservices/ordinate Bench has held as follows: 5. The very same issue raised by these petitioners wasconsidered by a co-ordinate Bench of this Court in a batch of writpetitions in W.P. (MD) No.6102 of 2020 batch. In the batch of writpetitions involving an identical issue after considering Section194N of Income Tax Act and Section 201 of Income Tax Act, the co-https://hcservices.ecourts.gov.in/hcservices/ordinate Bench has held as follows: “22. Since the Assessing Officers have not takeninto account the entire scheme of the Act and hadproceeded at breakneck speed, I am constrained tointerfere with the impugned proceedings and they areaccordingly quashed. The matters are remitted to thefile of the respective jurisdictional Assessing Officers.The Assessing Officers will issue fresh hearing noticesto the writ petitioners. The writ petitioners are atliberty to bring on record the returns filed by themember-Societies who had withdrawn cash beyond theceiling limit of Rupees One Crore. The AssessingOfficers will exclude Pongal cash gift distributed by thepetitioner-Banks at the instance of the Government ofTamil Nadu from the entire computation. This is becauseas already held the member-Societies have merely acted asbusiness correspondents of the writ petitioners herein.As regards the remaining amounts, it is open to the writpetitioners to establish before the Assessing Officersthat the sums withdrawn by the member-Societies do notrepresent income at their hands. As evidence the annualincome tax returns filed by the member-Societies can beproduced. If the second respondent is satisfied that theamounts withdrawn by the member-Societies did not in factrepresent income at their hands, the jurisdictionalAssessing Officers will drop further action. If they arenot so satisfied, of course, it is open to the AssessingOfficers to pass further orders in accordance withlaw”. 6. The Court is in agreement with the view taken by theco-ordinate Bench of this Court in the aforesaid order. 7. Accordingly, the same order is passed by this Court and thematter is remanded back to the respondent for fresh consideration asdirected by a Co-ordinate Bench of this Court in the aforesaidorder. 8. With the above directions, these writ petitions are disposedof. No costs. Consequently, connected miscellaneous petitions areclosed. Sd/- Assistant Registrar (P&A) / /2020Sub Assistant Registrar(CS) Note : In view of the present lock down owing to COVID-19pandemic, a web copy of the order may be utilizedfor official purposes, but, ensuring that the copyof the order that is presented is the correct copy,shall be the responsibility of the Advocate /litigant concerned. To The Income Tax Officer, TDS Ward,Kulamangalam Road,Meenambalpuram,Madurai - 625 002. +2 CC to M/s.S. SRIMATHY, Advocate ( SR-20092[F]& 20093 dated15/10/2020 ) KMV(CO)AP(05/11/2020) 4 P 4C W.P.(MD)Nos.6604 and 6610 of 2020 14.10.2020