The Assistant Commissioner Of Income Tax,O/O. The Assistant Commissioner Of Income Tax,Non-Corporate Circle-11, Chennai - 6 v. Https://Hcservices.ecourts.gov.in/Hcservices

IN THE HIGH COURT OF JUDICATURE AT MADRAS M/s.The LIC Employees Co-operative Bank Ltd.,Represented by its President Mr.AE Muthukumar,No.8, United India Building, Esplanade Road,Chennai - 600 108. ... Petitioner The Assistant Commissioner of Income Tax,O/o. The Assistant Commissioner of Income Tax,Non-Corporate Circle-11, Chennai - 6.... Respondent Prayer: Writ Petition filed under Article 226 of theConstitution of India, praying to issue a Writ of Certiorari, tocall for the records of the impugned assessment order u/s. 143(3) of the Income Tax Act, 1961 issued by the respondent dated08.12.2017 in PAN: for assessment year 2015-16 andquash the same as it was passed in violation of the law laiddown by the judgment of this Court in the case of M/s.TheCoimbatore District Central Co-operative Bank Ltd. vs. ITO,reported as (2016) 382 ITR 266 (Madras) and orders of the IncomeTax Appellate Tribunal in petitioner's own case for assessmentyears 2009-10, 2010-11, 213-14 and 2014-15 in ITA Nos.823 to826/Mds/2016 and the CBDT Circular No.19/2015 dated 27.11.2015. The petitioner is a co-operative society, namely, The LICEmployeers Co-operative Bank Ltd., registered under theprovisions of the Co-operative Societies Act, 1983. The Co-operative Society has been formed for the welfare of theemployees of the Life Insurance Corporation. In this writpetition, the petitioner is aggrieved by an assessment orderdated 08.12.2017 for the assessment year 2015-2016 under Section https://hcservices.ecourts.gov.in/hcservices/ 143(3) of the Income Tax Act, 1961 (hereinafter referred to as"the Act") 2.Mr.J.Narayanasamy, learned counsel for the revenuevehemently opposed the maintainability of the writ petition andcontended that the petitioner should be relegated to avail theappellate remedy under the Act and no indulgence should begranted to the petitioner to challenge an assessment order byway of a writ petition. It is further submitted that if thisCourt is inclined to entertain the writ petition, then theDepartment should be permitted to file a detailed counteraffidavit and arguments to be heard. 3.Both the submissions are not convincing for the reasonthat the respondent has ignored the decision of the DivisionBench of this Court which is the jurisdictional Court withinwhose jurisdiction the respondent exercises its power.Secondly, if there is a palpable error apparent on the face ofthe impugned order which does not require a long drawnreasoning, this Court would be well within its jurisdiction toexercise its powers under Article 226 of the Constitution ofIndia. Furthermore, the respondent cannot be permitted tosubstitute reasons not contained in the impugned order by way ofa counter affidavit. This position has been settled by theHon'ble Supreme Court as early as in the year 1981. Therefore,the Court is inclined to entertain the writ petition. 4.Heard Mr.K.Ravi, learned counsel for the petitioner andMr.J.Narayanasamy, learned counsel for the respondent. 4.Heard Mr.K.Ravi, learned counsel for the petitioner andMr.J.Narayanasamy, learned counsel for the respondent. 5.The respondent issued a show cause notice which appears tohave been issued after perusal of the Profit and Loss account ofthe petitioner and it is stated that the petitioner had notdeducted tax at source on interest payments exceedingRs.10,000/- as per Section 194(A)(1) read with Section 194A(i)(b) of the Act. Therefore the petitioner was directed to showcause as to why the provisions under Section 40(a)(ia) of theAct should not be invoked for non-compliance of TDS deduction.The petitioner in their reply stated that the assessee startedfunctioning in the year 1939 in the name of United Union IndiaBuilding Staff Cooperative Society Ltd. registered under theMadras Cooperative Societies Act, 1932 and after nationalizationof the insurance sectors with effect from 01.09.1956, the nameof the assessee was changed to the present name with area ofoperation extending to the State of Tamil Nadu. The petitionerassessee obtained license from the Reserve Bank of India on01.03.1966 to carry out banking business. It was further statedthat the petitioner assessee has two categories of membership,namely, one open to LIC employees only and second category isassociate membership. Both categories of members can deposit money into the petitioner Society but loan can be availed onlyby the LIC employee members. Further, it was stated that theamendment to Section 194A expressly provide that from aprospective date i.e. 01.06.2015 exemption has been provided.In this regard, reference was made to the circular issued byCBDT in Circular No.19/2015. Therefore, it was contended thatthe co-operative bank was not required to deduct tax at sourcefrom the payment of interest on time deposits of its memberspaid or credited before 01.06.2015. Reliance was placed on thedecision of the Hon'ble Division Bench in the case of CoimbatoreDistrict Central Cooperative Bank Ltd. vs. Income Tax Officer,TDS Ward I(5), Coimbatore reported in (2016) 382 ITR 266(Madras). 6.Further, the concept of single transaction was alsoexplainedapartfromtheoryofprospectivityvs.retrospectivity. The petitioner Society encloses a copy of theexplanatory note given by the CBDT, a copy of the decision inthe case of Coimbatore District Central Cooperative Bank Ltd.and the orders passed by the ITAT in the assessee's own case forthe assessment years 2009-2010, 2010-2011, 2013-2014 and 2014-2015. 7.On perusal of the impugned order, I find that there hasnot been due application of mind to the stand taken by thepetitioner in their reply dated 04.12.2017. The respondent hasproceeded entirely on a different ground than what was mentionedin the show cause notice. In other words, the decision arrivedat while completing the assessment is not on the ground on whichthe petitioner was required to show cause. This would besufficient to set aside the impugned proceedings. That apart,the respondent has passed the impugned order by drawing adistinction between different types of Cooperative Societies andhas stated that the petitioner is involved in banking businessthough it is a cooperative society and tax has to be deducted atsource. In fact, this very issue was considered by the Hon'bleDivision Bench in paragraph No.42 of the judgment. It appearsthat the respondent has not gone through the decision, copy ofwhich was filed by the petitioner along with their reply to theshow cause notice. The Assessing Officer was bound by thedecision rendered by the jurisdictional High Court. It isstated that as on date there is no appeal by the revenue asagainst the decision in the case of Coimbatore District CentralCooperative Bank Ltd. That apart, in the assessee's own casefor the previous assessment years, the Tribunal has held infavour of the petitioner assessee. 8.The learned senior counsel for the revenue submits thatappeals have been preferred against the said orders. Merependency of an appeal would not amount to an order of stay. https://hcservices.ecourts.gov.in/hcservices/ Therefore, even assuming appeals have been presented as long asorders passed by the ITAT, has not been stayed or set aside itis binding upon the Assessing Officer. 9.For all the above reasons, the impugned order calls forinterference. Accordingly, the writ petition is allowed, theimpugned order is set aside and the matter is remanded to therespondent for passing fresh orders, who is directed to takeinto consideration the decision of the Hon'ble Division Bench inthe case of Coimbatore District Central Cooperative Bank Ltd.and also the circular issued by the CBDT in Circular No.19/2015dated 27.11.2015 and pass revised orders in accordance with law.While re-doing the assessment, the respondent should bear inmind the observations made by the Hon'ble Supreme Court in thecase of Union of India and others vs. Kamlakshi FinanceCorporation reported in AIR 1992 SC 711. No costs.Consequently, connected Miscellaneous Petition is closed. Sd/- Assistant Registrar(CS VII) //True Copy// cseTo Sub Assistant Registrar The Assistant Commissioner of Income Tax,O/o. The Assistant Commissioner of Income Tax,Non-Corporate Circle-11,Chennai - 6. +1cc to Mr.J.Narayanaswamy, Advocate Sr.No.4695+1cc to Mr.K.Ravi, Advocate, Sr.No.3968 KJI(CO)RRK:22.2.2018 W.P.No.812 of 2018and WMP.No.979 of 2018