Wa/1405/2018 Of Venjaramood Service Co-Operative Bank Ltd v. The Income Tax Officer

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN & THE HONOURABLE MR. JUSTICE ASHOK MENON TUESDAY, THE 7TH DAY OF AUGUST 2018 / 16TH SRAVANA, 1940 WA.No. 1405 of 2018 IN WPC. 14906/2018 AGAINST THE JUDGMENT IN WP(C) 14906/2018 of THIS HONOURABLE COURT DATED 29-05-2018 APPELLANT(S)/PETITIONER VENJARAMOOD SERVICE CO-OPERATIVE BANK LTD NO.2419, REPRESENTED BY ITS SECRETARY, VENJARAMOODU P.O., THIRUVANANTHAPURAM DISTRICT - 695 607. BY ADVS.SRI.V.G.ARUN SRI.T.R.HARIKUMAR SRI.JAIBY PAUL SRI.ARJUN RAGHAVAN SRI.ADITHYA RAJEEV RESPONDENT(S)/RESPONDENTS: 1. THE INCOME TAX OFFICER, WARD - 2 (3), OFFICE OF THE JOINT COMMISSIONER OF INCOME TAX, RANGE-2, AAYAKAR BHAVAN, KOWDIAR P.O., THIRUVANANTHAPURAM DISTRICT - 695 003. 2. THE COMMISSIONER OF INCOME TAX (APPEALS), AAYAKAR BHAVAN, KOWDIAR, THIRUVANANTHAPURAM - 695 003. R BY SRI.CHRISTOPHER ABRAHAM, STANDING COUNSEL,INCOME TAX DEPARTMENT THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 07-08-2018, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: acd K. VINOD CHANDRAN & ASHOK MENON, JJ.------------------------------------------- W.A.No.1405 of 2018 ---------------------------------------------- Dated this the 7[th] day of August, 2018 K. VINOD CHANDRAN,J. The Co-operative Bank, who is the appellant herein, isbefore us against the judgment of the learned Single Judge,which modified the interim order in a first appeal under theIncome Tax Act, 1961 [for brevity, the Act], directing paymentof 20% of the demand made under Section 68 of the Act;dissatisfied with the conditional order having not been setaside in toto. At the first appellate stage, the Commissioner[Appeals] granted a stay on condition of payment of 50% ofthe amounts. The learned Single Judge reduced it to 20%. TheCo-operative Bank is before us claiming impecuniouscircumstances and the possibility of close-down, if such hugeamounts are directed to be paid. 2. The assessment was made after issuance of noticeunder Section 143 or Section 142 of the Act. The assessee/Co-operative Bank produced Audit Certificates but did not produce the details of the persons, who have made depositswith them. The Income Tax Officer, drawing adverse inference,treated the deposits as unexplained cash credits and assessedthe same under Section 68 of the Act. The assessee filedappeal and then challenged the conditional order as statedabove. 3. Before us also the learned Counsel appearing for theassessee vigorously argued for a blanket stay and undertookthat the entire details will be produced before the FirstAppellate Authority. It is pleaded that only due to ignorance,earlier the details were not furnished before the AssessingOfficer. The First Appellate Authority, also being entitled to lookinto the facts, it is undertaken that the details would befurnished and in such circumstances, let there be aconsideration of the appeal at the earliest; without anyamounts being deposited. 4. The learned Standing Counsel with equal vigoropposed the prayer and submitted that what was attempted tobe checked is the laundering of black money, for which the Co-operative Banks are a major conduit. It is also submitted thatthe assessee having failed to produce the documents; shouldcomply with the demand raised subject only to the appeal. In the present case considerable reduction has been made andthere need not be any further indulgence extended to them, isthe contention. The learned Standing Counsel would alsosubmit that verification of the genuineness of the depositorswould require some time and may also warrant a report fromthe Assessing Officer, who could be directed to examine thegenuineness on the basis of the details supplied. Thisnecessarily would take time and in the meanwhile there cannotbe a blanket stay. the present case considerable reduction has been made andthere need not be any further indulgence extended to them, isthe contention. The learned Standing Counsel would alsosubmit that verification of the genuineness of the depositorswould require some time and may also warrant a report fromthe Assessing Officer, who could be directed to examine thegenuineness on the basis of the details supplied. Thisnecessarily would take time and in the meanwhile there cannotbe a blanket stay. 5. Having regard to the rival contentions, especiallynoticing the fact that the assessee is an Institution in theCo-operative sector and taking note of its members who arefrom the general public as also from the marginalised sections,we are of the opinion that an opportunity could be afforded tothe assessee to produce the details of deposits. 6. To avoid any recalcitrant attitude by the assessee, wedirected the learned Counsel to file an affidavit of undertaking,which has been done by the Secretary in the appeal before us.The affidavit categorically undertakes to produce the details ofthe deposits before the First Appellate Authority. The assesseewould also produce any further details required by the FirstAppellate Authority or the Assessing Officer on a report being called for by the First Appellate Authority. The same shall bedone within the time stipulated by the First Appellate Authorityor the Assessing Officer on directions of the First AppellateAuthority. In any event, we do not think that a blanket staycan be granted. 7. Considering the entire circumstances as also the failureof the assessee to produce the details at the first stage, we areof the opinion that the assessee will have to make a deposit of1% of the tax addition made under Section 68 of the Act withina period of one month from the date of receipt of a certifiedcopy of this judgment. Writ appeal is disposed of with noobservation on merits. The consideration of the First AppellateAuthority shall be untrammeled by any observation of thelearned Single Judge. Writ Petition is allowed leaving theparties to suffer their respective costs. sd/- K. VINOD CHANDRAN, JUDGE. sd/- ASHOK MENON, JUDGE.