Wa/1437/2018 Of The Aruvikkara Farmers 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 THURSDAY, THE 2ND DAY OF AUGUST 2018 / 11TH SRAVANA, 1940 WA.No. 1437 of 2018 IN WPC. 15070/2018 AGAINST THE ORDER/JUDGMENT IN WP(C) 15070/2018 of HIGH COURT OF KERALA DATED 29.5.2018 APPELLANT(S)/PETITIONER THE ARUVIKKARA FARMERS SERVICE CO-OPERATIVE BANK LTD.NO.603, REPRESENTED BY ITS MANAGING DIRECTOR-IN-CHARGE, ARUVIKKARA P.O., THIRUVANANTHAPURAM - 695 564. 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. BY SRI.CHRISTOPHER ABRAHAM, INCOME TAX DEPARTMENT THIS WRIT APPEAL HAVING BEEN FINALLY HEARD ON 02-08-2018,THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: jg-10/8 K.VINOD CHANDRAN & ASHOK MENON, JJ. -------------------------------------------WA No.1437 of 2018------------------------------------------- Dated this the 2[nd] day of August, 2018 J U D G M E N T Vinod Chandran, J. The petitioner, Aruvikkara Farmers Service Co-operative Bank Ltd., is before us in this Writ Appealagainst the judgment of the learned Single Judge, whichmodified the interim order in a first appeal under theIncome Tax Act, 1961 (for brevity, the Act), directingpayment of 20% of the demand made under Section 68 ofthe Act; dissatisfied with the conditional order havingnot been set aside in toto. At the first appellatestage, the Commissioner (Appeals) granted a stay oncondition of payment of 50% of the amounts. The learnedSingle Judge reduced it to 20%. The appellant-Bank isbefore us claiming impecunious circumstances and thepossibility of close-down, if such huge amounts aredirected to be paid. 2. The assessments were made after issuance ofnotice under Section 143 of the Act. The assessee-Bankproduced Audit Certificates but did not produce thedetails of the persons, who have made deposits with it.TheIncomeTaxOfficer,drawingadverseinference, treated the deposits as unexplained cash credits and assessed the same under Section 68 ofthe Act. The assessee filed appeal and then challengedthe conditional order as stated above. 3. Before us also the learned Counsel appearingfor the assessee vigorously argued for a blanket stayand undertook that the entire details will be producedbefore the First Appellate Authority. It is pleadedthat only due to ignorance, earlier the details werenot furnished before the Assessing Officer. The FirstAppellate Authority, also being entitled to look intothe facts, it is undertaken that the details would befurnished and in such circumstances, let there be aconsideration of the appeal at the earliest; withoutany amounts being deposited. 4. The learned Standing Counsel with equal vigoropposed the prayer and submitted that what wasattempted to be checked is the laundering of blackmoney, for which the Co-operative Banks are a majorconduit. It is also submitted that the assessee havingfailed to produce the documents; should comply with thedemand raised subject only to the appeal. In thepresent case, considerable reduction has been made andthere need not be any further indulgence extended to it, is the contention. The learned Standing Counselwould also submit that verification of the genuinenessof the depositors would require some time and may alsowarrant a report from the Assessing Officer, who couldbe directed to examine the genuineness on the basis ofthe details supplied. This necessarily would take timeand in the meanwhile there cannot be a blanket stay. it, is the contention. The learned Standing Counselwould also submit that verification of the genuinenessof the depositors would require some time and may alsowarrant a report from the Assessing Officer, who couldbe directed to examine the genuineness on the basis ofthe details supplied. This necessarily would take timeand in the meanwhile there cannot be a blanket stay. 5. Having regard to the rival contentions,especially noticing the fact that the assessee is anInstitution in the Co-operative sector and taking noteof its members who are from the general public as alsofrom the marginalised sections, we are of the opinionthat an opportunity could be afforded to the assesseeto produce the details of deposits. 6. To avoid any recalcitrant attitude by theassessee, we directed the learned Counsel to file anaffidavit of undertaking, which has been done by theSecretary of the appellant-Bank, in this appeal beforeus. The affidavit categorically undertakes to producethe details of the deposits before the First AppellateAuthority. The assessee would also produce any furtherdetails required by the First Appellate Authority orthe Assessing Officer on a report being called for by the First Appellate Authority. The same shall be donewithin the time stipulated by the First AppellateAuthority or the Assessing Officer on directions of theFirst Appellate Authority. In any event, we do notthink that a blanket stay can be granted. Considering the entire circumstances as also thefailure of the assessee to produce the details at thefirst stage, we are of the opinion that the assesseewill have to make a deposit of 1% of the tax additionmade under Section 68 of the Act within a period of onemonth from the date of receipt of a certified copy ofthis judgment. The Writ appeal is disposed of with noobservation on merits. The consideration of the FirstAppellate Authority shall be untrammeled by anyobservation of the learned Single Judge. Writ Petitionis allowed leaving the parties to suffer theirrespective costs. Sd/- K.VINOD CHANDRAN JUDGE jg Sd/- ASHOK MENON JUDGE