Wp(C)/14761/2023 Of Kochin Co-Operative Society Ltd v. The Income Tax Officer

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE DINESH KUMAR SINGH THURSDAY, THE 21 DAY OF DECEMBER 2023 / 30TH AGRAHAYANA, 1945WP(C) NO. 14761 OF 2023 PETITIONER: KOCHIN CO-OPERATIVE SOCIETY LTD., NO. E 100, LALAN ROAD, MATTANCHERY, COCHIN, REPRESENTED BY ITS SECRETARY,PIN - 682002. BY ADV. SRI. C. A. JOJO RESPONDENTS: 1THE INCOME TAX OFFICER,WARD 2(4) & TPS KOCHI, C. R. BUILDING, I. S. PRESS ROAD, COCHIN, PIN - 682018. 2THE PRINCIPAL CHIEF COMMISSIONER,C R BUILDING, I S PRESS ROAD, COCHIN, PIN - 682018. BY ADV. SRI. CHRISTOPHER ABRAHAM - SC- INCOME TAX DEPARTMENT THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON21.12.2023, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: DINESH KUMAR SINGH, J. -------------------------- W.P.(C) No.14761 of 2023 ------------------------- Dated this the 21[st] day of December, 2023 JUDGMENT 1. The petitioner is a Co-operative Society and is stated to be in business of providing credit services, marketing of consumer productsand Neethi Medical shops towards members. 2.The petitioner did not file return of its income under Section 139(1) of the Income Tax Act, 1961 (hereinafter referred to as “the Act” forshort) for the assessment year 2016-17. During the scrutiny, it wasnoticed that the petitioner had transactions around 95,30,000/- in theassessment year 2016-17. The petitioner was issued notice in ExhibitP-1 on 03.01.2023 asking the petitioner to clarify the transactions foran amount of Rs. 95,30,000/- and provide reasons for not filing thereturn despite huge financial transactions which would suggest filingof return mandatorily. Petitioner was put to caution that in theabsence of any reply to the said show cause notice, the case of thepetitoner would be taken up under Section 148A of the Act. Petitionerfiled reply to the said notice stating that the petitioner had not filedreturn because the petitioner’s income is exempted under Section 80P of the Act. Considering the said reply, notice under Clause (b) ofSection 148A of the Act was issued to the petitioner, having recordedthe satisfaction that the income chargeable to tax for the assessmentyear 2016-17 of the petitioner had escaped assessment within themeaning of Section 147 of the Act. The petitioner was required toshow cause as to why in view of the details in enclosures of the notice,a notice under Section 148 of the Act should not be issued. Despitethe service of the notice, the petitioner did not file his reply to the saidnotice under Section 148 of the Act. 3.As no reply came forward, an order under Clause (d) of Section148A of the Act in Exhibit P-4 dated 24.02.2023 came to be passed. 4.The petitioner’s reply filed in response to Exhibit P-1 noticedated 03.01.2023 was taken into consideration. It was noticed that theassessee did not submit any document/evidence in support of theirclaim. The statement made in the reply to the Exhibit P-1 notice dated03.01.2023 that the petitioner had purchased a property for Rs.45,30,000/- and made payment of consideration of Rs. 50,00,000/- washaving infirmity and inconsistency within. It was also stated that theassessee being a Co-operative Society, the assessee’s accounts were tobe audited by the Audit Department of State Co-operative Department and audited accounts to be passed in their annual general 4.The petitioner’s reply filed in response to Exhibit P-1 noticedated 03.01.2023 was taken into consideration. It was noticed that theassessee did not submit any document/evidence in support of theirclaim. The statement made in the reply to the Exhibit P-1 notice dated03.01.2023 that the petitioner had purchased a property for Rs.45,30,000/- and made payment of consideration of Rs. 50,00,000/- washaving infirmity and inconsistency within. It was also stated that theassessee being a Co-operative Society, the assessee’s accounts were tobe audited by the Audit Department of State Co-operative Department and audited accounts to be passed in their annual general meeting. The petitioner was not having the audited accounts in theirpossession and they failed to furnish any information even after noticewas issued under Section 148A(b) of the Act. It was also noticed thatthe assessee did not submit any explanation for the cash transactionsreported and marked by the INSIGHT Risk Management System(INSIGHT RMS) of the Income Tax Department, the source of cashdeposit/financial transactions with reference to the informationavailable within the INSIGHT RMS remained unexplained and,therefore, it was concluded that the information tagged in the insightdata suggested that income chargeable to tax had escaped assessmentfor the assessment year 2016-17, and it was fit case to issue a noticeunder Section 148 of the Act. The petitioner instead of filing the replyto the notice issued under Section 148 of the Act has approached thisCourt in this writ petition. 5.Considering the aforesaid facts, this Court finds no ground toentertain this writ petition. The petitioner is permitted to file reply tothe notice issued under Section 148 of the Act dated 10.03.2023 withina period of twenty one days from today, and also file return of itsincome for the assessment year 2016-17. If the petitioner fails to file reply and return in response to the notice under Section 148 of the Act dated 10.03.2023 in Exhibit P-6, the assessing authority shouldproceed to finalise the proceedings expeditiously. If the petitionerfiles the reply and return in response to the said notice, the same shallbe considered and the petitioner should be given an opportunity ofhearing before the final order is passed. It is made clear that nofurther opportunity shall be granted to the petitioner to file reply tothe notice under Section 148 of the Act or to file the return of itsincome for the assessment year 2016-17. With the above directions, the present writ petition is herebydisposed of. Svn Sd/- DINESH KUMAR SINGH JUDGE PETITIONER'S EXHIBITS EXHIBIT P1TRUE COPY OF THE LETTER DATED 03.01.2023 ISSUEDBY THE 1ST RESPONDENTBY THE 1ST RESPONDENT EXHIBIT P2A TRUE COPY OF THE REPLY SUBMITTED TO THE 1STRESPONDENT DATED 12.01.2023RESPONDENT DATED 12.01.2023 EXHIBIT P3A TRUE COPY OF THE NOTICE ISSUED BY THE 1STRESPONDENT U/S 148A(B) DATED 13.01.2023RESPONDENT U/S 148A(B) DATED 13.01.2023 EXHIBIT P4A TRUE COPY OF THE NOTICE ISSUED BY THE 1STRESPONDENT U/S 148A(D) DATED 24.02.2023RESPONDENT U/S 148A(D) DATED 24.02.2023 EXHIBIT P5A TRUE COPY OF THE AUDITED CERTIFICATE ISSUED BYTHE JOINT REGISTRAR AUDIT SECTION DATED11.09.2017 FOR AY 2016-17THE JOINT REGISTRAR AUDIT SECTION DATED11.09.2017 FOR AY 2016-17 EXHIBIT P6A TRUE COPY OF THE NOTICE ISSUED BY THE 1STRESPONDENT U/S 148 DATED 10.03.2023RESPONDENT U/S 148 DATED 10.03.2023 EXHIBIT P7A TRUE COPY OF THE STATUS QUO ORDER IN WP ( C)24112 OF 2019 DATED 04.09.201924112 OF 2019 DATED 04.09.2019 EXHIBIT P8A TRUE COPY OF THE STAY ORDER IN WP(C) 4368 OF2023 DATED 12.04.20232023 DATED 12.04.2023 RESPONDENT'S EXHIBITS EXHIBIT P4A TRUE COPY OF THE NOTICE ISSUED BY THE 1STRESPONDENT U/S 148A(D) DATED 24.02.2023RESPONDENT U/S 148A(D) DATED 24.02.2023 EXHIBIT P5A TRUE COPY OF THE AUDITED CERTIFICATE ISSUED BYTHE JOINT REGISTRAR AUDIT SECTION DATED11.09.2017 FOR AY 2016-17THE JOINT REGISTRAR AUDIT SECTION DATED11.09.2017 FOR AY 2016-17 EXHIBIT P6A TRUE COPY OF THE NOTICE ISSUED BY THE 1STRESPONDENT U/S 148 DATED 10.03.2023RESPONDENT U/S 148 DATED 10.03.2023 EXHIBIT P7A TRUE COPY OF THE STATUS QUO ORDER IN WP ( C)24112 OF 2019 DATED 04.09.201924112 OF 2019 DATED 04.09.2019 EXHIBIT P8A TRUE COPY OF THE STAY ORDER IN WP(C) 4368 OF2023 DATED 12.04.20232023 DATED 12.04.2023 RESPONDENT'S EXHIBITS EXHIBIT R1(A)COPY OF THE JUDGMENT OF THE SUPREME COURT DATED2ND SEPTEMBER ,2022 IN THE CASE OF ANSHUL JAINV. PRINCIPAL COMMISSIONER OF INCOME TAX ANDANOTHER , [2022] 449 ITR 2 256 (SC)2ND SEPTEMBER ,2022 IN THE CASE OF ANSHUL JAINV. PRINCIPAL COMMISSIONER OF INCOME TAX ANDANOTHER , [2022] 449 ITR 2 256 (SC) EXHIBIT R1(B)COPY OF THE JUDGMENT OF PUNJAB AND HARYANA HIGHCOURT DATED 2ND JUNE ,2022 IN THE CASE OF ANSHULJAIN V.PRINCIPAL COMMISSIONER OF INCOME TAX ANDANOTHER ,[2022} 449 ITR 251 (P AND H)COURT DATED 2ND JUNE ,2022 IN THE CASE OF ANSHULJAIN V.PRINCIPAL COMMISSIONER OF INCOME TAX ANDANOTHER ,[2022} 449 ITR 251 (P AND H) EXHIBIT R1(C)COPY OF THE JUDGMENT OF THE KERALA HIGH COURTDATED 07.12.2022 IN WP(C) NO.37527 OF 2022 INTHE CASE OF M/S VISWABHARATHI MEDICALS V.INCOMETAX OFFICERDATED 07.12.2022 IN WP(C) NO.37527 OF 2022 INTHE CASE OF M/S VISWABHARATHI MEDICALS V.INCOMETAX OFFICER