Wp(C)/15861/2022 Of Peruvayal Service Co-Operative Bank Ltd v. Additional/Joint/Deputy/Assistant Commissioner Of Income Tax /Income Tax Officer

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE GOPINATH P. FRIDAY, THE 24 DAY OF JUNE 2022 / 3RD ASHADHA, 1944 WP(C) NO. 15861 OF 2022 PETITIONER: M/S.PERUVAYAL SERVICE CO-OPERATIVE BANK LTD.,PERUVAYAL POST, KOZHIKODE - 673 008, REPRESENTED BY ITS SECRETARY. BY ADVS.T.M.SREEDHARAN (SR.)V.P.NARAYANANALAN PRIYADARSHI DEV PERUVAYAL POST, KOZHIKODE - 673 008, RESPONDENT: THE ADDITIONAL/JOINT/DEPUTY/ASSISTANT COMMISSIONER OF INCOME TAX /INCOME TAX OFFICER NATIONAL FACELESS ASSESSMENT CENTRE, INCOME TAX DEPARTMENT, MINISTRY OF FINANCE, ROOM NO.401, 2ND FLOOR, E-RAMP, JAWAHARLAL STADIUM, DELHI - 110 003. SRI. CHRISTOPHER ABRAHAM (SC) THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON24.06.2022, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: JUDGMENT The petitioner has approached this Court challenging Ext.P2order imposing penalty under Section 270A of the Income Tax Act. 2.The learned counsel appearing for the petitioner submitsthat Ext.P2 order is absolutely illegal and unsustainable in law. It issubmitted that for a technical error committed by the assesseewhile furnishing its return of income, a huge penalty of Rs.54 lakhshas been imposed by Ext.P2 order. It is submitted that following thecompletion of assessment, there is no tax liability in so far as thepetitioner / assessee is concerned. It is submitted that in suchcircumstances, there was no under reporting of income as allegedand a huge penalty of Rs.54 lakhs ought not to have been imposedespecially considering the fact that the provisions of Section 270Aof the Income Tax Act does not provide for a mandatory penalty.The learned counsel for the petitioner further points out that goingby the provisions of sub-section (6) of Section 270A of the IncomeTax Act, since there was no suppression or underreporting of anyincome by the petitioner and all materials were placed before theAssessing Officer, the petitioner could not have been mulcted withany liability. WP(C) NO. 15861 OF 2022 3 3.The learned Standing Counsel appearing for therespondent submits that the petitioner has an effective alternativeremedy by way of appeal and there are no special circumstances,which will enable the petitioner to approach this court directlyunder Section Article 226 of the Constitution of India. It is pointedout that even if the contention of the petitioner is accepted, theauthority is acted within its jurisdiction and the quantum of penaltyby itself cannot be a reason for this Court to interfere under Article226 of the Constitution of India, especially when there is aneffective alternative remedy as far as the petitioner is concerned. 4.Having heard the learned counsel for the petitioner andthe learned Standing counsel for the respondent, I am of theopinion that the petitioner can be relegated to the remedy ofappeal. I find that the Standing Counsel for the Department is rightin contending that there is no jurisdictional error warrantinginterference with Ext.P2 order of penalty directly in exercise ofjurisdiction under Article 226 of the Constitution of India. However,taking note of the fact that there was no tax liability afterassessment and the petitioner is a society running at a loss, I am ofthe opinion that Ext.P2 order can be directed to be kept inabeyance till a decision is taken on the stay petition in the appealto be filed by the petitioner. Accordingly, this writ petition will WP(C) NO. 15861 OF 2022 WP(C) NO. 15861 OF 2022 stand disposed of directing that if the petitioner files an appealagainst Ext.P2 order along with an application for stay within threeweeks from the date of receipt of a certified copy of this judgment,the stay petition shall be considered and decided on merits by theappellate authority after affording an opportunity of hearing to thepetitioner. The period during which this writ petition was pendingbefore this Court shall be excluded for the purpose of computingany period of limitation for filing the appeal. The appellateauthority shall dispose of the stay petition having due regard to theprovisions of sub-section (6) of Section 270A of the Income Tax Act.Till a decision is taken on the application for stay, all coercive stepsto recover the amount in Ext.P2 shall be kept in abeyance. Sd/-GOPINATH P.JUDGE APPENDIX OF WP(C) 15861/2022 PETITIONER EXHIBITS Exhibit P1TRUE COPY OF THE ASSESSMENT ORDER DATED 15.2.2021 PASSED BY THE RESPONDENT FOR AY-2018-19.Exhibit P2TRUE COPY OF THE ORDER IMPOSING PENALTY U/S 270A OF THE INCOME TAX ACT 1961, DATED 04.02.2022 PASSED BY THE RESPONDENTFOR THE AY 2018-19. Exhibit P3TRUE COPY OF THE PROCEEDINGS OF THE INCOME TAX OFFICER, WARD 2 (3) KOZHIKODE FOR THE ASSESSMENT YEAR 2007-08Exhibit P4TRUE COPY OF THE PROCEEDINGS OF INCOME TAX OFFICER, WARD 2 (3), KOZHIKODE FOR ASSESSMENT YEAR 2008-09Exhibit P5TRUE COPY OF THE PROCEEDINGS OF INCOME TAX OFFICER, WARD 2 (3), KOZHIKODE FOR THE ASSESSMENT YEAR 2009-10Exhibit P6TRUE COPY OF THE PROCEEDINGS OF THE INCOME TAX OFFICER, WARD 2 (3), KOZHIKODEFOR THE ASSESSMENT YEAR 2012-13Exhibit P7TRUE COPY OF THE APPELLATE ORDER PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS), KOZHIKODE DATED 07/09/2017 FORTHE ASSESSMENT YEAR 2013-14