Wp(C)/2375/2016 Of Kadakkarappally Service Co Operative Bank Limited v. The Income Tax Officer

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR. JUSTICE A.K.JAYASANKARAN NAMBIAR TUESDAY, THE 16TH DAY OF FEBRUARY 2016/27TH MAGHA, 1937 WP(C).No. 2375 of 2016 (V) --------------------------- PETITIONER: ------------------- KADAKKARAPPALLY SERVICE CO-OPERATIVE BANK LIMITED, NO.1125, KADAKKARAPPALLY POST, CHERTHALA, REPRESENTED BY ITS SECRETARY, SRI. P.VENUGOPAL, S/O.PRABHAKARAN PILLAI, AGED 57 YEARS, RESIDING AT 'MAYALAYAM', KADAKKARAPPALLY, CHERTHALA, PIN - 688529. BY ADVS.SRI.C.A.JOJO SRI.JACOB CHACKO SRI.MATHEWS JOSEPH RESPONDENT(S): -------------------------- 1. THE INCOME TAX OFFICER, WARD NO.5, DEVASWAM BUILDING, ALAPPUZHA, PIN - 688011. 2. THE COMMISSIONER OF INCOME TAX (APPEALS), OFFICE OF THE COMMISSIONER OF INCOME TAX (APPEALS), 1ST FLOOR, KOTTAYAM PUBLIC LIBRARY BUILDING, SASTHRI ROAD, KOTTAYAM - 686001. BY SRI.P.K.R.MENON,(SENIOR COUNSEL) ADV. SRI.JOSE JOSEPH, SC THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 16-02-2016, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: mbr/ WP(C).No. 2375 of 2016 (V) -------------------------------------- APPENDIX PETITIONER(S)' EXHIBITS: ------------------------------------- P1:TRUE COPY OF THE ASSESSMENT ORDER 27.03.2015 FOR AY 2011-12 ISSUED BY THE 1ST RESPONDENT.BY THE 1ST RESPONDENT. P2:TRUE COPY OF THE ASSESSMENT ORDER 27.03.2015 FOR AY 2012-13 ISSUEDBY THE 1ST RESPONDENT.BY THE 1ST RESPONDENT. P3:TRUE COPY OF THE DEMAND NOTICES DATED 27.03.2015. P4:TRUE COPY OF THE APPEAL FOR AY 2012-13 DATED 24.04.2015 BEFORE THE 2ND RESPONDENT.2ND RESPONDENT. P5:TRUE COPY OF THE APPEAL FOR AY 2011-12 DATED 24.04.2015 BEFORE THE 2ND RESPONDENT.2ND RESPONDENT. P6:TRUE COPY OF THE NOTICE ISSUED BY THE 2ND RESPONDENT DATED 24.11.2015.DATED 24.11.2015. P7:TRUE COPY OF THE REPLY NOTICE SEND TO THE 2ND RESPONDENT DATED 07.12.2015.DATED 07.12.2015. P8:TRUE COPY OF THE ORDER OF CONDITIONAL STAY BY THE 2ND RESPONDENT DATED 28.12.2015 IN THE ASSESSMENT YEAR 2011-12.2ND RESPONDENT DATED 28.12.2015 IN THE ASSESSMENT YEAR 2011-12. P9:TRUE COPY OF THE ORDER OF CONDITIONAL STAY BY THE 2ND RESPONDENT DATED 28.12.2015 IN THE ASSESSMENT YEAR OF 2012-13.2ND RESPONDENT DATED 28.12.2015 IN THE ASSESSMENT YEAR OF 2012-13. P10:TRUE COPY OF THE JUDGMNET OF THIS HON'BLE COURT IN A SIMILAR CASE GRANTING COMPLETE STAY OF RECOVERY PENDING DISPOSAL OF APPEAL DATED 20.11.2015 IN WP(C)32053/15.CASE GRANTING COMPLETE STAY OF RECOVERY PENDING DISPOSAL OF APPEAL DATED 20.11.2015 IN WP(C)32053/15. P11:TRUE COPY OF THE ITR-V FILED ON 26.10.2012 FOR AY 2012-13. P12 :TRUE COPY OF THE CBDT CIRCULAR NO.14 DATED 11.4.1955. RESPONDENT(S)' EXHIBITS:NIL --------------------------------------- //TRUE COPY// P.S. TO JUDGE A.K.JAYASANKARAN NAMBIAR, J. - - - - - - - - - - - - - - - - - - - - - - - - - - W.P.(C) No.2375 of 2016 - - - - - - - - - - - - - - - - - - - - - - - - - - Dated this the 16[th] day of February 2016 JUDGMENT The challenge in the writ petition is against Exts.P8 and P9conditional orders of stay passed in a stay application filed alongwith an appeal against the assessment orders under the IncomeTax Act, for the assessment years 2011-12 and 2012-13respectively. The grievance of the petitioner in the writ petition isessentially that, while passing Exts.P8 and P9 orders, the 2[nd]respondent appellate authority, did not exercise his discretionvalidly. 2. I have heard the learned counsel for the petitioner and thelearned Government Pleader for the respondents. W.P.(C) No.2375 of 2016 - - - - - - - - - - - - - - - - - - - - - - - - - - Dated this the 16[th] day of February 2016 JUDGMENT The challenge in the writ petition is against Exts.P8 and P9conditional orders of stay passed in a stay application filed alongwith an appeal against the assessment orders under the IncomeTax Act, for the assessment years 2011-12 and 2012-13respectively. The grievance of the petitioner in the writ petition isessentially that, while passing Exts.P8 and P9 orders, the 2[nd]respondent appellate authority, did not exercise his discretionvalidly. 2. I have heard the learned counsel for the petitioner and thelearned Government Pleader for the respondents. 3. On a consideration of the facts and circumstances of thecase and the submissions made across the bar, I find from Exts.P8and P9 orders, that the claim of the petitioner is essentially for theextension of the benefit of Section 80P of the Income Tax Act, whilecomputing the taxable income under the Income Tax Act. In Ext.P8order, the 2[nd] respondent appellate authority considered the case of the petitioner and found that the assessment of the petitioner hadresulted in an assessment of positive income of the petitioner butdespite this, the contention of the petitioner for the benefit of Section80P, was turned down while requiring the petitioner to deposit 50% ofthe demand, till the disposal of the appeal. In my view, since the issueof entitlement of a Co-Operative society, such as the petitioner, for thebenefit of Section 80P of the Income Tax Act, is stated to have beendecided in favour of the assessees, by a decision of a Division Bench ofthis Court in Income tax appeals, that were pending before this Court,the petitioner also ought to be given the said benefit, in the staypetition. Resultantly, I am of the view that Ext.P8 order, inasmuch as itrequires the petitioner to deposit 50% of the demand pending disposalof the appeal, cannot be legally sustained. I, accordingly, quash Ext.P8order and direct the 2[nd] respondent to consider and pass orders in theappeal preferred by the petitioner, for the said assessment year, afterhearing the petitioner, within a period of three months, from the dateof receipt of a copy of this judgment. Recovery steps for recovery ofamounts confirmed against the petitioner by the assessment order forthe said assessment year (2011-12), shall be kept in abeyance, till suchtime as orders are passed by the 2[nd] respondent as directed andcommunicated to the petitioner. 4. As regards Ext.P9 order, which is also impugned in the writ 4. As regards Ext.P9 order, which is also impugned in the writ petition, I find that the said order takes note of the fact that in theassessment order, that was passed against the petitioner for theassessment year 2012-13, the petitioner had initially returned a loss ofincome and by virtue of an addition made under Section 68 of theIncome Tax Act, the petitioner was assessed on a total incomeRs.2,94,94,385/-. Accordingly, a demand was also raised on thepetitioner, for Rs.1,24,81,640/-. Although it is the case of the petitionerthat during the said assessment year also, the petitioner would beentitled to the benefit of Section 80P, pursuant to the additions madeby the Assessing Officer, I am of the view that inasmuch as it is notdiscernible at this stage as to whether the income that was addedunder Section 68 of the Income Tax Act, was income of the naturespecified in Section 80P of the Income Tax Act, the petitioner cannot begranted the benefit of the judgment referred to above in relation to thebenefit of Section 80P of the Income Tax Act. The learned counsel forthe petitioner would submit that the direction to pay 50% of thedemand confirmed against the petitioner would result in an unduehardship to the petitioner, whose financial position is bleak. Takingnote of the said submission of the learned counsel for the petitioner, Imodify Ext.P9 order of the 2[nd] respondent and make it clear that thepetitioner shall pay only an amount of Rs.25,00,000/- towards the taxliability for the said assessment year, as a condition for stay of recoveryof the balance amounts confirmed against the petitioner by the assessment order, for the assessment year 2012-13. On the petitionerpaying the amount of Rs.25,00,000/-, in lieu of the 50% directed inExt.P9 order, in the manner specified in the said order, the 2[nd]respondent shall proceed to consider the appeal preferred by thepetitioner on merits, and pass orders thereon, within a period of fourmonths thereafter. The respondent shall also ensure that recoveryproceedings for recovery of the balance amounts confirmed againstthe petitioner by the assessment order for the assessment year 2012-13, are kept in abeyance till such time as the 2[nd] respondent passesorders in the appeal, as directed. The 2[nd] respondent appellateauthority shall also consider the books of accounts and otherdocuments produced by the petitioner to substantiate his contentionthat the amounts which were added to the income of the petitioner forthe said assessment year, represent deposits that were made byvarious members of the society. The writ petition is disposed as above. Sd/- A.K.JAYASANKARAN NAMBIAR JUDGE