Wp(C)/7259/2019 Of Poothady Service Co-Operative Bank v. Income Tax Officer

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE A.K.JAYASANKARAN NAMBIAR FRIDAY, THE 11TH DAY OF OCTOBER 2019 / 19TH ASWINA, 1941 WP(C).No.6907 OF 2019(K) PETITIONER/S: SULTHAN BATHERY SERVICE CO-OPERATIVE BANKREP. BY ITS SECRETARY, SULTHAN BATHERY, WAYANAD DISTRICT.BY ADVS.SRI.M.P.ASHOK KUMARSMT.BINDU SREEDHARSHRI.ASIF N RESPONDENT/S: IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE A.K.JAYASANKARAN NAMBIAR FRIDAY, THE 11TH DAY OF OCTOBER 2019 / 19TH ASWINA, 1941 WP(C).No.12007 OF 2019(A) PETITIONER/S: THIRUNELLY SERVICE CO-OPERATIVE BANK LTDKARTIKULAM, MANANTHAVADY, WAYANAD - 673 646, REPRESENTED BY ITS SECRETARY BY ADVS.SRI.P.R.VENKETESHSRI.G.KEERTHIVAS RESPONDENT/S: 1THE INCOME TAX OFFICERAAYAKAR BHAVAN, KOZHIKODE - 673 001 2THE JOINT COMMISSIONER OF INCPME TAXOFFICE OF THE INCOME TAX DEPARTMENT, RANGE - 2, KOZHIKODE-673001 3THE COMMISSIONER OF INCOME TAX (APPEALS)AAYAKAR BHAVAN, KOZHIKODE- 673001 THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON11.10.2019, ALONG WITH WP(C).6907/2019(K), WP(C).6970/2019(U),WP(C).7259/2019(F),WP(C).7931/2019(N),WP(C).7959/2019(T),WP(C).7963/2019(U), THE COURT ON THE SAME DAY DELIVERED THEFOLLOWING: IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE A.K.JAYASANKARAN NAMBIAR FRIDAY, THE 11TH DAY OF OCTOBER 2019 / 19TH ASWINA, 1941 WP(C).No.6970 OF 2019(U) PETITIONER/S: MULLANKOLLY SERVICE CO-OPERATIVE BANKREP. BY ITS SECRETARY, MULLANKOLLY, WAYANAD DISTRICT.BY ADVS.SRI.M.P.ASHOK KUMARSMT.BINDU SREEDHARSMT.R.S.MANJULASHRI.ASIF N RESPONDENT/S: THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON11.10.2019, ALONG WITH WP(C).12007/2019(A), WP(C).6907/2019(K),WP(C).7259/2019(F),WP(C).7931/2019(N),WP(C).7959/2019(T),WP(C).7963/2019(U), THE COURT ON THE SAME DAY DELIVERED THEFOLLOWING: IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE A.K.JAYASANKARAN NAMBIAR FRIDAY, THE 11TH DAY OF OCTOBER 2019 / 19TH ASWINA, 1941 WP(C).No.7259 OF 2019(F) PETITIONER/S: POOTHADY SERVICE CO-OPERATIVE BANKREP. BY ITS SECRETARY, KENICHIRA, WAYANAD DISTRICT.BY ADVS.SRI.M.P.ASHOK KUMARSMT.BINDU SREEDHARSHRI.ASIF N RESPONDENT/S: 1INCOME TAX OFFICERAAYAKAR BHAVAN, KOZHIKODE-673 0012JOINT COMMISSIONER OF INCOME TAXOFFICE OF THE INCOME TAX DEPARTMENT, RANGE-2, KOZHIKODE-673 001 3COMMISSIONER OF INCOME TAX (APPEALS),AYAKAR BHAVAN, KOZHIKOE-673 001R1 BY SRI.CHRISTOPHER ABRAHAM, INCOME TAX DEPARTMENT THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON11.10.2019, ALONG WITH WP(C).12007/2019(A), WP(C).6907/2019(K),WP(C).6970/2019(U),WP(C).7931/2019(N),WP(C).7959/2019(T),WP(C).7963/2019(U), THE COURT ON THE SAME DAY DELIVERED THEFOLLOWING: IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE A.K.JAYASANKARAN NAMBIAR FRIDAY, THE 11TH DAY OF OCTOBER 2019 / 19TH ASWINA, 1941 WP(C).No.7931 OF 2019(N) PETITIONER/S: KALPETTA SERVICE CO-OEPRATIVE BANK LTD.,REP. BY ITS SECRETARY, KALPETTA, WAYANAD DISTRICT,-673 121BY ADVS.SRI.M.P.ASHOK KUMARSMT.BINDU SREEDHARSHRI.ASIF N RESPONDENT/S: 1THE INCOME TAX OFFICERAAYAKAR BHAAVAN, KOZHIKODE-673 0012JOINT COMMISSIONER OF INCOME TAXOFFICE OF THE INCOME TAX DEPARTMENT, RANGE-2, KOZHIKODE-673 0013COMMISSIONER OF INCOME TAX (APPEALS)AYAKAR BHAVAN, KOZHIKODE-673 001 BY SRI.CHRISTOPHER ABRAHAM, INCOME TAX DEPARTMENT THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON11.10.2019, ALONG WITH WP(C).12007/2019(A), WP(C).6907/2019(K),WP(C).6970/2019(U),WP(C).7259/2019(F),WP(C).7959/2019(T),WP(C).7963/2019(U), THE COURT ON THE SAME DAY DELIVERED THEFOLLOWING: IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT KALPETTA SERVICE CO-OEPRATIVE BANK LTD.,REP. BY ITS SECRETARY, KALPETTA, WAYANAD DISTRICT,-673 121BY ADVS.SRI.M.P.ASHOK KUMARSMT.BINDU SREEDHARSHRI.ASIF N RESPONDENT/S: 1THE INCOME TAX OFFICERAAYAKAR BHAAVAN, KOZHIKODE-673 0012JOINT COMMISSIONER OF INCOME TAXOFFICE OF THE INCOME TAX DEPARTMENT, RANGE-2, KOZHIKODE-673 0013COMMISSIONER OF INCOME TAX (APPEALS)AYAKAR BHAVAN, KOZHIKODE-673 001 BY SRI.CHRISTOPHER ABRAHAM, INCOME TAX DEPARTMENT THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON11.10.2019, ALONG WITH WP(C).12007/2019(A), WP(C).6907/2019(K),WP(C).6970/2019(U),WP(C).7259/2019(F),WP(C).7959/2019(T),WP(C).7963/2019(U), THE COURT ON THE SAME DAY DELIVERED THEFOLLOWING: IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE A.K.JAYASANKARAN NAMBIAR FRIDAY, THE 11TH DAY OF OCTOBER 2019 / 19TH ASWINA, 1941 WP(C).No.7959 OF 2019(T) PETITIONER/S: KANIYAMBETTA SERVICE CO-OPERATIVE BANK LIMITEDREP. BY ITS SECRETARY, KANIYAMBETTA, WAYANAD DISTRICT, 673 121 BY ADVS.SRI.M.P.ASHOK KUMARSMT.BINDU SREEDHARSHRI.ASIF N RESPONDENT/S: 1THE INCOME TAX OFFICERAAYAKAR BHAAVAN, KOZHIKODE-673 0012JOINT COMMISSIONER OF INCOME TAX,OFFICE OF THE INCOME TAX DEPARTMENT, RANGE-2, KOZHIKODE-673 001 3COMMISSIONER OF INCOME TAX (APPEALS)AYAKAR BHAVAN, KOZHIKODE-673 001 R1-3 BY SRI.CHRISTOPHER ABRAHAM, INCOME TAX DEPARTMENT THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON11.10.2019, ALONG WITH WP(C).12007/2019(A), WP(C).6907/2019(K),WP(C).6970/2019(U),WP(C).7259/2019(F),WP(C).7931/2019(N),WP(C).7963/2019(U), THE COURT ON THE SAME DAY DELIVERED THEFOLLOWING: IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE A.K.JAYASANKARAN NAMBIAR FRIDAY, THE 11TH DAY OF OCTOBER 2019 / 19TH ASWINA, 1941 WP(C).No.7963 OF 2019(U) PETITIONER/S: MADIKKAMALA SERVICE CO-OPERATIVE BANK LTD.,REP. BY ITS SECRETARY, MADIKKAMALA, WAYANAD DISTRICT. BY ADVS.SRI.M.P.ASHOK KUMARSMT.BINDU SREEDHARSHRI.ASIF N RESPONDENT/S: 1INCOME TAX OFFICERAAYAKAR BHAAVAN, KOZHIKODE-673 001 2JOINT COMMISSIONER OF INCOME TAXOFFICE OF THE INCOME TAX DEPARTMENT, RANGE-2, KOZHIKODE 673 001. 3COMMISSIONER OF INCOME TAX (APPEALS)AYAKAR BHAVAN, KOZHIKODE-673 001 BY SRI.CHRISTOPHER ABRAHAM, INCOME TAX DEPARTMENT THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON11.10.2019, ALONG WITH WP(C).12007/2019(A), WP(C).6907/2019(K),WP(C).6970/2019(U),WP(C).7259/2019(F),WP(C).7931/2019(N),WP(C).7959/2019(T), THE COURT ON THE SAME DAY DELIVERED THEFOLLOWING: WP(C).7931/2019(N), JUDGMENT [ WP(C).6907/2019, WP(C).12007/2019, WP(C).6970/2019,WP(C).7259/2019, WP(C).7931/2019, WP(C).7959/2019,WP(C).7963/2019 ] Dated this the 11th day of October 2019 In all these writ petitions the petitioners, who are Primary AgriculturalCredit Societies, are aggrieved by the penalty orders passed under the Income TaxAct against them during the assessment year 2015-16, in terms of Sections 271Dand 271E of the Income Tax Act. The facts stated in the writ petitions wouldreveal that the petitioner societies had not complied with the requirements ofSections 269 SS and had accepted deposits from their members in excess ofRs.20,000/-, in cash. A penalty for the said action was imposed under Sections271D and 271E of the Income Tax Act. The penalty amounts imposed on thepetitioners range from approximately Rs.36 Crores to Rs.218 Crores. Dated this the 11th day of October 2019 In all these writ petitions the petitioners, who are Primary AgriculturalCredit Societies, are aggrieved by the penalty orders passed under the Income TaxAct against them during the assessment year 2015-16, in terms of Sections 271Dand 271E of the Income Tax Act. The facts stated in the writ petitions wouldreveal that the petitioner societies had not complied with the requirements ofSections 269 SS and had accepted deposits from their members in excess ofRs.20,000/-, in cash. A penalty for the said action was imposed under Sections271D and 271E of the Income Tax Act. The penalty amounts imposed on thepetitioners range from approximately Rs.36 Crores to Rs.218 Crores. 2.It would appear that, against the penalty orders, the petitionerspreferred appeals before the First Appellate Authority, and simultaneously movedthe Joint Commissioner of Income tax, through petitions under Section 226 of theIncome Tax Act for considering them as assessees not in default pending thedisposal of the appeals by the appellate authority. The Joint Commissioner, afterconsidering the case of the petitioners, directed them to pay 10% of the penaltyamounts confirmed against them by the assessing authority in two equal monthlyinstalments, as a condition for stay of the recovery of the balance amountsconfirmed against them. It is citing their poor financial condition, and inability topay even the reduced amount directed by the 2[nd] respondent - the Joint Commissioner of Income Tax, that they have approached this Court through thepresent writ petitions, impugning the orders of the Joint Commissioner of IncomeTax. 3.I have heard Sri.,Ashok Kumar and Sri.P.R.Venkatesh, the learnedcounsel for the petitioners and also the learned Standing Counsel for therespondents. 4.On a consideration of the facts and circumstances of the case and thesubmissions made across the Bar, while under normal circumstances, the orders ofthe Joint Commissioner of Income Tax impugned in these writ petitions cannot beseen as unreasonable or arbitrary and hence liable for interference by this Courtin these proceedings under Article 226 of the Constitution of India, I take note ofthe submissions of the learned counsel for the petitioners, that the appealspreferred by them against the penalty orders have since been heard by theappellate authority, and orders are not passed in the appeals only because of thependency of these writ petitions. I also note that when these writ petitions wereadmitted by this Court, this Court had by an interim order passed in March 2019,stayed the recovery of the penalty amounts from the petitioners during thependency of the writ petitions. The writ petitions have been pending before thisCourt for over six months and a stay has also been operating in favour of thepetitioners, in the meanwhile. Under the said circumstances, and taking note ofthe fact that the statutory appeals can now be disposed by the First AppellateAuthority, I dispose these writ petitions by directing the Commissioner of IncomeTax (Appeals) before whom the appeals preferred by the petitioners, against theorders of penalty passed against them under the Income Tax Act, are pending, toconsider and pass orders on the same, expeditiously after hearing the petitioners,at any rate, within three months from the date of receipt of a copy of thisjudgment. It is made clear that pending disposal of the appeals by the Commissioner of Income Tax (Appeals), and communication of the appellate ordersto the petitioners, the stay granted by this Court against recovery of penaltyamounts from the petitioners shall continue to operate. Sd/-A.K.JAYASANKARAN NAMBIARJUDGE APPENDIX OF WP(C) 6907/2019 PETITIONER'S/S EXHIBITS: APPENDIX OF WP(C) 12007/2019 PETITIONER'S/S EXHIBITS: Commissioner of Income Tax (Appeals), and communication of the appellate ordersto the petitioners, the stay granted by this Court against recovery of penaltyamounts from the petitioners shall continue to operate. Sd/-A.K.JAYASANKARAN NAMBIARJUDGE APPENDIX OF WP(C) 6907/2019 PETITIONER'S/S EXHIBITS: APPENDIX OF WP(C) 12007/2019 PETITIONER'S/S EXHIBITS: EXHIBIT P12TRUE COPY OF THE STAY ORDER DATED 31.1.2019ISSUED BY THE 2ND RESPONDENT TO THE PETITIONERISSUED BY THE 2ND RESPONDENT TO THE PETITIONEREXHIBIT P13TRUE COPY OF THE DEMAND NOTICE DATED 26.7.2018 ISSUED BY THE 2ND RESPONDENT TO THE PETITIONER26.7.2018 ISSUED BY THE 2ND RESPONDENT TO THE PETITIONEREXHIBIT P14TRUE COPY OF THE ASSESSMENT ORDER FOR THE YEAR 2015-16 DATED 26.7.2018 ISSUED BY THE 2ND RESPONDENT TO THE PETITIONERYEAR 2015-16 DATED 26.7.2018 ISSUED BY THE 2ND RESPONDENT TO THE PETITIONEREXHIBIT P15TRUE COPY OF THE WRITTEN SUBMISSIONS FILED BY THE PETITIONER SOCIETY AGAINST THE NOTICE UNDER SECTION 274 R/W SECTION 271E OF THE INCOME TAX ACT DATED 14.2.2018BY THE PETITIONER SOCIETY AGAINST THE NOTICE UNDER SECTION 274 R/W SECTION 271E OF THE INCOME TAX ACT DATED 14.2.2018EXHIBIT P16TRUE COPY OF THE STAY APPLICATION FILED BY THE PETITIONER DATED 23.1.2019 AGAINST RECOVERY OF DEMAND LEVIED UNDER SECTION 271ETHE PETITIONER DATED 23.1.2019 AGAINST RECOVERY OF DEMAND LEVIED UNDER SECTION 271EEXHIBIT P17TRUE COPY OF THE ORDER DATED 31.1.2019 ISSUED BY THE 2ND RESPONDENT UNDER SECTION 271E IN RESPONSE TO THE STAY APPLICATIONISSUED BY THE 2ND RESPONDENT UNDER SECTION 271E IN RESPONSE TO THE STAY APPLICATIONEXHIBIT P18TRUE COPY OF THE INTERIM ORDER DATED 11/03/2019 IN WP(C) 6907 OF 201911/03/2019 IN WP(C) 6907 OF 2019EXHIBIT P19TRUE COPY OF THE APPEAL FILED BEFORE THE 3RD RESPONDENT AGAINST DEMAND NOTICE UNDER SEC.271E BY THE PETITIONER DATED 28.8.20183RD RESPONDENT AGAINST DEMAND NOTICE UNDER SEC.271E BY THE PETITIONER DATED 28.8.2018 APPENDIX OF WP(C) 6970/2019 PETITIONER'S/S EXHIBITS: EXHIBIT P1PENALTY ORDER DATED 26/07/2018. EXHIBIT P2PENALTY ORDER DATED 26/07/2018. EXHIBIT P3 PHOTOCOPY OF THE APPEAL PENDING BEFORE THE 3RD RESPONDENT. EXHIBIT P4PHOTOCOPY OF THE APPEAL PENDING BEFORE THE 3RD RESPONDENT. EXHIBIT P5PHOTOCOPY OF THE STAY PETITION DATED 23/01/2019. EXHIBIT P6PHOTOCOPY OF THE STAY PETITION DATED 23/01/2019. EXHIBIT P7PHOTOCOPY OF THE INTERIM ORDER PASSED IN THE STAY PETITION 31/01/2019 EXHIBIT P8 PHOTOCOPY OF THE INTERIM ORDER PASSED IN THE STAY PETITION 31/01/2019. EXHIBIT P9PHOTOCOPY OF THE RELEVANT PAGE OF THE BALANCE SHEET DATED 31/03/2015. APPENDIX OF WP(C) 7259/2019 PETITIONER'S/S EXHIBITS: APPENDIX OF WP(C) 7931/2019 PETITIONER'S/S EXHIBITS: APPENDIX OF WP(C) 7959/2019 PETITIONER'S/S EXHIBITS: APPENDIX OF WP(C) 7963/2019 PETITIONER'S/S EXHIBITS: