Wp(C)/8878/2021 Of Poonjar Service Co-Operative Bank Ltd v. Income Tax Officer

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE BECHU KURIAN THOMAS FRIDAY, THE 30TH DAY OF APRIL 2021 / 10TH VAISAKHA, 1943 WP(C).No.8878 OF 2021(H) PETITIONER:M/S.POONJAR SERVICE CO-OPERATIVE BANK LTD.,REG.NO.3963, POONJAR, KOTTAYAM DISTRICT, PIN-686 681, REPRESENTED BY ITS SECRETARY, MR.RAGHUNATHAN NAIR.R.BY ADVS.SRI.A.KUMARSRI.P.J.ANILKUMARSMTG.MINI(1748)SRI.P.S.SREE PRASADSHRI.JOB ABRAHAM SRI.AJAY V.ANANDRESPONDENTS:1INCOME TAX OFFICERWARD 3, KOTTAYAM-686 001. 2INCOME TAX OFFICER,NATIONAL E-ASSESSMENT CENTRE, NEW DELHI-110 003. SRI.JOSE JOSEPH, SC THIS WRIT PETITION (CIVIL) HAVING COME UP FORADMISSION ON 30.04.2021, THE COURT ON THE SAME DAYDELIVERED THE FOLLOWING: JUDGMENT Dated this the 30[th] day of April, 2021 Faced with an order of assessment for the year 2018-19,the petitioner claiming to be a Primary Agricultural CreditSociety, challenges the same under Article 226 of theConstitution of India, alleging that the impugned assessmentorder completely flouts the judgment of the Hon'ble SupremeCourt in Mavilayi Service Co-operative Bank Ltd. andothers v Commissioner of Income Tax, Calicut andanother [2021(1) KLT 485]. It was contendedthat theprocedure adopted and the conclusions arrived at in theassessment order are in direct conflict with the SupremeCourt judgment mentioned above. It was submitted that thepetitioner need not be relegated to the normal remedy of astatutory appeal, since, the impugned assessment orderdirectly conflicts with the Supreme Court judgment 2.Adv.A.Kumar, the learned counsel for the petitioner, W.P.(C) No.8878/21 3 in support of the challenge against the assessment order,pointed out that the various conditions when a PrimaryAgricultural Credit Society can claim the benefit of deductionunder Section 80P were clearly delineated by the SupremeCourt. However, in gross disregard of the binding decision,the assessing authority has, without even understanding thescope of the Supreme Court judgment, passed the order ofassessment, astonishingly contradictory to the judgement ofthe Supreme Court. According to the learned counsel, theassessment order borders on contempt of the SupremeCourt. 3.The facts necessary for disposing of this writpetition can be summarised as follows; For the assessmentyear 2018-19, while filing its return, petitioner claimeddeduction under section 80P of the Income Tax Act, 1969, (forshort ‘the Act’). While selecting the return for scrutiny, anotice was issued under section 143(2) of the Act, proposingto disallow the deductions claimed under section 80P of theAct. Proper explanations were submitted by the petitioner,which was followed by subsequent notices, explanations,production of documents, suffice to state, petitioner contends W.P.(C) No.8878/21 4 3.The facts necessary for disposing of this writpetition can be summarised as follows; For the assessmentyear 2018-19, while filing its return, petitioner claimeddeduction under section 80P of the Income Tax Act, 1969, (forshort ‘the Act’). While selecting the return for scrutiny, anotice was issued under section 143(2) of the Act, proposingto disallow the deductions claimed under section 80P of theAct. Proper explanations were submitted by the petitioner,which was followed by subsequent notices, explanations,production of documents, suffice to state, petitioner contends W.P.(C) No.8878/21 4 that every query raised by the department wascomprehensively met and was even supported by documents.According to the petitioner, the assessing officer, in directconflict with the Supreme Court judgment held that thepetitioner is not a primary credit society and thereafterdisallowed the claim for deduction. It is also pointed out thatthough the Supreme Court had clearly held in paragraph 33of the said judgment that “providing credit facilities to itsmembers does not necessarily mean agricultural credit alone”and further that “once it is clear that the cooperative societyin question is providing credit facilities to its members. Thefact that it is providing credit facility to non-members doesnot disentitle the society in question from availing of thededuction.” the assessing officer disallowed deductionsclaimed on reasons contrary to the Supreme Court Judgment.The learned counsel for the petitioner invited my attention tothe decision in Union of India and others v KamalakshiFinance Corporation Ltd[(1992) 1 SCC 443] andemphasised that the order of a higher authority is binding onthe lower authority and disregard of earlier orders of theAppellate Authorities ought not to be taken lightly. W.P.(C) No.8878/21 5 4. The learned Standing Counsel for Income Tax, Adv.Jose Joseph, on the other hand cautioned this Court fromexercising the jurisdiction under Article 226 on the groundthat a statutory appeal is wholly available for the petitioner toinvoke and nothing interdicts the petitioner from resorting tosuch a remedy. He further substantiated his contentions bypointing out that this Court will not in exercise of the powerunder Article 226 consider the factual aspects and hence it isin the interest of all that petitioner be relegated to thestatutory remedy of an appeal. 5. I have considered the rival contentions. An assessment order is challenged in this writ petition. There isno case for the petitioner that the assessment order has beenpassed without jurisdiction. It is also not contended that theassessment order was issued in violation of the principles ofnatural justice. It is admitted that the impugned order can besubject to a statutory appeal as per the provisions of the Act. 6. The jurisdiction of this Court under Article 226though not limited, is certainly subject to certain wellestablished principles of self-restraint. Generally,constitutional courts do not permit invocation of the writ W.P.(C) No.8878/21 6 5. I have considered the rival contentions. An assessment order is challenged in this writ petition. There isno case for the petitioner that the assessment order has beenpassed without jurisdiction. It is also not contended that theassessment order was issued in violation of the principles ofnatural justice. It is admitted that the impugned order can besubject to a statutory appeal as per the provisions of the Act. 6. The jurisdiction of this Court under Article 226though not limited, is certainly subject to certain wellestablished principles of self-restraint. Generally,constitutional courts do not permit invocation of the writ W.P.(C) No.8878/21 6 jurisdiction when adequate and specific legal remedies areavailable under the respective statutes. Invoking thejurisdiction under Article 226 for issuance of a writ ofcertiorari is a supplementary remedy to be resorted to whenthe litigant has a legal right but no appropriate machinery toredress his grievance. Of course, if the exigencies of a casedemand that the ordinary method of appeal will renderinjustice or be inadequate, the remedy of Article 226 can beinvoked. Refraining from exercising the jurisdiction underArticle 226 is more as a measure of policy, convenience, anddiscretion rather than a rule of law. In cases where orders ofassessing authorities under taxing statutes are merely wrongor are contrary to established laws, generally, this Courtkeeps its hands off and relegates the parties to the statutoryremedies. The situation would be different when an order ispassed wholly without jurisdiction or in violation of theprinciples of natural justice or for other exceptional reasons.In such circumstances, the court may exercise its jurisdictionunder Article 226. However, merely for the reason that theconclusions arrived at by an assessing officer are wrong orthat it is incorrect being in conflict with a Supreme Court 7 judgment would not generally invite this Court to exercise theextraordinary jurisdiction to interfere under Article 226 of theConstitution of India. 7. The Supreme Court had in Veerappa Pillai v. Raman & Raman Ltd (AIR 1952 SCC 192) held that where aparticular statute provides self-contained machinery fordetermination of questions arising under the Act, theremedies provided under the Act should be followed except incases of orders, which are wholly without jurisdiction or inexcess of jurisdiction, or in violation of the principles ofnatural justice or actions in refusal to exercise jurisdictionvested in them or there is an error on the face of the recordand such an act, omission, error or exercise resulted inmanifest injustice. Similarly, when fundamental rights havebeen infringed, the alternate remedy is not a bar forentertaining writ petition. (See State of Bombay v. UnitedMotors Ltd. (AIR 1953 SC 252). 8. Similarly, in tax matters, especially after an order ofassessment is issued, the High Court ought not to entertainoriginal petitions under Article 226 and convert itself intoappellate authorities except in exceptional circumstances. In W.P.(C) No.8878/21 8 cases where the challenge requires an appreciation of factsand the analysis of the nature of objections raised orexplanations provided, it is ideal to relegate the parties to thestatutory remedies. The Income Tax Act, no doubt provides acomplete machinery for assessment of tax and for relief inrespect of improper or erroneous orders made by the taxingauthorities as held in Sibram Poddar v. Income TaxOfficer, Central circle II and Another ( AIR 1964 SC1095). 8. Similarly, in tax matters, especially after an order ofassessment is issued, the High Court ought not to entertainoriginal petitions under Article 226 and convert itself intoappellate authorities except in exceptional circumstances. In W.P.(C) No.8878/21 8 cases where the challenge requires an appreciation of factsand the analysis of the nature of objections raised orexplanations provided, it is ideal to relegate the parties to thestatutory remedies. The Income Tax Act, no doubt provides acomplete machinery for assessment of tax and for relief inrespect of improper or erroneous orders made by the taxingauthorities as held in Sibram Poddar v. Income TaxOfficer, Central circle II and Another ( AIR 1964 SC1095). 9.There is no quarrel with regard to the propositionlaid down in Union of India and others v KamalakshiFinance Corporation Ltd. [(1992) 1 SCC 443]. Judicialdiscipline demands that all authorities follow orders of thesuperior authority. When the order of the Supreme Courtclearly specifies and declares a law, all authorities are boundby the same and cannot depart from the conclusions arrivedat therein. If however an authority is alleged to have departedfrom a binding decision of the Supreme Court, andappreciation of facts and materials are required, howeverlimited it may be, the remedy of a statutory appeal is theappropriate remedy. Assessees cannot insist that, in every W.P.(C) No.8878/21 9 such case, this Court must exercise its jurisdiction to set asideeven an assessment order. 10. As a matter of fact, the Supreme Court had directed in the judgment in Mayilavi’s case referred above, that theassessing officers must consider each case on the basis of thedecision rendered by it. The said direction gives ampleauthority to the assessing officer to consider the case of thepetitioner also on merits. Thus, in passing the impugnedassessment order, the Assessing Officer had the requisitejurisdiction. Petitioner does not have any allegation that theorder was issued in violation of the principles of naturaljustice. The grievance of the petitioner in the instant casestems from the nature of appreciation and analysis carriedout by the assessing officer while passing the impugnedassessment order. 11. Taking note of the nature of the assessment orderimpugned in this writ petition, it can be seen that thepetitioner has an alternative remedy available, which isequally efficacious. No circumstances are pointed out toexercise the extraordinary jurisdiction under Article 226. 12. Accordingly, there is no merit in this writ petition W.P.(C) No.8878/21 10 and the same is dismissed, reserving the liberty of thepetitioner to pursue the statutory remedies available. Sd/-JUDGE BECHU KURIAN THOMAS Dxy APPENDIX PETITIONER'S/S EXHIBITS: EXHIBIT P1TRUE COPY OF THE NOTICE DATED 22.09.2019 ISSUED BY INCOME TAX DEPARTMENT.22.09.2019 ISSUED BY INCOME TAX DEPARTMENT.EXHIBIT P2TRUE COPY OF THE REPLY DATED 25.02.2019 FILED BY THE PETITIONER.25.02.2019 FILED BY THE PETITIONER.EXHIBIT P3TRUE COPY OF THE NOTICE DATED 01.12.2020 ISSUED BY INCOME TAX DEPARTMENT.01.12.2020 ISSUED BY INCOME TAX DEPARTMENT.EXHIBIT P4TRUE COPY OF THE NOTICE DATED 20.12.2020 ISSUED BY INCOME TAX DEPARTMENT.20.12.2020 ISSUED BY INCOME TAX DEPARTMENT. EXHIBIT P5TRUE COPY OF THE REPLY DATED 24.12.2020 FILED BY THE PETITIONER.,24.12.2020 FILED BY THE PETITIONER., EXHIBIT P6TRUE COPY OF THE NOTICE DATED 31.01.2021 ISSUED BY INCOME TAX DEPARTMENT.,31.01.2021 ISSUED BY INCOME TAX DEPARTMENT., EXHIBIT P7TRUE COPY OF THE REPLY DATED 02.02.2021 FILED BY THE PETITIONER.02.02.2021 FILED BY THE PETITIONER. EXHIBIT P5TRUE COPY OF THE REPLY DATED 24.12.2020 FILED BY THE PETITIONER.,24.12.2020 FILED BY THE PETITIONER., EXHIBIT P6TRUE COPY OF THE NOTICE DATED 31.01.2021 ISSUED BY INCOME TAX DEPARTMENT.,31.01.2021 ISSUED BY INCOME TAX DEPARTMENT., EXHIBIT P7TRUE COPY OF THE REPLY DATED 02.02.2021 FILED BY THE PETITIONER.02.02.2021 FILED BY THE PETITIONER. EXHIBIT P8TRUE COPY OF THE NOTICE DATED 04.02.2021 ISSUED BY INCOME TAX DEPARTMENT.04.02.2021 ISSUED BY INCOME TAX DEPARTMENT.EXHIBIT P9TRUE COPY OF THE NOTICE DATED 11.02.2021 ISSUED BY INCOME TAX DEPARTMENT.11.02.2021 ISSUED BY INCOME TAX DEPARTMENT.EXHIBIT P10TRUE COPY OF THE REPLY DATED 15.02.2021 FILED BY THE PETITIONER.15.02.2021 FILED BY THE PETITIONER.EXHIBIT P11TRUE COPY OF THE ASSESSMENT ORDER DATED 18.02.2021 ISSUED BY INCOME TAX DEPARTMENT.DATED 18.02.2021 ISSUED BY INCOME TAX DEPARTMENT.