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2020 Supreme(Online)(KER) 27179
HIGH COURT OF KERALA
ALEXANDER THOMAS, J
THE THACHINGANADAM SERVICE CO OPERATIVE BANK LIMITED NO.10152 – Appellant
Versus
THE COMMISSIONER OF INCOME TAX (APPEALS) – Respondent
WP(C)/855/2020
SRI.O.D.SIVADAS
Coercive recovery of taxes cannot be enforced while an appeal is pending; this aligns with established judicial precedent ensuring fair treatment in tax disputes.
Headnote:
Income Tax - Writ Petition - Income Tax Act Section List - The court emphasized the interpretation of Sec. 80P(4) of the Income Tax Act and aligned its decision with previous case law, ultimately halting coercive tax recovery while the appeal is pending.
Fact of the Case:
The petitioner society claimed tax benefits under Sec. 80P(4) of the Income Tax Act for 2017-2018. The assessment authority rejected the claim, leading to a tax demand and subsequent coercive recovery actions during the appeal process.
Finding of the Court:
The court found merit in the petitioner’s argument, noting that similar cases had previously decided against the insistence on tax payment pending appeal, thus ordering a stay on coercive recovery actions.
Issues: Whether coercive steps for tax recovery can proceed while an appeal is pending, particularly considering the implications of the Full Bench ruling on similar cases.
Ratio Decidendi: The court held that the appellate authority should not require payment before resolving the appeal, reiterating its reliance on established case law that supports maintaining the appeal process free from pressure.
Final Decision: The court ordered a stay on coercive recovery actions until the appellate authority resolves the appeal.
J U D G M E N T
The averments in the above Writ Petition (Civil) are as follows:
The petitioner society furnished income tax returns for the period 2017-2018 and claimed the benefit under Sec. 80P(4) of the Income Tax Act . That the assessing authority disallowed the said claim and demanded tax for Rs. 29,14,317/-. The petitioner filed appeal in that regard before the 1st respondent, during the pendency of which appeal, the 2nd respondent has initiated coercive steps for recovery of the disputed amounts. It is in the above circumstances that the petitioner bank has filed the instant Writ Petition (Civil) with the following prayers:
“1) Issue a writ of mandamus or other appropriate writ, order or direction to the 1st respondent to consider Ext.P-2 appeal on merit and also restraining the respondents from initiating coercive proceedings against the petitioner society till orders are passed in
2. Heard Sri.O.D.Sivadas, learned counsel appearing for the petitioner society and Sri.Christopher Abraham, learned Standing Counsel for the Income Tax Department, Government of India, appearing for the respondents.
3. It is pointed by Sri.O.D.Sivadas, learned counsel appearing for the petitioner that the question regarding the liability of the banks like the petitioner co-operative bank to pay income tax assessed is a matter, which was answered by a Full Bench of this Court in the judgment in Income Tax Appeal, I.T.A.Nos.97/2016 and connected cases on 19.3.2019 {The Mavilayi Service Co- operative Service Bank Ltd., v. Commissioner of Income Tax, Calicut [2019 (2) KHC 287]} Further that in view of the said dictum of the Full Bench of this Court, it is contended that the appellate authority can only remand the matter to the assessing authority for conducting fresh enquiry and hence it is urged that the insistence for making payment of any portion of the amount under demand, pending disposal of the appeal, may cause hardships and prejudices to the petitioner co-operative society concerned. Hence it is contended that, the insistence for making payment of any portion of the amount under demand, pending disposal of the appeal, may cause hardships and prejudices to the banks concerned.
4. Sri.Christopher Abraham, learned Standing Counsel for the Income Tax Department, Government of India, appearing for the respondents would, on the other hand, urge that part payment insisted for granting stay is a matter, which comes within the discretion of the appellate authority and this Court may not be justified in interfering with discretion of the appellate authority in exercising such discretion of the statutory appellate authority.
5. However, it is seen that in similar cases it hasalready been ordered by a Division Bench of this Court in the judgment dated 1.7.2019 in W.A.No.1529/2019 that in the light of the aspects mentioned in the said case, their Lordships of the Division Bench of this Court are of the opinion that the insistence for payment of a portion of the amount demanded, as a condition for granting stay, need not be insisted in the case at hand and hence the Division Bench has ordered that it is for the appellate authority to take a decision on the statutory appeal at the earliest and that until final decision is rendered by the appellate authority in the statutory appeal, coercive steps for recovery and collection of the impugned tax is to be kept in abeyance in the light of the dictum laid down by the Full Bench of this Court inMavilayi Service Co-operative Bank Ltd. 's case supra. A copy of the abovesaid judgment dated 1.7.2019 rendered by the Division Bench of this Court in W.A.No. 1529/209 along with connected cases, has been made available for the perusal of this Court. Taking note of the said orders issued by the abovesaid Division Bench of this Court, it is ordered that the 1st appellate authority shall ensure final disposal of Ext.P-2 appeal after affording reasonable opportunity of b
