Case Law Details
Poonjar Service Co-Operative Bank Ltd. Vs ITO (Kerala High Court)
In the case of Poonjar Service Co-Operative Bank Ltd. vs. ITO, the Kerala High Court dealt with a challenge against an assessment order for the year 2018-19 under Article 226 of the Constitution of India. The petitioner, claiming to be a Primary Agricultural Credit Society, contested the assessment order on the grounds that it disregarded a binding judgment of the Supreme Court in Mavilayi Service Co-operative Bank Ltd. vs. Commissioner of Income Tax, Calicut.
The crux of the petitioner’s argument was that the assessing authority had failed to apply the principles laid down by the Supreme Court in Mavilayi’s case regarding eligibility for deduction under Section 80P of the Income Tax Act, 1961. The petitioner contended that despite providing comprehensive responses and supporting documents during the assessment process, the assessing officer wrongly concluded that the petitioner did not qualify as a primary credit society entitled to the deductions under Section 80P. This, according to the petitioner, amounted to a clear disregard of the Supreme Court’s directive and was tantamount to contempt of court.
On the other hand, the counsel representing the Income Tax department argued that the petitioner should pursue the statutory remedy of appeal available under the Income Tax Act rather than seeking relief under Article 226. The respondent emphasized that the High Court should exercise restraint in interfering with assessment orders unless there are exceptional circumstances such as lack of jurisdiction, violation of natural justice, or manifest injustice.
After considering the arguments from both sides, the Kerala High Court delved into the principles governing the exercise of its jurisdiction under Article 226. It acknowledged that while Article 226 grants wide powers to constitutional courts, these powers are typically exercised sparingly, particularly in tax matters where statutory remedies like appeals exist. The court cited precedents emphasizing that a mere error in assessment or deviation from legal principles, without more, does not justify the invocation of Article 226.
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