Case Law Details
Paravur Service Co-Operative Bank Ltd. Vs ITO (Kerala High Court)
In a significant ruling, the Kerala High Court addressed the issue of condonable delays in tax-related appeals, directing the Income Tax Appellate Tribunal (ITAT) to expedite the consideration of a delay condonation application. The case of Paravur Service Co-Operative Bank Ltd. Vs ITO has highlighted the procedural intricacies and the necessity for judicial discretion in ensuring fairness in tax adjudication processes.
The appeal by Paravur Service Co-Operative Bank Ltd. stems from a judgment dated May 23, 2024, by a learned Single Judge in W.P(C) No. 17762 of 2024. The appellant challenged the dismissal of their writ petition, which sought a directive for the ITAT to consider their delay condonation application and to stay recovery proceedings until the application was adjudicated.
The appellant, a co-operative bank, had initially approached the writ court following an unfavorable order from the First Appellate Authority under the Income Tax Act. The bank filed an appeal (Ext.P3), a stay petition (Ext.P4), and a delay condonation application (Ext.P5) before the ITAT. The primary contention in the writ petition was to obtain an order for the ITAT to address the delay condonation application and to suspend recovery actions until a decision was made.
Single Judge’s Dismissal: The learned Single Judge dismissed the writ petition, operating under the assumption that the ITAT lacked the authority to condone the delay in question. This dismissal prompted the appellant to challenge the judgment before the Kerala High Court, asserting that the ITAT does indeed possess discretionary power to condone delays as per statutory provisions.
High Court’s Ruling: The High Court, after hearing the arguments from both the appellant’s counsel, Sri. Arjun Raghavan, and the Income Tax Department’s Standing Counsel, Sri. P.G. Jayashankar, found merit in the appellant’s submission. The Court noted that the statutory framework grants the ITAT the discretion to condone delays, provided the explanation for the delay is satisfactory.
Directions Issued: Recognizing the discretionary power vested in the ITAT, the High Court deemed it appropriate to set aside the judgment of the learned Single Judge. The following directions were issued:
1. Expeditious Consideration: The ITAT is directed to consider and pass orders on the delay condonation application (Ext.P5) within two months from receiving a copy of the judgment.
2. Stay on Recovery Proceedings: Recovery actions against the appellant, based on the first appellate authority’s order, shall be paused until the ITAT has decided on the delay condonation application and communicated its decision to the appellant.
Conclusion: The Kerala High Court’s decision underscores the importance of procedural fairness and the judicial discretion necessary to uphold statutory rights. By directing the ITAT to expeditiously consider the delay condonation application of Paravur Service Co-Operative Bank Ltd., the Court has reinforced the principle that justice should not be denied due to procedural delays.
FULL TEXT OF THE JUDGMENT/ORDER OF KERALA HIGH COURT
This appeal has been preferred by the appellant-Co-operative Bank aggrieved by the judgment dated 23.05.2024 of a learned Single Judge in W.P(C)No.17762 of 2024.
2. The brief facts necessary for disposal of this writ appeal are as follows:
The appellant herein had approached the writ court against an order of the First Appellate Authority under the Income Tax Act, against which order they had preferred Ext.P3 appeal, Ext.P4 stay petition and Ext.P5 delay condonation application before the Income Tax Appellate Tribunal.
3. The limited prayer in the writ petition was for a direction to the Appellate Tribunal to consider and pass orders on Ext.P5 delay condonation application and to stay the recovery proceedings for recovery of amounts confirmed against the appellant by the first appellate order, till such time as the Tribunal had an occassion to consider and pass orders on the dealy condonation application.
4. The learned Single Judge, proceeding on the assumption that the Appellate Tribunal did not have a power to condone the delay in question, thought it appropriate to dismiss the writ petition. It is against the said judgment of the learned Single Judge that the appellant is before us in this appeal.
5. We have heard Sri.Arjun Raghavan, the learned counsel for the appellant and Sri.P.G.Jayashankar, the learned Standing Counsel for the Income Tax Department.
6. It is the submission of Sri.Arjun Raghavan, the learned counsel for the appellant that, as per the provisions of the statute, the Appellate Tribunal has the power to condone the delay in question and it is a discretionary power that has to be exercised based on the provisions of the statute and by considering the explanation of the assessee for the delay. Taking note of the said submission and finding that the statutory provisions empower the Tribunal to condone the delay in question, we deem it appropriate to allow the writ appeal, by setting aside the impugned judgment of the learned Single Judge, and with the following directions:
The Appellate Tribunal, before which Ext.P3 appeal, Ext.P4 stay petition and Ext.P5 delay condondation application preferred by the appellant are pending, shall consider and pass orders on Ext.P5 delay condonation application within a period of two months from the date of receipt of a copy of this judgment. The recovery steps for recovery of the amounts confirmed against the petitioner by the orders of the first appellate authority shall be kept in abeyance till such time as orders are passed by the Appellate Tribunal on the delay condonation application as directed and the order communicated to the appellant.
The writ appeal is disposed as above.
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