Case Law Details
Porkulam Service Co-Operative Bank Limited Vs Principal Chief Commissioner of Income Tax (Kerala High Court)
n a recent judgment that has caught the attention of the tax community, the Kerala High Court has set a precedent by ordering a fresh decision in the case of Porkulam Service Co-Operative Bank Limited Vs Principal Chief Commissioner of Income Tax. This ruling underscores the importance of due process and the need for authorities to consider all submissions made by taxpayers before making a decision.
Background of the Case
Porkulam Service Co-Operative Bank Limited, a Primary Agricultural Credit Society registered under the Kerala Co-operative Societies Act, 1969, engaged in banking and providing credit facilities exclusively to its members, found itself in a legal tangle over the delay in filing its income tax return. The bank filed its return seven days past the deadline and subsequently applied for condonation of delay under Section 119(2)(b) of the Income Tax Act.
The Oversight
The Principal Chief Commissioner of Income Tax, Kerala, issued a notice for a hearing on the application for condonation of the delay. The bank was given the opportunity to appear in person or through an authorised representative and was encouraged to file written submissions for consideration. Complying with this, the bank submitted its written arguments on November 3, 2023. However, the impugned order passed by the Principal Chief Commissioner overlooked these submissions, stating that the bank neither appeared in person nor submitted any written representation, an assertion that was factually incorrect.
Kerala High Court’s Intervention
Recognizing the oversight, the Kerala High Court intervened, setting aside the impugned order for not considering the bank’s written submissions. The court emphasized the importance of considering all relevant documents and submissions before passing an order on applications for condonation of delay in filing tax returns. The matter was remitted back to the Principal Chief Commissioner of Income Tax, Kerala, for a fresh decision. The court also granted liberty to the bank to file new written submissions and mandated that the bank be given a notice of hearing.
Implications of the Ruling
This ruling by the Kerala High Court serves as a critical reminder to tax authorities about the importance of adhering to principles of natural justice and ensuring that all submissions by taxpayers are duly considered before making a decision. It highlights the judiciary’s role in ensuring fairness and due process in administrative proceedings.
For taxpayers, this judgment is a beacon of hope, indicating that the judiciary is willing to intervene when procedural oversights could potentially harm their interests. It also serves as a reminder for taxpayers to diligently document and follow up on their submissions to tax authorities.
Conclusion
The Kerala High Court’s order in the case of Porkulam Service Co-Operative Bank Limited Vs Principal Chief Commissioner of Income Tax sets a significant precedent in tax litigation. It underscores the judiciary’s commitment to ensuring that administrative bodies respect the rights of taxpayers to be heard and that their submissions are considered. This case is a testament to the checks and balances inherent in the Indian legal system, designed to protect the interests of all parties involved in the tax administration process.
FULL TEXT OF THE JUDGMENT/ORDER OF KERALA HIGH COURT
The petitioner claims to be a Primary Agricultural Credit Society registered under the provisions of the Kerala Co-operative Societies Act, 1969. The petitioner also claims that the petitioner is engaged in the business of banking and providing credit facilities only to its members.
2. The petitioner filed return on 03.2019 to the last date for filing the return was 28.02.2019. Thus, there was a delay of 7 days in filing the return. The petitioner moved an application under Section 119(2)(b) of the Income Tax Act for condoning the delay in filing the return. On the said application, notice was issued to the petitioner on 27.10.2023 intimating the petitioner that the hearing on the application was fixed before the Joint Commissioner of Income Tax (Hqrs./Tech), Office of the Deputy Commissioner of Income Tax, Kerala on 07.11.2023 at 11.30 a.m. The petitioner was directed to appear either in person or through an authorised representative. The petitioner was given a liberty to file written submission which was to be taken into consideration before deciding upon the application for condoning the delay of 7 days in filing the return. The petitioner filed written submission on 03.11.2023. The impugned order has been passed without taking note of the fact that the petitioner had submitted written submission. The order shows that neither the petitioner appeared in person nor submitted the written submission. Prima facie, the said finding is incorrect on the basis of the report.
3. In view thereof, the impugned order is set aside, the matter is remitted back to the Principal Chief Commissioner of Income Tax, Kerala to pass a fresh The petitioner is given liberty to file fresh written submission before the Principal Chief Commissioner of Income Tax, Kerala within one week from today. The petitioner may be served notice of hearing, and after considering the submission of the petitioner, fresh order shall be passed expeditiously.
With the aforesaid direction, this writ petition stands finally disposed of.
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