Case Law Details
Ramanthali Service Co-Operative Bank Ltd Vs ITO (Kerala High Court)
Introduction: In a recent legal development, the Kerala High Court delivered a verdict in the case of Ramanthali Service Co-Operative Bank Ltd Vs ITO. The case pertains to a rectification application filed by the Income Tax Department (ITD) under Section 254(2) of the Income Tax Act, 1961, challenging an earlier order related to the assessment years 2009-2010. The central issue in this case was the delay of six months in filing the rectification application.
Detailed Analysis:
1. Background: The petitioner, Ramanthali Service Co-Operative Bank Ltd, a co-operative society, had faced an assessment order by the assessing officer in 2011, determining a tax liability of Rs. 10,64,549. The assessing officer also initiated penalty proceedings under various sections of the Income Tax Act. Dissatisfied with this, the petitioner appealed to the first appellate authority, who dismissed the appeal in 2012. Subsequently, the petitioner filed a second appeal before the Income Tax Appellate Tribunal (ITAT), Cochin Bench.
2. ITAT’s Decision: In 2017, the ITAT delivered an order partially allowing the petitioner’s appeal. The ITAT ruled that the petitioner, being a co-operative society, was eligible for a deduction under Section 80P(2) of the Income Tax Act, 1961, and directed the assessing officer to grant the claimed deduction.
3. Subsequent Developments: However, a Full Bench of the Kerala High Court, in a judgment dated 19.03.2019, took a contrary view to that of the ITAT. The Department subsequently filed various Miscellaneous Petitions, including one against the petitioner (Ext. P4 petition), under Section 254(2) of the Act before the ITAT. The Department sought rectification of the ITAT’s 2017 order. It is crucial to note that these applications were filed well beyond the six-month limitation period prescribed by Section 254(2) of the Act.
4. Legal Arguments: The petitioner argued that the Department’s application for rectification was barred by limitation. The Full Bench judgment that formed the basis of the Department’s rectification application had been set aside by the Supreme Court. Furthermore, there was no provision in the Income Tax Act, 1961, for the review of an ITAT order.
5. Court’s Verdict: The Kerala High Court upheld the petitioner’s arguments and ruled that the Department’s rectification application was not maintainable. It had been filed well beyond the six-month limitation period prescribed under Section 254(2) of the Act. The court noted that the ground on which the Department based its application no longer existed due to the Supreme Court’s decision overturning the Full Bench judgment.
Conclusion: The Kerala High Court’s decision in Ramanthali Service Co-Operative Bank Ltd Vs ITO highlights the importance of adhering to statutory timelines when filing rectification applications. In this case, the Court quashed the IT Department’s application due to a significant delay of six months. The ruling emphasizes the need for timely legal actions and underscores that applications filed beyond prescribed limits may not be maintainable. This judgment serves as a reminder to all parties involved in tax disputes to be vigilant about adhering to legal timelines and procedures.
FULL TEXT OF THE JUDGMENT/ORDER OF KERALA HIGH COURT
The present writ petition has been filed impugning Exhibit P5 order dated 16.09.2022 passed by the Income Tax Appellate Tribunal, Cochin Bench in M.P. No. 242/Coch/2021, filed under Section 254(2) of the Income Tax Act, 1961 (‘Act, 1961’ for short) seeking rectification of Exhibit P3 order dated 14.03.2017 in ITA No. 361/Coch/2012 in respect of the assessment years 2009-2010.
2. The petitioner claims to be a co-operative society. The assessing officer has passed Exhibit P1 order dated 22.12.2011 for the assessment years 2009-2010 assessing the tax liability at Rs. 10,64,549/- and initiating penalty proceedings under Sections 271F, 271B, 271(1)(b) and 271(1)(c) separately against the petitioner. Challenging the same, the petitioner has filed an appeal before the first appellate authority, who as per Exhibit P2 order dated 21.09.2012, dismissed the same. Against the said order, the petitioner has filed a second appeal before the Income Tax Appellate Tribunal, Cochin Bench and the Tribunal, as per Exhibit P3 order dated 14.03.2017, allowed the appeal in part holding that the petitioner, being a co-operative society, is eligible for deduction under Section 80P(2) of the Act, 1961 and the assessing officer was directed to grant the deduction claimed by the petitioner.
3. It appears that after the said order was passed, a Full Bench of this Court, in the judgment dated 19.03.2019 in ITA No. 97 of 2016 has taken a contrary view as that of the view taken by the Tribunal. Accordingly, the Department has filed various Miscellaneous Petitions in respect of different assessees, including Ext. P4 petition against the petitioner, under Section 254(2) of the Act, 1961 before the Income Tax Appellate Tribunal seeking rectification of Ext. P3 order. It is submitted that those applications were filed beyond the limitation period prescribed under Section 254(2) of the Act, 1961 and therefore, the same were not maintainable under law. The application for rectification in respect of the petitioner is dated 30.09.2019, which is much beyond the period of limitation of six months provided for filing such an application.
4. The learned counsel for the petitioner also submits that the aforesaid Full Bench judgment has been set aside by the Apex Court and therefore, the application filed by the Department seeking rectification of the order dated 14.03.2017 was barred by limitation. Even otherwise, the Department was seeking review of the order of the Income Tax Appellate Tribunal and there is no provision in the Act, 1961 to review the order passed by the Income Tax Appellate Tribunal. It is also submitted that the very ground on the basis of which the impugned order was passed does not survive, in view of the judgment of the Apex Court setting aside the Full Bench judgment dated 19.03.2019.
5. In view of the above, I find that the application filed by the Department seeking rectification of the order dated 14.03.2017 in respect of the petitioner was not maintainable and it was filed much beyond the six months’ period of limitation prescribed under Section 254(2) of the Act, 1961.
Accordingly, the present writ petition is allowed and Exhibit P5 order dated 16.09.2022 is set aside.
