Vallapuzha Service Co-Operative Bank Ltd. Vs Assessment Unit (Kerala High Court)
The petitioner challenged a penalty order passed under Section 270A of the Income Tax Act, 1961. The assessment for Assessment Year 2021-22 had been completed under Section 143(3) by order dated 19.12.2022. Although the computation reflected nil tax liability, the assessment disallowed a deduction of ₹1,11,62,396/-, leading to initiation of penalty proceedings under Section 270A and the passing of the impugned penalty order.
During the pendency of the writ petition, the petitioner succeeded in the first appeal against the assessment order. By the appellate order, the benefit of deduction under Section 80P was granted. The appellate order was subsequently implemented through an order dated 20.02.2026.
The High Court observed that the assessment had been revised in accordance with the appellate order granting the Section 80P deduction. Consequently, there was no tax liability remaining against the petitioner. Since the basis for initiating and sustaining the penalty proceedings under Section 270A no longer existed, the penalty could not be sustained.
Accordingly, the High Court allowed the writ petition and set aside the penalty order passed under Section 270A.
FULL TEXT OF THE JUDGMENT/ORDER OF KERALA HIGH COURT
Heard Sri.V.P.Narayanan, the learned counsel for the petitioner, as well as Sri.Navaneeth N.Nath, the learned Standing Counsel for the Income Tax department.
