Case Law Details
Thuruthipuram Service Co-Operative Bank Ltd. Vs ITO (Kerala High Court)
Introduction: The Kerala High Court recently addressed concerns raised by Thuruthipuram Service Co-Operative Bank Ltd. through a writ petition, urging swift action on their stay petition. This legal development unfolds against the backdrop of Income Tax authorities denying a deduction claim and initiating penalty proceedings under Section 270A for the assessment year 2020-21.
Detailed Analysis: The petitioner, Thuruthipuram Service Co-Operative Bank Ltd., filed its income tax return for the assessment year 2020-21 on January 6, 2021. The scrutiny process, initiated under the Computer Assisted Scrutiny Selection (CASS), focused on examining claims for deductions, high creditors/liabilities, and deductions under Section 80P.
Notices under Sections 143(2), 142(1) of the Income Tax Act were issued on June 29, 2021, December 3, 2021, and February 7, 2022, respectively. The assessing authority, after thorough examination, disallowed the petitioner’s claim for the deduction of interest earned on deposits. The interest income was assessed at Rs.18,17,072/-, and penalty proceedings under Section 270A were directed.
Challenged by the assessment order, the petitioner sought intervention from the Kerala High Court, primarily urging the court to direct the 3rd respondent to decide on their appeal and stay petition promptly. However, the court refrained from interfering with the appellate authority’s jurisdiction and directed the Income Tax authorities to consider and pass appropriate orders on the stay petition (Ext.P3) expeditiously, preferably within two months.
Conclusion: The Kerala High Court’s directive highlights the court’s inclination towards expeditious resolution in tax matters. The petitioner’s concerns regarding the denial of deduction and the initiation of penalty proceedings under Section 270A will now be addressed by the Income Tax authorities, emphasizing the need for a timely and lawful decision. As businesses navigate tax assessments, this case underscores the importance of a balanced and prompt judicial approach in resolving disputes related to income tax assessments and penalties. The court’s decision serves as a reminder of the significance of due process and timely adjudication in tax-related legal proceedings.
FULL TEXT OF THE JUDGMENT/ORDER OF KERALA HIGH COURT
The present writ petition has been filed, inter alia seeking a relief in the nature of writ/direction to the 3rd respondent to decide appeal and stay petition at Exts.P2 and P3, respectively, filed against the assessment order in Ext.P1 for the assessment year 2020-21, expeditiously.
2. The petitioner filed return of its income for the assessment year 2020-21 on 6.1.2021. The case of the petitioner/assessee was selected for complete scrutiny under CASS to verify, the claim of any other amount allowable as deduction in Schedule BP, high creditors/liabilities and deduction under Section 80P.
3. A notice under Section 143(2) of the Income Tax Act, 1961 (‘Act’, for short) dated 29.6.2021 was served on the petitioner. Thereafter, notices under Section 142(1) of the Act dated 3.12.2021 and 7.2.2022 were issued. The assessing authority denied the petitioner’s claim for deduction of interest earned by it on deposits. The petitioner’s interest income has been assessed at Rs.18,17,072/- under Sections 143(3) read with 144B of the Act. Interest has been charged. Penalty proceedings under Section 270A of the Act has been directed to be initiated against the petitioner.
4. The petitioner is aggrieved by the assessment order as stated above. This Court would not like to exercise parallel jurisdiction with the appellate authority for granting an interim order as prayed for by the learned counsel for the petitioner.
5. In view thereof, the present writ petition is disposed of with direction to the 3rd respondent to consider and pass appropriate orders, in accordance with law, on the stay petition, Ext.P3, expeditiously, preferably within a period of two months.
Pending interlocutory application, if any, in the present writ petition stands dismissed.
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