Recovery proceedings deferred till appeal relating to denial of benefits u/s. 80P is finalized

Peroorkada Service Co-Operative Bank Ltd. Vs ITO (Kerala High Court)

Kerala High Court held that recovery proceedings by attaching the bank account directed to be deferred till the appeals relating to denial of benefits under section 80P of the Income Tax Act are finalized.

Facts- The petitioner has approached this Court, being aggrieved by the fact that the amounts due under the orders of assessment are being sought to be recovered by attaching the bank accounts maintained by the petitioner with the 5^th respondent bank. Notably, in most of the cases, demand arises out of the denial of benefit under section 80P of the Income Tax Act.

Conclusion- Held that the writ petition will stand disposed of, directing that the steps for recovery of any demands finalized against the petitioner for the years 2012-13 and 2013-14 shall stand deferred till appeals filed for the said years are heard and disposed of by the 3^rd respondent and till the appeals filed for the years 2016-17, 2017-18 and 2018-19 are heard and disposed of by the 4^th respondent-Tribunal. Recovery relating to the demand arising for the year 2014-15 will be deferred till a decision is taken on the application for rectification of mistake by the 4th respondent-Tribunal. As result of the aforesaid directions, will also stand set aside.

FULL TEXT OF THE JUDGMENT/ORDER OF KERALA HIGH COURT

Certain assessments were completed against the petitioner under the provisions of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’), for the years 2012-13, 2013­14, 2014-15, 2016-17, 2017-18 and 2018-19. The appeals against the orders of assessment for the years 2012-13 and 2013-14 are pending before the 3^rd respondent and second appeals filed against the orders of assessment for the years 2016-17, 2017-18 and 2018-19 are pending before the 4^th respondent-Tribunal . For the year 2014-15 also, an application for rectification of mistake is pending before the Tribunal. The petitioner has approached this Court, being aggrieved by the fact that the amounts due under the orders of assessment are being sought to be recovered by attaching the bank accounts maintained by the petitioner with the 5^th respondent bank.

2. Learned counsel appearing for the petitioner submits that most of the demands arise out of the denial of benefits of Section 80P of the Act and that going by the judgment of the Supreme Court in Mavilayi Service Co-operative Bank Ltd. v. Commissioner of Income Tax [2021 (1) KLT 485], the petitioner is entitled to substantial reliefs in respect of the demands. It is pointed out that, in cases where claim for deduction under Section 80P of the Act has been denied in similar circumstances, the demands have been stayed pending consideration of the appeals etc., by the Appellate Authority.

3. Heard the learned Standing Counsel appearing for the Income Tax Department and the learned Standing Counsel appearing for the 5^th respondent also.

4. Having heard the learned counsel appearing for the petitioner, learned Standing Counsel appearing for the Income Tax Department and the learned Standing Counsel appearing for the 5^th respondent bank, the writ petition will stand disposed of, directing that the steps for recovery of any demands finalized against the petitioner for the years 2012-13 and 2013-14 shall stand deferred till appeals filed for the said years are heard and disposed of by the 3^rd respondent and till the appeals filed for the years 2016-17, 2017-18 and 2018-19 are heard and disposed of by the 4^th respondent-Tribunal. Recovery relating to the demand arising for the year 2014-15 will be deferred till a decision is taken on the application for rectification of mistake by the 4th respondent-Tribunal. As result of the aforesaid directions, Ext.P5 will also stand set aside.