Case Law Details
Peroorkada Service Co-Operative Bank Ltd Vs ITO (Kerala High Court)
In a recent development, the Kerala High Court issued a directive to the Income Tax Commissioner regarding recovery proceedings initiated against Peroorkada Service Co-Operative Bank Ltd. The bank, engaged in providing banking services and agricultural credit to its members, had claimed income tax exemption under Section 80P of the Income Tax Act, 1961. The court’s order revolves around the speedy resolution of an appeal filed by the bank and the implications of the demand notice issued.
1. Background: Peroorkada Service Co-Operative Bank Ltd, a primary Credit Co-operative Society, had its income tax assessment completed for the assessment year 2012-2013. The assessing authority determined the total income at Rs. 71,98,44,040, contrasting with the bank’s declared income of ‘nil.’ Subsequently, a demand notice under Section 156 of the Income Tax Act, 1961, was issued, demanding Rs. 54,49,31,750.
2. Appeal and Stay Application: The bank promptly filed an appeal challenging the assessment and also sought a stay on the recovery proceedings. The appeal and stay application were initially filed before one authority and later transferred to another.
3. Legal Precedent: The bank’s counsel cited a precedent, Principal Commissioner v. Peroorkaa Service Co-operative Bank Ltd., [2022 442 ITR 141 (Ker.)], which they claimed supported their case. Additionally, it was argued that the bank’s income primarily comprised interest earned from deposits made by its members.
4. Court’s Intervention: The Kerala High Court refrained from delving into the merits of the case but acknowledged that the bank was currently facing recovery proceedings due to the demand notice. In light of this, the court issued a directive to the third respondent (Income Tax Commissioner) to expedite the decision on the appeal filed by the bank.
5. Timeframe for Resolution: The court instructed the Income Tax Commissioner to evaluate the bank’s appeal (Exhibit P4) and issue appropriate orders within a period of two months. Furthermore, the court clarified that if the third respondent found it impossible to decide the appeal within the specified timeframe, they should consider the bank’s stay petition (Exhibit P5) within the same limit.
6. Conclusion: The Kerala High Court’s directive to the Income Tax Commissioner reflects the importance of expeditiously resolving appeals and recovery proceedings in taxation matters. The court’s order ensures that Peroorkada Service Co-Operative Bank Ltd’s appeal will be addressed promptly, providing clarity and closure to the ongoing dispute. This case exemplifies the judicial commitment to timely and fair tax assessments and appeals.
FULL TEXT OF THE JUDGMENT/ORDER OF KERALA HIGH COURT
The petitioner is a primary Credit Co-operative Society engaged in the business of providing banking services and agricultural credit to its members. The petitioner claims that its income is exempted from the payment of income tax under the provisions of Section 80P of the Income Tax Act, 1961. The assessing authority has completed assessment for the assessment year 2012-2013 and had computed the total income at Rs.71,98,44,040/- as against the declared income of ‘nil’. A demand notice under Section 156 of the Act, 1961 for an amount of Rs.54,49,31,750/- was issued in pursuance to Exhibit P1 assessment order dated 23.02.2023.
2. The petitioner has filed an appeal along with an application to stay the recovery proceedings, before the second respondent and the same was transferred to the third respondent. The appeal has not yet been disposed of.
3. The learned counsel for the petitioner submits that the petitioner’s case is squarely covered by the decision of this Court in Principal Commissioner v. Peroorkaa Service Co-operative Bank Ltd., [2022 442 ITR 141 (Ker.)]. It is also submitted that the income of the petitioner is nothing but the interest from the deposits made by its members. This Court does not want to go into the merits of the matter. Since the petitioner is facing recovery proceedings pursuant to Exhibit P6 demand notice, it would be appropriate to direct the third respondent to decide the appeal expeditiously.
In that view of the matter, the present writ petition is finally disposed of, with a direction to the third respondent to consider Exhibit P4 appeal filed by the petitioner and pass appropriate orders within a period of two months. It is made clear that if the third respondent is not in a position to decide the appeal within the aforesaid time limit, Exhibit P5 stay petition be considered within the aforesaid limit.
