Allowed

M/S. Nanniyode Service Co-Operative Bank Ltd. v. the Central Board of Direct Taxes

Kerala HC10 Jul 2018WA/1248/2018

Case brief

AI extract

What is this about?

The High Court of Kerala disposed of writ appeals filed by cooperative banks challenging an interim order directing payment of 20% of tax addition under section 68. Officers treated deposits as unexplained credits. The Court allowed the appeal, reducing the deposit to 1% upon submission of affidavits undertaking to produce details within one month, rather than granting a blanket stay.

What did the court decide?

Writ Petitions allowed. Assessees directed to deposit 1% of tax addition within one month and file undertaking to produce depositor details.

M/S. Nanniyode Service Co-Operative Bank Ltd. Vs the Central Board… — Income Tax | Kerala HC (2018)

¶1

IN THE HIGH COURT OF KERALA AT ERNAKULAM

¶2

PRESENT:

¶3

THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN &

¶4

THE HONOURABLE MR. JUSTICE ASHOK MENON

¶5

TUESDAY, THE 10TH DAY OF JULY 2018 / 19TH ASHADHA, 1940

¶6

WA.No. 1248 of 2018 IN WPC. 16024/2018

¶7

AGAINST THE JUDGMENT IN WP(C) NO.16024/2018 OF THE HIGH COURT OF KERALA DATED 06-06-2018

¶8

APPELLANT/WRIT PETITIONER:-

¶9

M/S. NANNIYODE SERVICE CO-OPERATIVE BANK LTD. NO.1161 NANNIYODE, PACHA P.O., NEDUMANGAD, THIRUVANANTHAPURAM-695 562 REPRESENTED BY ITS SECRETARY, P. LATHAKUMARI.

¶10

BY ADVS.DR.K.P.PRADEEP

¶11

SRI.SANAND RAMAKRISHNAN SRI.T.T.BIJU SRI.K.P.KESAVAN NAIR SMT.T.THASMI

¶12

RESPONDENTS/RESPONDENTS:

¶13

1. THE CENTRAL BOARD OF DIRECT TAXES DEPARTMENT OF REVENUE, MINISTRY OF FINANCE GOVERNMENT OF INDIA, NORTH BLOCK NEW DELHI-110 001, REPRESENTED BY ITS CHAIRMAN.

¶14

2. INCOME TAX OFFICER, WARD 2(3), THIRUVANANTHAPURAM DEPARTMENT OF INCOME TAX, AAYAKKAR BHAVAN, KOWADIAR THIRUVANANTHAPURAM-695 004.

¶15

3. COMMISSIONER OF INCOME TAX [APPEALS] DEPARTMENT OF INCOME TAX, THIRUVANANTHAPURAM AAYAKAR BHAVAN, PRESS CLUB ROAD THIRUVANANTHAPURAM-695 001.

¶16

4. INCOME TAX OFFICER, WARD 2(3)(i/C) JOINT COMMISSIONER OF INCOME TAXES RANGE-2, 1ST FLOOR AAYAKAR BHAVAN, KOWDIAR, THIRUVANANTHAPURAM-695 004.

¶17

BY SRI.CHRISTOPHER ABRAHAM, SC, INCOME TAX DEPARTMENT

¶18

THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 10-07-2018, ALONG WITH W.A. NOS.1250 OF 2018 & 1251 OF 2018, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

¶19

¶20

K. VINOD CHANDRAN & ASHOK MENON, JJ.

¶21

--------------------------------------------W.A. Nos.1248, 1250 & 1251 of 2018 --------------------------------------------Dated this the 10^th day of July, 2018

¶22

JUDGMENT

¶23

K. Vinod Chandran, J.

¶24

The Co-operative Banks, who are the appellants herein, are before us against the judgment of the learned Single Judge, which modified the interim order in a first appeal under the Income Tax Act, 1961 [for brevity, the Act], directing payment of 20% of the demand made under Section 68 of the Act; dissatisfied with the conditional order having not been set aside in toto. At the first appellate stage, the Commissioner [Appeals] granted a stay on condition of payment of 50% of the amounts. The learned Single Judge reduced it to 20%. The Cooperative Banks are before us claiming impecunious

¶25

W.A. Nos.1248, 1250 & 1251 of 2018

¶26

¶27

circumstances and the possibility of close-down, if such huge amounts are directed to be paid.

¶28

The assessments were made after issuance of notice under Section 143 or Section 142 of the Act.

¶29

The assessees/Co-operative Banks produced Audit Certificates but did not produce the details of the persons, who have made deposits with them. The Income Tax Officer, drawing adverse inference, treated the deposits as unexplained cash credits and assessed the same under Section 68 of the Act. The assessees filed appeal and then challenged the conditional order as stated above.

¶30

Before us also the learned Counsel appearing for the assessee's vigorously argued for a blanket stay and undertook that the entire details will be produced before the First Appellate Authority. It

¶31

is pleaded that only due to ignorance, earlier the details were not furnished before the Assessing

¶32

W.A. Nos.1248, 1250 & 1251 of 2018

¶33

¶34

Officer. The First Appellate Authority, also being entitled to look into the facts, it is undertaken that the details would be furnished and in such circumstances, let there be a consideration of the appeal at the earliest; without any amounts being deposited.

¶35

The learned Standing Counsel with equal vigor opposed the prayer and submitted that what was attempted to be checked is the laundering of black money, for which the Co-operative Banks are a major conduit. It is also submitted that the assessees having failed to produce the documents; should comply with the demand raised subject only to the appeal. In the present case considerable reduction has been made and there need not be any further indulgence extended to them, is the contention. The learned Standing Counsel would also submit that verification of the genuineness of the

¶36

W.A. Nos.1248, 1250 & 1251 of 2018

¶37

¶38

depositors would require some time and may also warrant a report from the Assessing Officer, who could be directed to examine the genuineness on the basis of the details supplied. This necessarily would take time and in the meanwhile there cannot be a blanket stay.

¶39

Having regard to the rival contentions, especially noticing the fact that the assessees are Institutions in the Co-operative sector and taking note of its members who are from the general public as also from the marginalised sections, we are of the opinion that an opportunity could be afforded to the assessees to produce the details of deposits.

¶40

To avoid any recalcitrant attitude by the assesses, we directed the learned Counsel to file an affidavit of undertaking, which has been done by the respective Secretaries in the three appeals

¶41

W.A. Nos.1248, 1250 & 1251 of 2018

¶42

¶43

before us. The affidavit categorically undertakes to produce the details of the deposits before the First Appellate Authority. The assessees would also produce any further details required by the First Appellate Authority or the Assessing Officer on a report being called for by the First Appellate Authority. The same shall be done within the time stipulated by the First Appellate Authority or the Assessing Officer on directions of the First Appellate Authority. In any event, we do not think that a blanket stay can be granted.

¶44

Considering the entire circumstances as also the failure of the assessees to produce the details at the first stage, we are of the opinion that the assessees will have to make a deposit of 1% of the tax addition made under Section 68 of the Act within a period of one month from the date of receipt of a certified copy of this judgment. Writ

¶45

W.A. Nos.1248, 1250 & 1251 of 2018

¶46

¶47

appeals are disposed of with no observation on merits. The consideration of the First Appellate Authority shall be untrammeled by any observation of the learned Single Judge. Writ Petition is allowed leaving the parties to suffer their respective costs.

¶48

Sd/-

¶49

K. VINOD CHANDRAN, JUDGE.

Sd/-

ASHOK MENON,

JUDGE.

//True Copy//

P.A. To Judge

sp/10/07/18

M/S. Nanniyode Service Co-Operative Bank Ltd. v. the Central Board of Direct Taxes

Case brief

What is this about?

What did the court decide?

M/S. Nanniyode Service Co-Operative Bank Ltd. v. the Central Board of Direct Taxes

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Statutes considered

Parties & counsel

Coram

Case details

Similar cases

The Commissioner of Income Tax, Thiruvan Vs Smt.Preetha S.Nair

K.Anilkumar Vs the Asst. Commissioner (Assessment)

State of Kerala Vs M/S. Pan Pacific Engineering Services (P) Ltd.

M/S Parisons Milling Company Pvt. Ltd. Vs Commissioner of Income Tax

The Commissioner of Income Tax, Thiruvananthapuram Vs M/S.Archana Trading Co., Ancal, Kollam.

The Commercial Tax Officer Vs Aver Software Technologies Ltd.