Poonjar Service Co-Operative ... vs Income Tax Officer
2021 Latest Caselaw 13350 Ker

             IN THE HIGH COURT OF KERALA AT ERNAKULAM
                             PRESENT
        THE HONOURABLE MR.JUSTICE A.K.JAYASANKARAN NAMBIAR
                                 &
              THE HONOURABLE MR.JUSTICE GOPINATH P.
        MONDAY, THE 28TH DAY OF JUNE 2021/7TH ASHADHA, 1943


                        W.A NO.753 OF 2021
 AGAINST THE JUDGMENT IN W.P(C).NO.8878/2021 OF HIGH COURT OF
                        KERALA, ERNAKULAM

APPELLANT/PETITIONER:

            M/S.POONJAR SERVICE CO-OPERATIVE BANK LTD.
            REG.NO.3963, POONJAR, KOTTAYAM DISTRICT,
            PIN - 686 681 REPRESENTED BY ITS SECRETARY,
            MR.RAGHUNATHAN NAIR R.

            BY ADVS.A.KUMAR
                    P.J.ANILKUMAR
                    G.MINI(1748)
                    P.S.SREE PRASAD
                    JOB ABRAHAM
                    AJAY V.ANAND


RESPONDENTS/RESPONDENTS:

    1       INCOME TAX OFFICER
            WARD 3, KOTTAYAM - 686001.

    2       INCOME TAX OFFICER
            NATIONAL E-ASSESSMENT CENTRE, NEW DELHI - 110003.

            BY SRI.JOSE JOSEPH, SC

          THIS WRIT APPEAL HAVING COME UP FOR ADMISSION
     ON 28.06.2021, THE COURT ON THE SAME DAY DELIVERED
     THE FOLLOWING:
 W.A.No.753/2021                      :: 2 ::




                               JUDGMENT

A.K. Jayasankaran Nambiar, J.

The petitioner in W.P.(C).No.8878/2020 is the appellant

before us, aggrieved by the judgment dated 30.4.2021 of the

learned Single Judge that dismissed the writ petition. The brief

facts necessary for disposal of the Writ Appeal are as follows:

Faced with an order of assessment for the year 2018-19

under the Income Tax Act [hereinafter referred to as the 'IT Act'],

the petitioner, who is stated to be a Primary Agricultural Credit

Society, impugned the assessment order inter alia on the ground

that, while completing the assessment, the Assessing Officer had

completely ignored the directions issued by the Supreme Court in

Mavilayi Service Co-operative Bank Ltd. and others v.

Commissioner of Income Tax, Calicut and another - [2021 (1)

KLT 485] that reversed a judgment of a Full Bench of this Court

and outlined the manner in which the provisions of Section 80P (2)

and (4) of the IT Act had to be interpreted while completing

assessments of Primary Agricultural Credit Societies under the IT

Act. In the writ petition, it was the case of the petitioner Society W.A.No.753/2021 :: 3 ::

that the Assessing Authority had, in the impugned assessment

order, despite referring to particular portions of the judgment of the

Supreme Court referred above, proceeded to act directly in

contravention thereto inter alia by finding that the petitioner's

claim for deduction under Section 80P of the IT Act could not be

acceded to, since, the name of the petitioner Society had the word

"Bank" included in it, and had further opined, based on the

activities carried on by the petitioner Society, that it had ceased to

have the characteristics of a Primary Agricultural Credit Society,

which was a necessary pre-condition for claiming deduction under

Section 80P. The learned counsel for the appellant would point out

that the said findings of the Assessing Authority are against the

judgment of the Supreme Court referred above, insofar as the

Court has clearly held in the said judgment that, it is not for the

Income Tax Authority to go behind the classification accorded to

the Society under the Statute concerned, and further, that the mere

mention of the word "Bank" in its name would not, without more,

deprive a Primary Agricultural Credit Society of the benefit of

deduction under Section 80P of the IT Act.

2. We note from the judgment of the learned Single Judge

impugned before us that, although counsel for the petitioner had

canvassed the aforesaid points before the learned Single Judge, the W.A.No.753/2021 :: 4 ::

learned Single Judge dismissed the writ petition on the ground that

the petitioner had an effective alternate remedy by way of an

appeal before the First Appellate Authority under the IT Act.

Indeed, it is also the case of the learned Standing counsel for the

Income Tax Department that we should not disturb this finding of

the learned Single Judge as the same is perfectly legal and cannot

be faulted, in law. He also submits that the judgment of the

Supreme Court in Mavilayi (Supra) was not available with the

Assessing Officer and that he had referred to it only from the reply

given by the assessee.

3. While, under normal circumstances, we would not have

interfered with the said judgment of the learned Single Judge,

inasmuch as this Court would ordinarily be loath to interfere with

assessment orders unless they are vitiated by an error of

jurisdiction or have been passed violating the rules of natural

justice, we find that this is a case where the Assessing Authority

has not applied the law as laid down by the Supreme Court on an

issue that has been the subject matter of litigation for a

considerable period of time. The reversal by the Supreme Court

was itself of a judgment rendered by a Full Bench of this Court,

which, in turn, had taken note of conflicting views expressed by

Division Benches of this Court. When the law is finally settled by W.A.No.753/2021 :: 5 ::

the Supreme Court in a contentious issue such as the one presented

in the instant case, the said law has necessarily to be applied by the

Assessing Authorities under the IT Act who are bound by it. It

cannot be the stand of the Department that an assessee, who is

aggrieved by an assessment order passed ignoring the binding

judgment of the Supreme Court, has nevertheless an alternate

remedy by way of an appeal before the First Appellate Authority

under the Statute. An erroneous assessment occasioned by

ignoring a binding judgment of the Supreme Court cannot be

trivialized as an order against which an appellate remedy lies that

would provide justice to an assessee.

4. We, therefore, set aside the judgment of the learned

Single Judge, and also quash Ext.P11 assessment order in relation

to the writ petitioner/assessee, and direct the 1 st respondent

Assessing Authority to re-do the assessment of the appellant

Society for the assessment year 2018-19 under the IT Act afresh,

after issuing notice to the appellant assessee and after hearing the

assessee in the matter. We make it clear that we have not

expressed any opinion on the merits of the matter and that all

contentions on merits are left open to the assessee to canvass

before the Assessing Authority at the time of hearing. The

Assessing Authority shall endeavour to complete the assessment as W.A.No.753/2021 :: 6 ::

directed, taking note of the judgment of the Supreme Court in

Mavilayi (Supra) within an outer time limit of three months from

the date of receipt of a copy of this judgment.

With the above direction, the Writ Appeal is disposed.

Sd/-

A.K.JAYASANKARAN NAMBIAR JUDGE

Sd/-

GOPINATH P.

JUDGE

prp/28.6.2021