2014 (5) TMI 594 - HC - Income Tax

Co-op Bank's Tax Challenge Dismissed; Appeals Process Emphasized

The Coimbatore District Central Co-operative Bank Limited Versus The Income Tax Officer, TDS Ward 1(5)

The High Court of Madras dismissed writ petitions filed by a Co-operative Bank challenging assessment orders for non-deduction of tax at source. The ... Availability of Alternate remedy - Order passes u/s 201(1) and 201(1A) of the Act – Failure to deduct TDS – Held that:- The assessment orders and the demand notice have to be set aside cannot be countenanced as the Act specifically provides an appeal remedy and the same has to be exhausted first by the assessee before approaching the Court under Article 226 of the Constitution of India - the writ petitions are not maintainable – Decided against Assessee. Issues: Challenge to assessment orders under Income Tax Act, 1961 for non-deduction of tax at source by a Co-operative Bank, applicability of Section 194A (3)(v) exemption, availability of appeal remedy under Section 246A before approaching High Court under Article 226.Analysis:The judgment by the High Court of Madras dealt with writ petitions filed by a Co-operative Bank challenging assessment orders passed by the Income Tax Department for not deducting tax at source on interest paid to depositors. The bank, being in the business of banking, was found to have failed to deduct tax during a survey conducted by the Income Tax authorities. Consequently, assessment orders were issued under Section 201(1) and 201(1A) of the Income Tax Act, 1961 for the years 2008-09 to 2014-15.The petitioner, represented by counsel, contended that Co-operative Banks are exempted from TDS under Section 194A (3)(v) of the Income Tax Act. However, the Department did not accept this argument and proceeded with the assessment orders demanding tax and interest. The Standing Counsel for the Income Tax Department highlighted that the petitioner had an appeal remedy available under Section 246A of the Income Tax Act, which should have been exhausted before approaching the High Court through writ petitions.The Court, after considering the submissions and the provisions of the law, held that the writ petitions were not maintainable at that stage. The Court emphasized that the Act specifically provides for an appeal remedy, which needed to be pursued before seeking relief under Article 226 of the Constitution of India. Therefore, the writ petitions were dismissed, granting the petitioner liberty to file an appeal before the appropriate authority within thirty days from the judgment date. The Court directed the authority to decide the appeal on merits and in accordance with the law without rejecting it solely on the ground of limitation.In conclusion, the High Court dismissed the writ petitions, closed the connected miscellaneous petitions, and did not award any costs. The judgment underscored the importance of exhausting the appeal remedy provided under the Income Tax Act before seeking judicial intervention through writ petitions, ensuring due process and adherence to legal procedures.