Kerala High Court
Malanad Cooperative Agricultural And ... vs The Assessment Unit on 29 September, 2025
2025:KER:72695
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR.JUSTICE ZIYAD RAHMAN A.A.
MONDAY, THE 29TH DAY OF SEPTEMBER 2025 / 7TH ASWINA, 1947
WP(C) NO. 35865 OF 2025
PETITIONER:
MALANAD COOPERATIVE AGRICULTURAL AND RURAL DEVELOPMENT
BANK LTD., MCARDB BUILDING, NEDUMKANDUM P.O.
IDUKKI DISTRICT REPRESENTED BY ITS SECRETARY,
PIN - 685553
BY ADVS.
SHRI.K.J.ABRAHAM
SRI.NIKHIL JOHN
SHRI.ARAVINDAKSHAN K.R.
RESPONDENTS:
1 THE ASSESSMENT UNIT,
NATIONAL FACELESS ASSESSMENT CENTRE, 2ND FLOOR,
E-RAMP, JAWAHARLAL NEHRU STADIUM, NEW DELHI,
PIN - 110003
2 COMMISSIONER OF INCOME TAX (APPEAL),
NATIONAL FACELESS APPEAL CENTRE (NFAC),
INCOME TAX DEPARTMENT, 2ND FLOOR, E-RAMP,
JAWAHARLAL NEHRU STADIUM, NEW DELHI, PIN - 110003
3 INCOME TAX APPELLATE TRIBUNAL
COCHIN BENCH, 1ST FLOOR, BLOCK, KENDRIYA BHAVAN,
C-I & C-II, KAKKANAD, ERNAKULAM, PIN - 682037
2025:KER:72695
WP(C) NO. 35865 OF 2025
2
4 INCOME TAX OFFICER
INCOME TAX DEPARTMENT, WARD -1 & TPS,
MAHIMA TOWERS, TEMPLE ROAD, THODUPUZHA,
IDUKKI, PIN - 685584
BY ADV
SHRI. JOSE JOSEPH, SR.SC
THIS WRIT PETITION (CIVIL) HAVING COME UP FOR
ADMISSION ON 29.09.2025, THE COURT ON THE SAME DAY
DELIVERED THE FOLLOWING:
2025:KER:72695
WP(C) NO. 35865 OF 2025
3
JUDGMENT
The petitioner is a Co-operative Society classified as an Agricultural and Rural Development Bank engaged in agricultural lending. The issue involved in this writ petition pertains to the assessment under the Income Tax Act, for the year 2020-2021. For the relevant assessment year, the petitioner submitted returns and based on the same, Ext.P1 assessment order was passed under Section 143(3) read with Section 144B of the Income Tax Act. In Ext.P1, in paragraph 4.2 the following observations are made:
"4.2 In its reply dated 16.09.2022, the assessee has agreed to pay taxes on the Interest subsidies of Rs.1,20,682/- received from the apex bank during the year as the same were to 2025:KER:72695 WP(C) NO. 35865 OF 2025 4 be shown as Income from other sources. Accordingly, the interest subsidy of Rs.1,20,682/- received from apex bank is added to the total income of the assessee as 'Income from Other sources' u/s 56 of the Act for the year under consideration. As the assessee has only disclosed this income in response to queries raised during the course of assessment proceedings, penalty proceedings u/s 270A(9)(a) are initiated separately for under-reporting of income in consequence of misreporting by misrepresentation or suppression of facts."
2. Thus, in the said proceedings, it was intimated that, penalty proceedings under Section 270A(9)(a) are to be initiated separately, for under-reporting of income in consequence of misreporting by misrepresentation or suppression of facts. Accordingly, penalty proceedings under Section 270A(9)(a) were initiated and the same culminated in Ext.P4. As against the same, the petitioner 2025:KER:72695 WP(C) NO. 35865 OF 2025 5 submitted an appeal before the First Appellate Authority, which culminated in Ext.P5. In Ext.P5, the finding of the Original Authority imposing penalty under Section 270A(9)
(a) was confirmed, but, on two items of income, relief was granted to the petitioner. Thus, the appeal was partly allowed.
3. The matter was taken up in second appeal before the Income Tax Appellate Tribunal, which culminated in Ext.P6. In Ext.P6, the appeal submitted by the petitioner was allowed in part, by directing the Assessing Authority to consider the application submitted by the petitioner seeking immunity under Section 270AA of the Income Tax Act. The matter was thus restored into the file of the Assessing Officer to consider the application 2025:KER:72695 WP(C) NO. 35865 OF 2025 6 for immunity filed by the assessee. Based on the same, the application of the petitioner submitted under Section 270AA was considered and Ext.P9 order was passed rejecting the same. This writ petition is submitted by the petitioner in such circumstances.
4. I have heard Sri.Abraham K.J., learned Counsel for the petitioner and Sri.Jose Joseph learned Standing Counsel for the respondents.
5. The specific contention raised by the learned Counsel for the petitioner is that, as far as Ext.P9 order passed by the 4th respondent is concerned, the same is liable to be interfered with, as the application submitted for immunity by the petitioner under Section 270AA was rejected, despite the fact that, the petitioner had fulfilled 2025:KER:72695 WP(C) NO. 35865 OF 2025 7 all the conditions stipulated therein. According to the learned Counsel for the petitioner, those conditions are, the petitioner should have submitted the tax within the time stipulated as per the demand notice and that no appeal should have been filed against assessment order. In this case, those conditions are satisfied and therefore, there is no reason why the same should be rejected by the 4th respondent and thus an interference is sought.
6. The learned Standing Counsel for the respondents, in response to the aforesaid contention pointed out that, no interference is warranted in this case in Ext.P9, taking note of the fact that, the penalty proceedings are initiated against the petitioner under Section 270A(9)(a) of the Income Tax Act and by virtue of 2025:KER:72695 WP(C) NO. 35865 OF 2025 8 Sub-section 3 of Section 270AA, in respect of a proceeding under the Section 270A(9), the immunity is not applicable.
7. In response to the aforesaid contention, the learned Counsel for the petitioner points out that, this is not a case which comes under Section 270A(9) of the Income Tax Act. At the most, it could be a case coming under Section 270A(3) and not under Section 270A(9)(a) of the Income Tax Act. The learned Counsel brought the attention of this Court to various decisions rendered by this Court in this regard.
8. After carefully going through the documents produced before this Court and hearing the learned Counsel on either side, I find merit in the submission made by the learned Standing Counsel for the 2025:KER:72695 WP(C) NO. 35865 OF 2025 9 respondents. This is particularly because, as rightly pointed out by the learned Standing Counsel, Sub-section 3 of Section 270AA contemplates as follows:
"(3)The Assessing Officer shall, subject to fulfilment of the conditions specified in sub-
section (1) and after the expiry of the period of filing the appeal as specified in clause (b) of sub-section (2) of section 249, grant immunity from imposition of penalty under section 270A and initiation of proceedings under section 276C or section 276CC, *where the proceedings for penalty under section 270A has not been initiated under the circumstances referred to in sub-section (9) of the said section 270A."
(*highlighted for emphasis)
9. Thus, as far as the proceedings initiated under the circumstances covered by Sub-section 9 of the Section 2025:KER:72695 WP(C) NO. 35865 OF 2025 10 270A is concerned, the immunity stipulated in Section 270AA would not be applicable. In this case, the penalty proceedings, which culminated in Ext.P4, were initiated under Section 270A(9)(a), which was confirmed in Ext.P5 appellate order by the First Appellate Authority. In the second appeal filed against the same also, the Tribunal confirmed the imposition of penalty under Section 270A(9)
(a) of the Act, but, the matter was restored to the Assessing Officer, for the limited extent of considering the application submitted by the petitioner for immunity as contemplated under Section 270AA of the Act. Thus, the fact that, the penalty imposed by the authorities concerned, was under Section 270A(9)(a), was confirmed even in Ext.P6 order passed in second appeal, and the 2025:KER:72695 WP(C) NO. 35865 OF 2025 11 limited purpose for which the matter was restored into the file of the Assessing Officer was to consider the application for immunity. Thus, when the Assessing Officer was considering the application for immunity, he could have considered the said application and granted the relief to the petitioner only if the petitioner was eligible to get the benefit of Section 270AA of the Act. While going through the statutory stipulations contained in Sub-section 3 of Section 270AA, it can be seen that, the said provision excludes the penalty proceedings under Section 270A(9), from the purview of the grant of immunity contemplated under Section 270AA. Of course, it is true that, learned Counsel for the petitioner raised various contentions and relied on decisions to substantiate 2025:KER:72695 WP(C) NO. 35865 OF 2025 12 his contention that, this is not a case which falls under Section 270A(9) and therefore the petitioner is entitled to the benefits of immunity as contemplated under Section 270AA. However, the fact remains that, the penalty proceedings were indeed initiated against the petitioner under Section 270A(9), which stands confirmed in Ext.P5 first appellate order and also by the Second Appellate Authority in Ext.P6. Therefore, so long as there is no challenge against Ext.P6 against the finding regarding the imposition of penalty under Section 270A(9), I am of the view that, an independent challenge against Ext.P9, by which the application for immunity is rejected, cannot be made.
Therefore, I am of the view that, this writ petition 2025:KER:72695 WP(C) NO. 35865 OF 2025 13 lacks merits and therefore it is dismissed. However, it is clarified that, this will not preclude the petitioner from invoking its remedies against Ext.P6.
Sd/-
ZIYAD RAHMAN A.A. JUDGE scs 2025:KER:72695 WP(C) NO. 35865 OF 2025 14 APPENDIX OF WP(C) 35865/2025 PETITIONER EXHIBITS Exhibit P1 TRUE COPY OF THE ASSESSMENT ORDER NO.
ITBA/AST/S/143(3)/2022- 23/1045845145(1) DATED 22.09.2022 PASSED BY THE 1ST RESPONDENT FOR THE ASSESSMENT YEAR 2020-21 Exhibit P2 TRUE COPY OF THE REPLY DATED 16.10.2022 SUBMITTED BY THE PETITIONER BEFORE THE 1ST RESPONDENT Exhibit P2(a) TRUE COPY OF THE REPLY DATED 26.02.2023 FILED BY THE PETITIONER BEFORE THE 1ST RESPONDENT Exhibit P3 TRUE COPY OF THE FORM NO.68 DATED 18.04.2023 Exhibit P4 TRUE COPY OF THE PENALTY ORDER NO.ITBA/PNL/F/270A/2022- 23/1051310029(1) DATED 25.03.2023 Exhibit P5 TRUE COPY OF THE APPELLATE ORDER NO.
ITBA/NFAC/S/250/2024-25/1063952542(1) DATED 06.04.2024 PASSED BY THE 2ND RESPONDENT Exhibit P6 TRUE COPY OF THE APPELLATE ORDER IN ITA NO.551/COCH/2024 DATED 21.01.2025 PASSED BY THE INCOME TAX APPELLATE TRIBUNAL, COCHIN BENCH, FOR THE ASSESSMENT YEAR 2020-21 Exhibit P7 TRUE COPY OF THE NOTICE NO.ITBA/COM/F/17/2025-26/1077194638(1) DATED 19.06.2025 ISSUED BY THE 4TH RESPONDENT Exhibit P8 TRUE COPY OF THE REPLY DATED 24.06.2025 SUBMITTED BY THE PETITIONER BEFORE THE 4TH RESPONDENT 2025:KER:72695 WP(C) NO. 35865 OF 2025 15 Exhibit P9 TRUE COPY OF THE ORDER NO.ITBA/COM/F/17/2025-26/1078037996(1) DATED 30.06.2025 PASSED BY THE 4TH RESPONDENT FOR THE ASSESSMENT YEAR 2020-21