Malanad Cooperative Agricultural and Rural Development Bank vs The Assessment Unit

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