2022 (11) TMI 1405 - HC - Income Tax

Deduction u/s 80P (ii) (d) - interest income receipts - HELD THAT - Since it is admitted that the judgment of Mavilayi Service Co-operative Bank Ltd. and others 2021 (1) TMI 488 - SUPREME COURT was not considered while finalizing the assessment which was subject matter of challenge and since the decision in Peroorkada 2021 (12) TMI 1084 - KERALA HIGH COURT was not considered while denying the benefit of deduction under Section 80P (ii) (d), the assessment orders which are impugned are liable to be set aside and the matter remanded to the respective assessing authorities for reconsideration after taking into consideration of the judgments referred to above. Accordingly orders of assessment produced in all these writ petitions are quashed and the assessments are remanded to the National Faceless Assessment Centre for fresh consideration.

Issues:
1. Denial of deduction under Section 80P (ii) (d) of the Income Tax Act for the assessment year 2020-21.
2. Whether challenging assessment orders through a writ petition under Article 226 of the Constitution of India is appropriate.
3. Failure to consider relevant judgments in finalizing assessment orders.

Analysis:
1. The petitioners challenged assessment orders under the Income Tax Act for the assessment year 2020-21, specifically regarding the denial of deduction under Section 80P (ii) (d). In cases where the assessing officer denied the deduction, the petitioners argued that a judgment favoring them had been overlooked. The court noted that the assessing officer failed to consider relevant judgments, such as the one in PCIT v. Peroorkada Service Co-Operative Bank Ltd.; 442 ITR 141, which supported the petitioners' claims.

2. The respondent Department contended that challenging the denial of deduction through a writ petition under Article 226 of the Constitution of India was not the appropriate legal recourse. The Department argued that such issues should be addressed through an appeal against the assessment order rather than a writ petition. The court considered this argument but ultimately found that the failure to consider important judgments necessitated a review of the assessment orders through the writ petitions.

3. In one of the cases, the petitioner challenged the assessment order for denial of deductions under both Section 80P and Section 80P (ii) (d), highlighting the assessing officer's failure to consider a judgment of the Supreme Court reported in 431 ITR 1. The court observed that the assessment orders were liable to be set aside due to the non-consideration of key judgments, such as the one in Mavilayi Service Co-operative Bank Ltd. v. Commissioner of Income Tax; 431 ITR 1, and Peroorkada. The court emphasized the importance of following binding judgments to ensure justice for the assessee.

4. Considering the arguments and the failure to consider relevant judgments, the court decided to quash the assessment orders and remand the assessments to the National Faceless Assessment Centre for fresh consideration. The court directed that the assessments be reconsidered in light of the applicable law and the judgments referred to in the case. The court emphasized the need for expeditious action without undue delay to address the issues raised by the petitioners effectively.

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