Orders ignoring Binding Precedents are in Violation of the Doctrine of Precedent and cannot be Countenanced: Kerala HC [Read Order]
The Petitioner, a co-operative bank successfully defended its position by citing the Revenue’s digression from a binding Supreme Court decision.
![Orders ignoring Binding Precedents are in Violation of the Doctrine of Precedent and cannot be Countenanced: Kerala HC [Read Order]](https://www.taxscan.in/wp-content/uploads/2025/03/Kerala-HC-Income-Tax.jpg "Orders ignoring Binding Precedents are in Violation of the Doctrine of Precedent and cannot be Countenanced: Kerala HC [Read Order]")
The Kerala High Court recently reaffirmed that any tax assessment orders passed on ignorance of binding precedents set by higher courts are violative of the doctrine of precedent and thus unsustainable. The case was instituted before the High Court by Vallapuzha Service Co-Operative Bank Ltd., a Primary Agricultural Credit Society engaged in providing credit facilities to its members. For...
The Kerala High Court recently reaffirmed that any tax assessment orders passed on ignorance of binding precedents set by higher courts are violative of the doctrine of precedent and thus unsustainable.
The case was instituted before the High Court by Vallapuzha Service Co-Operative Bank Ltd., a Primary Agricultural Credit Society engaged in providing credit facilities to its members. For the Assessment Year (A.Y.) 2023-24, the petitioner had filed their returns declaring 'Nil' taxable income, while claiming a deduction under Section 80P(2)(a)(i) of the Income Tax Act, 1961.
However, the return was selected for scrutiny, leading to an assessment passed on February 17, 2025, disallowing the deduction under Section 80P(2)(a)(i) and imposed a tax demand of ₹1,59,63,972 on the Assessee.
Want a deeper insight into the Income Tax Bill, 2025? Click here
The Petitioner, represented by V.P.Narayanan and Divya Ravindran contended before the Kerala High Court that the assessment order was passed in complete disregard of the binding decision rendered by the Supreme Court in Mavilayi Service Co-operative Bank Ltd. and Others vs. Commissioner of Income Tax and Another (2021) where the Apex Court had recorded several findings in favour of Primary Agricultural Credit Societies, none of which were considered by the Assessing Authority in the present matter.
It was further asserted the assessing authority had instead opted to rely on a decision of the Karnataka High Court in Principal Commissioner of Income Tax vs. Totgars Co-operative Society (2017) to record adverse findings against the Petitioner.
Meanwhile P.G. Jayashankar and Keerthivas Giri represented the Revenue.
The single-judge bench presided over by Justice Bechu Kurian Thomas observed that the erstwhile decision by a Division Bench of the Kerala High Court in M/s. Poonjar Service Co-operative Bank Ltd. v. Income Tax Officer (2021) where it was held that an erroneous assessment passed by ignoring a binding judgment of the Supreme Court cannot be trivialized as an order against which an appellate remedy shall lie.
Read More: ITAT quashes AO’s Order, upholds deduction under Section 80P for Cooperative Credit Society
Observing a violation of the doctrine of precedent, the Kerala High Court proceeded to set aside the impugned assessment order and directed the Assessing Officer to reconsider the assessment afresh, after considering the principles laid down by binding Supreme Court rulings that had been previously adverted to.
To Read the full text of the Order CLICK HERE
Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
