The Kerala High Court vide its judgment dated 18th day of June, 2025 in   W.P.(C.) No. 15933 of 2022 quashed Income Tax proceedings initiated under Section 148 on cancelled PAN against Keerampara Service Co-operative Bank Ltd.

Keerampara Service Co-operative Bank Ltd.is a co-operative society engaged in the business of providing credit services to its members. As per Rule 15 of the Kerala Co-operative Societies Rules, the petitioner has been classified as a Primary Agricultural Credit Co-operative Society. According to the society, they are entitled to exemption under Section 80P of the Income Tax Act, subject to compliance with the conditions applicable therein.

The PAN originally issued to the society had the status as a company and not as a cooperative society. As a consequence of the same, the petitioner was unable to claim exemption under Section 80P of the Income Tax Act, which the petitioner was otherwise eligible for. So, the society applied for and got allotted new PAN after cancelling the old PAN. However the notices and proceedings were issued by solely referring to the PAN card, which stood cancelled as of the date of the search notices/proceedings. Hnece,  the petitioner could not effectively contest the matter, and they were also prevented from pursuing the appellate remedy.  In these circumstances, the writ petition was submitted by the petitioner to quash Assessment Order and Demand Notice issued under Section 156 of the Income Tax Act, 1961.

The High Court considering the  denial of a proper opportunity to contest the income tax proceeding’s effectively allowed the petition and directed the department to issue fresh notice to the assesse.