In a recent case, the Kerala High Court directed to keep income tax recovery proceedings in abeyance unconditionally. The Court found that the income tax department issued a direction to remit 30% tax as a condition for a stay petition.
Kerala State Co-Operative Bank Ltd, the appellant had preferred the writ petition impugning demand notices issued in pursuance to the assessment order passed under Section 143(3) read with Section 144 B of the Income Tax Act, 1961 in respect of the assessment year 2020-21. The assessment order in question was impugned before the First Appellate Authority, which rejected the appeal.
The appellant deposited 20% of the assessed tax before the First Appellate Authority. Consequent to the dismissal of the appeal, the appellant approached the Income Tax Appellate Tribunal. The writ court because, although the appeal had been filed before the Appellate Tribunal, the respondent Tax authorities had issued the impugned demand notices for recovery of the amounts confirmed against the appellant by the assessment order in question.
The appellant undertook to file a stay petition before the Appellate Tribunal within ten days, and the limited prayer thereafter was for a direction to the Appellate Tribunal to consider and pass orders on the stay application expeditiously and to keep in abeyance recovery proceedings that have been initiated by the respondent in the meanwhile.
The Single Judge, who considered the matter, while permitting the appellant to file the stay petition, and directing the Appellate Tribunal to consider the stay petition expeditiously within three months, further directed the appellant to remit 30% of the tax assessed as a condition for staying the recovery of assessed tax in the meanwhile.
A division bench of Dr Justice A K Jayasankaran Nambiar & Justice Syam Kumar V M viewed that, since the Single Judge had relegated the appellant to the alternate remedy before the statutory authority, it was incumbent upon him to protect the appellant from recovery proceedings pending disposal of the stay petition by the Appellate Authority.
The Court modified the impugned judgment of the Single Judge to the limited extent of clarifying that pending disposal of the stay petition as directed by the Single Judge, the recovery proceedings against the appellant, for recovery of the amounts referred to demand notices shall be kept in abeyance unconditionally. Sri B G Harindranath, Sri Amith Krishnan H, Sri Gowri Dev and Smt P Devikrishna appeared for the petitioner. Sri Christopher Abraham appeared for the respondent
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