Income Tax Recovery Proceedings cannot initiate  during Pendency of Appeals before CIT(A): Gujarat HC [Read Order]

In a significant ruling, the Gujarat High Court has held that Income tax recovery proceedings cannot initiate during pendency of appeals before Commissioner Of Income Tax ( Appeals ) ( CIT(A) ). The bench added that if the respondents department are not interested in resolution of the issue of pendency of the Appeals then no recovery should be made from the assessees during the pendency of the Appeals.

The appeal filed by the petitioner,  Om Vision Infraspace Private Limited before the CIT( Appeals ) is pending for more than four years and the same is not being heard. It was further submitted that though the petitioner is protected by this Court by permitting the petitioner to operate the bank account as per order dated 26.03.2020, till this date, no further progress has been made with regard to hearing of the appeal by the CIT(Appeals).

On the other hand, the respondent submitted that upon instructions from Commissioner of Income Tax [NaFAC] that the efforts are being made by the respondent-Department to hear the appeals expeditiously.

The matters are pending before the Court on the ground that the Commissioner of Income Tax (Appeals) are not disposing the pending Appeals on one hand and the recovery proceedings are initiated by the respondent-Income Tax Department for the outstanding demand.

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With regard to remedial measures suggested by Central Board of Direct Taxes for reduction of the backlog of the pending appeals, it is stated that the CBDT has issued the guidelines for the priority/out of turn disposal on 19.03.2024 and 100 JCIT ( Appeals ) are appointed in the year 2023 and as per Section 345MA of the Income-Tax Act, 1961, e-Dispute Resolution Scheme, 2022 is notified and under Finance Act, 2024, new measures have been introduced and Vivad se Vishwas Scheme, 2024 is also introduced by Finance Act, 2024 and Commissioner (Appeals) have been empowered to set aside the ex-parte assessment orders.

It was found that no measures are mentioned with regard to bunching of similar appeals or repeated issues for different succeeding years in appeals, covered matters etc. which would speedily dispose of such appeals by CIT (Appeals).

The division bench of Justice Bhargav D. Karia and Justice D.N.Ray has observed that if the department is not interested in resolution of the issue of pendency of the Appeals the manner in which it ought to have been resolved by classifying the Appeals as per the issues concerning the recurring issues, covered issues, etc., then no recovery should be made from the assessees during the pendency of the Appeals.

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While allowing the petition, the court  held that the petitioner is protected by restraining the department from taking any coercive action. K. Parikh, Ashutosh S. Dave Dhinal A. Shah  appeared for the petitioner and Karan Sanghani and  Mrs.Kalpana K. Raval  appeared for the respondent.

To Read the full text of the Order CLICK HERE

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