ITAT Wrongly Dismisses Stay Petition on 20% Pre-Deposit Condition already Removed by High Court: Kerala HC Quashes Order [Read Order]

In a recent ruling, the Kerala High Court held that the Income Tax Appellate Tribunal committed a serious error in dismissing a stay petition on the ground of non-payment of a 20% pre-deposit, even though that condition had already been removed by an earlier Division Bench order.

C. Prasannakumaran Unnithan, the petitioner, had challenged an order of the ITAT dated 30 January 2025 dismissing his stay petition. Earlier, in related proceedings, a Division Bench of the High Court had vacated a condition requiring the petitioner to deposit 20% of the disputed tax and directed the ITAT to hear the stay petition promptly on its own merits.

Want a deeper insight into the Income Tax Bill, 2025? Click here

Despite this, the tribunal dismissed the petitioner’s stay petition on the ground that he had not complied with the 20% pre-deposit requirement.

The petitioner’s counsel argued that the tribunal acted contrary to the clear direction of the High Court order, which had set aside the pre-deposit condition. They submitted that the tribunal was bound to hear the stay petition on merits and that its order was legally unsustainable.

The Single-Judge Bench comprising Bechu Kurian Thomas observed that the Division Bench judgment dated 23 September 2024 had expressly vacated the requirement of a 20% deposit and directed the Tribunal to hear the stay petition expeditiously.

By dismissing the stay petition on the basis of a non-existent condition, the tribunal committed a perverse error that warranted interference. The court set aside the ITAT’s order dismissing the stay petition and directed the Tribunal to reconsider it on merits within two months. The writ petition was allowed in part for this issue.

Support our journalism by subscribing to Taxscanpremium. Follow us on Telegram for quick updates