Kerala HC Stays Income Tax Demand, Directs Filing of Stay Petition in Two Weeks [Read Order]

The Kerala High Court has intervened in a dispute between an assessee and the Income Tax Department, staying the recovery proceedings based on a tax demand and directing the assessee to file a stay petition.

A single bench of Justice Ziyad Rahman A.A. passed the order, providing relief to the assessee, K.B. Raghuraman, who was facing a demand notice while his statutory appeal against the underlying assessment was still pending.

K.B. Raghuraman, the petitioner, was aggrieved by an assessment order. After a previous writ petition was disposed of with a direction to file a statutory appeal, he filed the appeal , which is currently pending. However, the Income Tax Department issued a demand notice to recover the tax dues, prompting the assessee to file the present writ petition challenging this recovery action.

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After hearing the counsel for the petitioner and the standing counsel for the respondents, the court found merit in the petitioner's contention that coercive proceedings should not be pursued while the statutory appeal is pending consideration. The court was inclined to dispose of the writ petition to provide a clear direction to the authorities and prevent undue hardship to the assessee.

Accordingly, the court disposed of the writ petition with specific directions. It ordered the petitioner to file a stay petition within a period of two weeks from the date of receipt of the judgment. The Appellate Authority (the Commissioner of Income Tax (Appeals)) was then directed to take up this stay application and pass an appropriate order within two months of its filing.

The court ordered that all coercive proceedings based on the demand notice shall remain in abeyance until a final decision is made on the stay petition, subject to the condition that the petitioner files the stay petition within the stipulated two-week period.

This interim order provides immediate relief to K.B. Raghuraman, preventing the tax authorities from taking any recovery steps until the appellate authority has had the opportunity to consider and decide on the stay application. The court's intervention ensures that the assessee is not subjected to coercive measures while his statutory appeal remains pending.

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