The Kerala High Court has ordered a temporary halt on recovery proceedings initiated by the Income Tax Department against a group of petitioners who are now in the process of moving their appeals before the appropriate forum, the Income Tax Appellate Tribunal, as per Section 253(1)(d) of the Income Tax Act, 1961.

In this case, four writ petitions were filed by Mohamed Haneefa Onathu Kattil and Suhail Onathu Kattil, who were aggrieved by assessment orders issued against them for the assessment years 2015-16 and 2016-17. These orders were passed under Section 147 read with Section 144C of the Income Tax Act, based on recommendations by the Disputes Resolution Panel (DRP). Along with the orders, computation sheets and demand notices had been issued, placing the petitioners under pressure from imminent recovery steps.

The petitioners had filed their statutory appeals under Section 246A before the Commissioner of Income Tax (Appeals) based in Bangalore. They had also moved applications seeking a stay on the recovery proceedings. But it was only after the recovery machinery had already been set in motion that the petitioners, with assistance from their legal counsel, realised that the correct appellate forum in their case was not the Commissioner (Appeals), but the Income Tax Appellate Tribunal. This was because their assessment orders stemmed from DRP proceedings, which, under Section 253(1)(d), are appealable directly to the Tribunal.

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Realizing that they had filed their appeals before the wrong authority, the petitioners quickly corrected their mistake. They withdrew their earlier appeals from the Commissioner of Income Tax (Appeals) and submitted fresh ones before the Income Tax Appellate Tribunal, which was the right forum in their case. But even as they did so, the tax department’s recovery actions were already underway, putting them under pressure.

With the Tribunal yet to hear their stay applications, the petitioners turned to the Kerala High Court for urgent relief. At the hearing on June 12, 2025, their senior counsel requested the Court to pause the recovery process just for a short while, long enough for the tribunal to look into their case and decide on the stay requests.

The Court found this request fair, especially since the petitioners had acted quickly to fix the error and were now following the proper legal path.

Justice Ziyad Rahman A.A. disposed of the writ petitions with a direction that recovery proceedings arising out of the impugned assessment orders be kept in abeyance for a period of one month. The court was of the opinion that this period would give the petitioners a fair opportunity to obtain interim protection from the Tribunal without the threat of coercive recovery in the meantime.

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