Once ITAT Order Attains Finality and Tax Paid, No Further Recovery Permissible: Madras HC Rules Authority Bound to Lift Attachment [Read Order]
Section 225(2) of the Income Tax Act mandates the TRO to act in accordance with appellate orders and cancel recovery certificates when the tax demand is reduced or extinguished, said the bench
ITAT Order
ITAT Order
The Madras High Court held that once the order of the Income Tax Appellate Tribunal (ITAT) attains finality and the tax demand is fully paid, the tax authorities cannot proceed with further recovery or continue attachment proceedings.
The Court directed the Tax Recovery Officer (TRO) to lift the property attachment and return the original documents to the assessee.
The brief fact is that the petitioner, K. Rethinam challenged multiple attachment orders issued by the TRO under Section 222 of the Income Tax Act, 1961, after assessments were completed for the assessment years (AYs) 2012-13 to 2017-18.
Following appellate proceedings, the Commissioner of Income Tax (Appeals) [CIT(A)] set aside additions made for certain years, which was upheld by the ITAT on 30.04.2025. Despite the ITAT order becoming final and the petitioner having remitted all outstanding dues, the TRO continued to retain the attachment.
Justice Krishnan Ramasamy observed that when an ITAT order being the highest fact-finding authority attains finality and the entire tax demand stands satisfied, the recovery proceedings must cease.
Understanding Common Mode of Tax Evasion with Practical Scenarios, Click Here
The bench, stating decisions in Sri Lakshmi Brick Industries v. TRO and Coromandel Oils (P) Ltd. v. TRO observed that “once if the order attained its finality on the factual aspect at the level of ITAT and if the amount was paid as per the order passed by the Tribunal, no further recovery can be initiated and thus, the concerned Authority is bound to lift the attachment order.”
Additionally, the Court said that even if the revenue prefers an appeal on a question of law before the High Court, it cannot continue coercive recovery or attachment unless the appeal succeeds and a fresh demand arises.
Section 225(2) of the Income Tax Act mandates the TRO to act in accordance with appellate orders and cancel recovery certificates when the tax demand is reduced or extinguished, said the bench.
Accordingly, the Court directed the TRO to release the attached properties within four weeks, observing that the whole demand had already been paid and no further liability pending.
Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
