Recovery Barred During Pending Appeal: Kerala HC Stays Income Tax Dept’s Recovery Action against Oralium Ltd.
The court found merit in the petitioner's contention that recovery proceedings should not be pursued while the statutory appeal and its accompanying stay petition were undecided.
The Kerala High Court has intervened in a dispute between Oralium Limited and the Income Tax Department, staying the recovery proceedings of a tax penalty pending the disposal of the company's appeal.
A single bench of Justice Ziyad Rahman A.A. passed the order directing the appellate authority to expedite the hearing on the stay petition.
Oralium Limited, represented by its director, had filed an appeal and a stay petition challenging a penalty order passed by the Income Tax Department for the assessment year 2020-2021. The company's grievance stemmed from the department's attempts to recover the penalty amount while their appeal and stay petition were still pending consideration, prompting them to file the present writ petition.
After hearing the counsel for Oralium Limited and the standing counsel for the Income Tax Department, the court found merit in the petitioner's contention that recovery proceedings should not be pursued while the statutory appeal and its accompanying stay petition were undecided. 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 Commissioner of Income Tax (Appeals), the 2nd respondent, to hear and decide on the stay petition within a period of two months from the date of the judgment. Crucially, the court ordered that all recovery proceedings initiated based on the impugned penalty order shall remain in abeyance until a final decision is made on the stay petition.
Crucially, the court stipulated that "until such a decision is taken, the recovery proceedings pursuant to the impugned penalty order shall be kept in abeyance." This interim stay provides immediate relief to Oralium Limited, preventing the tax authorities from taking any further steps to recover the penalty amount until the appeal process has run its course.
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