Recovery must await Stay Adjudication: Kerala HC Stays Income Tax Proceedings Pending Tribunal's Decision [Read Order]

In a recent ruling, the Kerala High Court stayed income tax recovery proceedings pending the Tribunal's decision on a stay application on holding that recovery must await adjudication of the stay petition.

The petitioner, Edakkalathur Devassy Daiz, challenged the recovery proceedings initiated by the Income Tax Department based on an assessment order for the assessment year 2017-2018. The petitioner had filed an appeal against this assessment order, which was dismissed by the Commissioner of Income Tax (Appeals). Subsequently, the petitioner filed another appeal before the Income Tax Appellate Tribunal along with a stay petition seeking to halt the recovery proceedings during the pendency of the appeal.

The petitioner, represented by advocates Smt. K. Krishna, Shri. Achyuth Menon, and Shri. V. Harisankar, argued that the recovery proceedings were being pursued despite the pendency of the stay application before the Tribunal. The respondents, including the Assistant Commissioner of Income Tax and the Commissioner of Income Tax (Appeals), were represented by Shri. G. Keerthivas, Senior Counsel.

The Single Bench of Justice Ziyad Rahman A.A. observed that since the petitioner had already invoked the statutory remedy and filed an application for stay of proceedings, it was appropriate that the said application be considered by the Tribunal expeditiously. The Court noted that the recovery proceedings should not continue while the stay application was pending consideration.

The Court disposed of the writ petition by directing the Income Tax Appellate Tribunal to take up and decide the stay application filed by the petitioner along with the appeal after providing an opportunity for hearing. The Tribunal was directed to pass appropriate orders within three months from the date of receipt of the judgment. Until such a decision was taken, the Court ordered that the recovery proceedings based on the assessment order and appellate order shall be kept in abeyance.

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