The Kerala High Court ruled that tax recovery proceedings must be held in abeyance when an assessee’s delay condonation and stay petitions are pending before the appellate authority (NFAC). The Court emphasized that the Revenue has a duty to act fairly and decide these procedural applications before initiating coercive recovery action.
Kerala High Court mandated that the CPC, Bengaluru, must dispose of an assessee’s grievance petition challenging a Section 143(1) intimation within three months. Recovery proceedings based on the impugned intimation are stayed until the CPC issues its final decision.
Kerala High Court halted coercive tax recovery, directing the NFAC to first dispose of the pending Section 154 rectification petition. The ruling ensures fairness by suspending recovery when a procedural dismissal (based on a 704-day delay) is being challenged.
The Kerala High Court ruled that once appeal hearings are completed before the CIT(A), the Revenue must wait for the final orders before initiating coercive recovery action. The CIT(A) was directed to dispose of the pending income tax appeals within a strict two-month timeframe.
The Kerala High Court ruled that coercive tax recovery against an assessee must be kept in abeyance while the NFAC considers the pending delay condonation and stay petitions. The Court directed the NFAC to decide the delay condonation petition within two months, and if successful, rule on the stay petition within one month thereafter.
AO had added ₹11,38,000/- towards the amount paid to a builder — ₹8,00,000/- by cheque & ₹3,38,000/- in cash — treating it as unexplained. CIT(A)/NFAC upheld the addition on the ground that Assessee failed to substantiate the source of payment.
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