Ranjit V Srivatsaa Vs ITO (Madras High Court)
Madras High Court has issued a significant directive concerning income tax recovery, affirming that such proceedings are automatically stayed once an assessee deposits 20% of the disputed tax amount while filing an appeal. The ruling, delivered in the case of Ranjit V Srivatsaa Vs. Income Tax Officer (ITO), led to the quashing of a recovery notice that had been issued despite the petitioner’s adherence to the pre-deposit requirement.
The legal challenge originated from a recovery notice dated December 16, 2024, which the petitioner, Ranjit V Srivatsaa, sought to invalidate. The chronology of events began with an assessment order passed by the Income Tax Officer on December 24, 2018. In response, the petitioner lodged an appeal on January 24, 2019. A critical aspect of this appeal was the simultaneous payment of 20% of the contested tax liability to the tax authorities. This payment is a well-established mechanism designed to provide a degree of relief to assessees by typically triggering an automatic stay on further coercive recovery measures while their appeal is under consideration.
During the court proceedings, the petitioner’s counsel underscored that the payment of 20% of the disputed tax amount by an assessee should, by convention, result in an automatic cessation of recovery actions. Despite this, the respondent proceeded to issue the impugned recovery notice, compelling the petitioner to approach the High Court. While the initial petition sought broader relief, the counsel strategically narrowed the scope, requesting the court to issue a directive for the swift disposal of the pending appeal and to ensure that recovery proceedings remained deferred until the appeal’s final adjudication. This pragmatic approach aimed to secure immediate relief from the recovery threat while awaiting the substantive outcome of the appeal.
