Palode Service Co-Operative Bank Ltd Vs Central Board of Direct Taxes (Kerala High Court)
The Kerala High Court stayed income tax recovery proceedings against a Primary Agricultural Credit Society, citing a pending appeal where the core tax issue is allegedly covered by the Supreme Court’s Mavilayi Service Co-Operative Bank judgment.
Kerala High Court Orders Stay on Income Tax Recovery
The Kerala High Court has directed the Income Tax Department to keep recovery proceedings in abeyance against a Primary Agricultural Credit Society until its appeal before the Commissioner of Income Tax (Appeals) is resolved. The petitioner, Palode Service Co-Operative Bank Ltd., challenged the initiation of tax recovery while its appeal against the Assessment Year 2023-24 order was still pending.
A specific ground raised by the co-operative bank was that the central tax issue in its appeal—likely concerning its eligibility for a deduction—is covered in its favor by the binding Supreme Court judgment in Mavilayi Service Co-Operative Bank Ltd. Vs. CIT.
Considering the pendency of the appeal and the judicial precedent cited, the High Court determined that the appellate authority must first address the appeal and the accompanying stay petition on their merits. The Court therefore disposed of the writ petition by directing the appellate authority to consider and pass an order on the appeal and its application for stay as expeditiously as possible, after granting the bank an opportunity for hearing. Until that decision is finalized, all further recovery proceedings pursuant to the assessment order will remain postponed.
