Kerala HC Stays Recovery Pending Decision on Delay & Stay Petitions

Jayaprakash Kanakkankottil Vs ITO (Kerala High Court)

Kerala HC Stays Recovery Pending Decision on Delay & Stay Petitions – Revenue Directed to Act Fairly Before Coercive Steps

The Petitioner, an assessee under the Income Tax Act, filed an appeal before the CIT(A)/NFAC against the assessment order dated 26.03.2025 for A.Y. 2020–21. Along with the appeal, he filed a delay condonation petition supported by medical certificates & a stay petition ( seeking to keep the recovery proceedings in abeyance pending disposal of the appeal. However, the Department initiated recovery proceedings even before deciding the delay condonation & stay petitions. Aggrieved by this coercive action, the Petitioner approached the High Court.

Issue

Whether recovery proceedings can be continued when the appeal, delay condonation petition, & stay petition are still pending before the appellate authority.

Court’s Observations

The Court noted that the Petitioner had already filed both the appeal & stay petition, along with a request to condone the delay. The authorities, however, had not taken any action on those applications & had proceeded with recovery. Justice Ziyad Rahman observed that such coercive steps before adjudication of the delay & stay petitions would cause grave prejudice to the taxpayer, defeating the right of appeal. The Court emphasized that the Revenue must act fairly & first dispose of procedural applications before enforcing recovery.

Held

• NFAC was directed to first consider & dispose of the delay condonation application within two months of receiving the judgment.
• If the delay is condoned, the stay petition shall then be decided within one month thereafter.
• Till such time, all recovery proceedings arising from the impugned assessment order shall remain in abeyance.

Result

Writ Petition disposed of – recovery stayed pending decision on delay & stay petitions.

Essence

Tax recovery cannot proceed while delay condonation & stay petitions in appeal remain undecided. The appellate authority must first decide those applications fairly before taking coercive steps

FULL TEXT OF THE JUDGMENT/ORDER OF KERALA HIGH COURT

The petitioner, who is an assessee under the Income Tax Act, has filed Ext.P2 appeal being aggrieved by Ext.P1 assessment order pertaining to the assessment years 2020- 2021. Along with Ext.P2 appeal, Ext.P4 stay petition was also submitted. Ext.P3 is the delay condonation petition.

2. Grievance of the petitioner is with regard to the recovery that is being pursued by the respondents, pending consideration of the appeal and the stay petition. This writ petition is submitted in such circumstances.

3. After hearing the learned counsel for the petitioner and the learned Standing Counsel for the respondents, I am inclined to dispose of this writ petition. Accordingly, it is ordered that the 2nd respondent shall take up Ext.P3 delay condonation application at first and appropriate orders thereon shall be passed within a period of two months from the date of receipt of a copy of this judgment after hearing the petitioner. In the event of the delay being condoned, the2 nd respondent shall take up Ext.P4 stay petition and appropriate orders in accordance with law shall be passed after hearing the petitioner within a period of one month from the date of condonation of delay. Until such a decision is taken, the recovery proceedings pursuant to Ext.P1 shall be kept in abeyance.