NSS Taluk Union Adoor Vs Union of India (Kerala High Court)
Kerala HC Stays Recovery Pending Appeal – NFAC Told to Decide Case Considering Restored 12A Registration
The petitioner, an association registered u/s 12A, challenged recovery proceedings initiated during the pendency of its appeal before the CIT(A)/NFAC. Earlier, the registration granted u/s 12A had been cancelled by the Department, but ITAT, Cochin Bench, through order dated 10.06.2025, had set aside the cancellation & directed restoration of registration. Department subsequently restored the registration on 19.08.2025.
Despite the restoration, the assessment order for AY 2023–24 (dated 24.03.2025) was passed on the premise that the registration stood cancelled, leading to demand & initiation of recovery proceedings . The petitioner filed an appeal before the NFAC which remained pending.
Justice Ziyad Rahman observed that since the appeal was already pending & the restoration of registration could materially affect the outcome of the appeal, it was only appropriate to keep recovery proceedings in abeyance. Accordingly, the Court directed the CIT(A)/NFAC to dispose of the appeal expeditiously, & in the meantime, stay all recovery proceedings arising from the impugned assessment.
FULL TEXT OF THE JUDGMENT/ORDER OF KERALA HIGH COURT
The petitioner is an association of persons referred to under Section 12A of the Income Tax Act. Earlier, registration of the petitioner under Section 12A was cancelled, but the order of cancellation was interfered with by the Appellate Tribunal, as evidenced by Ext.P2, wherein the same was set aside. Ext.P3 is the consequential order passed by the authority concerned, restoring the registration of the petitioner under Section 12A of the Income Tax Act. In the mean time, an assessment happened to be passed, pertaining to the assessment year 2023-2024 as evidenced by Ext.P4, where one of the grounds for assessment is that, the registration of the petitioner is cancelled. As against Ext.P4, the petitioner has already submitted Ext.P5 appeal, which is now pending before the 4th respondent. Petitioner is aggrieved by the recovery proceedings initiated by way of Ext.P7 that are being pursued against the petitioner, pending consideration of the appeal.
