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Case Law Details

Case Name : Wexco Homes Private Ltd. Vs ACIT (Kerala High Court)
Appeal Number : WA No. 238 of 2024
Date of Judgement/Order : 23/02/2024
Related Assessment Year :

Wexco Homes Private Ltd. Vs ACIT (Kerala High Court)

Introduction: In a significant ruling, the Kerala High Court has provided relief to taxpayers facing coercive tax recovery actions by directing the Income Tax Department to keep recovery proceedings in abeyance until the disposal of stay petitions or income tax appeals. This judgment came in response to a writ appeal filed by Wexco Homes Private Ltd. against an earlier judgment that did not grant a stay of recovery proceedings while their appeal was pending before the appellate authority.

Detailed Analysis: Wexco Homes Private Ltd., aggrieved by an order demanding tax recovery, had initially approached the Kerala High Court seeking relief against coercive recovery steps initiated by the Income Tax Department. The company had already filed an appeal (Ext.P2) along with a stay petition (Ext.P3) against the recovery order (Ext.P1) before the appellate authority. Despite this, recovery actions were being pursued, prompting the company to seek judicial intervention.

The learned Single Judge’s decision to dismiss the writ petition without staying the recovery proceedings led Wexco Homes Private Ltd. to file a writ appeal. Upon review, the Division Bench recognized the necessity to safeguard the appellant’s interests pending the resolution of the statutory appeal process. It was reasoned that if an appellant is subjected to coercive recovery while their appeal and stay petition are under consideration, it would undermine the very purpose of filing an appeal.

Therefore, the Court modified the earlier judgment to specifically direct that recovery proceedings against Wexco Homes Private Ltd. for the amounts demanded by the impugned order should be held in abeyance until the appellate authority decides on the stay petitions or appeals, whichever comes first. This modification aims to ensure that taxpayers are not unduly penalized with recovery actions while their appeals, which may have merit, are still being evaluated.

Conclusion: The Kerala High Court’s decision underscores the judiciary’s role in ensuring fairness in the tax recovery process, especially when the taxpayer’s appeal is yet to be adjudicated. By directing the Income Tax Department to halt recovery proceedings until the disposal of stay petitions or income tax appeals, the Court has provided a crucial safeguard for taxpayers against potentially premature enforcement actions. This judgment highlights the importance of allowing the appellate process to unfold without the added pressure of recovery proceedings, thereby ensuring that taxpayers are afforded a fair opportunity to contest tax demands.


The petitioner in WP(C).No. 3483 of 2024 is the appellant being aggrieved by the judgment dated 02.02.2024 in the Writ Petition. The brief facts necessary for disposal of this Writ Appeal are as follows:

2. The appellant had impugned Ext.P1 order before this Court in the writ petition when confronted with recovery steps for recovery of the amounts confirmed against it by the order. It was the case of the appellant that against Ext.P1 order, it has preferred Ext.P2 appeal along with Ext. P3 stay petition before the 2nd respondent, the Appellate Authority. In the meantime, coercive steps were taken for realisation of the demands. Therefore, the appellant preferred WP(C) No. 3483 of 2024 before this Court. The learned Single Judge dismissed the writ petition, however, with a direction to the 2nd respondent to consider and pass appropriate orders in the stay petition within a period of four months. The learned Single Judge, however, did not grant stay of recovery proceedings.

3. We have heard Sri. Harisankar V. Menon, the learned counsel for the appellant and Smt. Susie B. Varghese, the learned Standing counsel for the Income Tax Department.

4. In our view, since the learned Single Judge had relegated the appellant to the alternative remedy before the statutory authority, it was incumbent upon the learned Judge to protect the appellant from recovery proceedings pending disposal of the petitions by the respondent appellate authority. Accordingly, we modify the impugned judgment of the learned Single Judge to the limited extent of clarifying that pending disposal of the stay petitions or appeals whichever is earlier by the appellate authority, the recovery proceedings against the appellant for recovery of the amounts confirmed against it by Ext.P1 order shall be kept in abeyance. Save for this limited modification, the rest of the directions in the impugned judgment are not interfered with.

The writ appeal is disposed of as above.

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April 2024