Income Tax Dept Direction to Remit 30% Pre deposit on Stay of Recovery Petition: Kerala HC Directs to stay Proceedings Unconditionally

In a recent case before the Kerala High Court, the appellant, Kerala State Co-Operative Bank Ltd., challenged income tax demand notices issued for the assessment year 2020-21 under sections 143(3) and 144B of the Income Tax Act, 1961. Despite depositing 20% of the assessed tax, the First Appellate Authority rejected their appeal, prompting the appellant to approach the Income Tax Appellate Tribunal. While the appeal was pending before the Tribunal, the tax authorities initiated recovery proceedings based on the assessment order. The Single Judge initially directed the appellant to deposit 30% of the tax assessed as a condition for staying recovery proceedings pending the Tribunal's decision on their stay petition. However, a division bench clarified that the recovery proceedings should be unconditionally kept in abeyance until the Tribunal decides on the stay petition, ensuring protection from immediate tax recovery actions.