IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE GOPINATH P.

MONDAY, THE 9^TH DAY OF SEPTEMBER 2024 / 18TH BHADRA, 1946 WP(C) NO. 26445 OF 2024 PETITIONERS:

1 NOBLE JOHN,AGED 68 YEARS, S/O. JOHN, RESIDING AT KUZHIMURIYIL ESTATE, EZHAMKULAM, NEDUMON, PATHANAMTHITTA, KERALA, PIN – 691 556.

2 ANNIE NOBLE,AGED 58 YEARS, W/O. NOBLE JOHN, RESIDING AT KUZHIMURIYIL ESTATE, EZHAMKULAM, NEDUMON, PATHANAMTHITTA, KERALA, PIN – 691 556. BY ADV ASWIN GOPAKUMAR RESPONDENTS:

1 THE COMMISSIONER OF INCOME TAX (APPEALS), CENTRAL CIRCLE, COCHIN, POORNIMA BUILDING, MANORAMA JUNCTION, PANAMILLY NAGAR, COCHIN, PIN – 682036.

2 THE COMMISSIONER OF INCOME TAX (APPEALS) -3, 4TH FLOOR, CENTRAL REVENUE BUILDING, I.S. PRESS ROAD, COCHIN, PIN – 682 018.

3 THE ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, INCOME TAX OFFICE, PUBLIC LIBRARY BUILDING, SHASTRI ROAD, KOTTAYAM, PIN – 686 001.

BY ADVS.

SRI.NAVANEETH.N.NATH, SC SMT.SUSIE B VARGHESE, SR.SC THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 09.09.2024, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

JUDGMENT This writ petition has been filed challenging Ext.P6 order attaching certain bank accounts of the petitioners, who are stated to be Directors of a Private Limited Company named Covenant Stones Private Limited (the Company). The 1^st petitioner owns 99.73% of the shares of the Company, while the 2^nd petitioner (his wife) owns 0.22% and their son (not a party to the writ petition) owns 0.05% of the shares of the Company. Assessment of the Company was completed for the period from 2014-15 to 2019-20 resulting in a demand for a sum of Rs.32,10,37,345/-. The Company filed appeals before the 1^st Appellate Authority and approached this Court by filing W.P(C)No.38390 of 2022, which was disposed of on 21.12.2022 directing the Appellate Authority to consider and pass orders on the stay petitions filed in the statutory appeals and further directing that recovery proceedings shall remain suspended till orders are passed on the stay petitions. The Appellate Authority vide Ext.P3 order dated 13.09.2023 directed stay of further recovery on payment of 20% of the total tax demand. The operative portion of Ext.P3 order reads thus:-

“6. However, considering the facts of the case and the online submissions, the appellant is directed to pay 20% of the total tax demand raised vide assessment orders for the AYs. 2014-15, 2015-16, 2016-17, 2017-18, 2018-19 and 2019-20 in seven equal monthly instalments on or before 25^th March 2024. The instalments have to be paid on or before the 25^th of every month and the first instalment has to be paid on or before 25^th September 2023. Subject to the above mentioned payment schedule and on the condition that the appellant cooperates with the appellate proceedings and remand proceedings, if any, the balance demand of the appellant is kept in abeyance till 31/03/2024 or disposal of appeal whichever is earlier.”

The Company challenged Ext.P3 order by filing W.P(C)No.40710 of 2023. This Court dismissed the writ petition, however directing as follows:-

“In that view of the matter, the present writ petition is dismissed. The petitioner was granted time to pay the first instalment on or before 25.09.2023, the said time is extended to 30.12.2023 and the last and final installment has to be paid on or before 30.06.2024. Needless to say that the observation made herein will not prejudice the appellate authority to consider the case of the petitioner on merit. ”

The Company carried the matter in appeal before a Division Bench of this Court through W.A.No.661 of 2024, where the specific contention taken was that the Company is in dire financial straits and hence the direction to pay 20% of the demand pending disposal of the appeal would cause great prejudice to the Company. It was also pointed out that the conditional stay order issued by the 1^st Appellate Authority did not disclose any reasons as to why 20% of the demand should be paid as a condition for stay. The Di