Penalty recovery stayed pending appeal where tax was already paid and prima facie interim protection was shown.

Pending appeal, the High Court considered whether recovery of penalty under the impugned order should be stayed. The appeal had been admitted on substantial questions of law, and the appellant clarified that the challenge at this stage was confined to penalty, with tax already paid and no refund sought. On that basis, the Court found a prima facie case for interim protection and held that the balance of convenience favoured the assessee. A limited stay was granted to preserve the parties' rights and equities during the appeal.

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Issues: Whether, pending the appeal, recovery of penalty under the impugned order should be stayed.

Analysis: The appeal was admitted on substantial questions of law. In view of the appellant's clarification that the challenge at this stage was confined to penalty and that the tax had already been paid without seeking refund, the Court found a prima facie case for interim protection. The balance of convenience was held to be in favour of the assessee, and the rights and equities were considered capable of being balanced by a limited stay.

Outcome: Recovery of penalty under the impugned order was stayed.

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