1 2025:CGHC:8530 NAFR HIGH COURT OF CHHATTISGARH AT BILASPUR WPT No. 31 of 2025 • Maa Danateshwari Maize Processing And Marketing Cooperative Society Limited Represented By Shri Vikas Ramesh Khanna In The Capacity Of Its Managing Director, S/o Shri Ramesh Khanna, Aged About 38 Years, R/o Room No. 1, Collectorate Composite Building Kondagaon - District - Kondagaon, Chhattisgarh, India, Pin Code - 494226. ... Petitioner versus 1. Central Board Of Direct Taxes Through Its Chairman, Ministry Of Finance, (Department Of Revenue) North Block, New Delhi 110002 2. Commissioner Of Income Tax (Appeals), National Faceless Appeal Centre, New Delhi 3. The Income Tax Officer, Ward Jagdalpur, Beside Jhankar Talkies, Kumharpara, District Jagadalpur, Chhattisgarh, 494001 4. Principal Commissioner Of Income Tax, Aayakar Bhawan, Civil Lines, Raipur, District Raipur Chhattisgarh ... Respondents For Petitioner : Mr. Vibhor Govardhan, Advocate For Respondents : Mr. Ajay Kumrani, Advocate appears on behalf of Mr. Amit Chaudhari, Advocate PRIYANKA VERMA Digitally signed by PRIYANKA VERMA Date: 2025.02.20 16:53:12 +0530 2 Hon'ble Shri Justice Deepak Kumar Tiwari Order On Board 19/02/2025 1. This Petition has been filed challenging the order dated 20.01.2025 passed by respondent No.3, whereby, during pendency of the Appeal, direction to deposit of 20% of the outstanding amount was made. 2. At the outset, learned counsel for the petitioner would submit that the issue involved in this matter is no longer res integra, as the Coordinate Bench of this Court in WP (T) No. 59/2018 (M/s. Aarti Sponge & Power Ltd. Vs. The Assistant Commissioner of Income Tax & Ors. and other connected matters) relying upon the decision of Bombay High Court in the matter of KEC International Ltd. Vs. B.R. Balakrishnan & Ors. reported in (2001) SCC OnLine Bom 1229 and in the matter of UTI Mutual Funds Vs. Income Tax Officer 19 (3) (2) & Ors. reported in (2012) SCC OnLine Bom 390, has directed for deposit of 20% of the disputed amount, by passing a speaking order, and the matter was remitted back to the competent authority to consider afresh in light of guidelines as framed by the Bombay High Court and followed by this Court. 3. Learned counsel further submits that in the instant matter also, the Assessing Officer rejected the stay application only on the ground that the petitioner failed to pre-deposit 20% of the total demand amount. He would further submit that the demand has been raised by the Revenue on account of non-availability of pan cards of marginal maize farmers, due to which, the tax liability has wrongly been assessed in respect of the 3 petitioner. He would further submit that the petitioner, after receiving the demand notice under Section 156 of the Income Tax Act, 1961 (for short, “the Act, 1961”), challenged the Assessment Order by filing an Appeal under Section 246 of the Act, 1961 before respondent No.2 and during pendency of the Appeal, the petitioner simultaneously filed an application under Section 220(6) of the Act, 1961 for staying the payment of demand amount, wherein the aforesaid order has been passed. Lastly, he submits that during pendency of such Appeal, the impugned order is bad in law. 4. On the other hand, learned counsel for the respondents has not disputed the aforesaid legal proposition. 5. Heard learned counsel for the parties and perused the records with utmost circumspection. 6. In the matter of M/s. Aarti (Supra), while deciding the similar issue, it was categorically held that the question is no longer res integra and the relevant paras of the said judgment read thus:- “18. In my opinion, the said question is no longer res integra and it has been well settled by a decision of the Bombay High Court in the matter of KEC International Ltd. v. B.R. Balakrishnan and others in which S.H. Kapadia, J, as then His Lordship was speaking for the Bombay High Court, while considering the similar issue has laid down the following guidelines: “This is the consequence of an order being passed without giving any reasons. Hence, we intend to lay down certain parameters which are required to be followed by the authorities in cases where a stay application is made by an 4 assesee pending appeal to the first appellate authority Parameters: (a) While considering the stay application, the authority concerned will at least briefly set out the case of the assessee. (b) In cases where the assessed income under the impugned order far exceeds returned income, the authority will consider whether the assessee has made out a case for unconditional stay. If not, whether looking to the questions involved in appeal, a part of the amount should be ordered to be deposited for which purpose, some short prima facie reasons could be given by the authority in its order. (c) In cases where the assessee relies upon financial difficulties, the authority concerned can briefly indicate whether the assessee is financially sound and viable to deposit the amount if the authority wants the assessee to so deposit. (d) The authority concerned will also examine whether the time to prefer an appeal has expired. Generally, coercive measures may not be adopted during the period provided by the statute to go in appeal. However, if the authority concerned comes to the conclusion that the assessee is likely to defeat the demand, it may take recourse to coercive action for which brief reasons may be indicated in the order. (e) We clarify that if the authority concerned complies with the above parameters while passing orders on the stay application, then the authorities on the administrative side of the Department like respondent No.2 herein need not once again give reasoned order.” “19. The aforesaid guidelines have been followed later-on again by the Bombay High Court in the matter of UTI Mutual Fund v. Income Tax Officer 19(3)(2) and others in which Dr. D.Y. Chandrachud, J (as then His 5 Lordship was) while following the decision rendered in KEC International Ltd. (supra) again held some more guidelines as under:- “These are, we may say so with respect, sage observations which must be borne in mind by the assessing authorities. Consistent with the parameters which were laid down by the Division Bench in KEC International and the observations in the judgment in Coca Cola6, we direct that the following guidelines should be borne in mind for effecting recovery : 1. No recovery of tax should be made pending (a) Expiry of the time limit for filing an appeal; (b) Disposal of a stay application, if any, moved by the assessee and for a reasonable period thereafter to enable the assessee to move a higher forum, if so advised. Coercive steps may, however, be adopted where the authority has reason to believe that the assessee may defeat the demand, in which case brief reasons may be indicated. 2. The stay application, if any, moved by the assessee should be disposed of after hearing the assessee and bearing in mind the guidelines in KEC International; 3. If the Assessing Officer has taken a view contrary to what has been held in the preceding previous years without there being a material change in facts or law, that is a relevant consideration in deciding the application for stay; 4. When a bank account has been attached, before withdrawing the amount, reasonable prior notice should be furnished to the assessee to enable the assessee to make a representation or seek recourse to a remedy in law; 5. In exercising the powers of stay, the Income Tax Officer should not act as a mere tax gatherer but as a quasi judicial authority vested with the public duty of protecting the interest of 6 the Revenue while at the same time balancing the need to mitigate hardship to the assessee. Though the AO has made an assessment, he must objectively decide the application for stay considering that an appeal lies against his order: the matter must be considered from all its facets, balancing the interest of the assessee with the protection of the Revenue.” “20. After having noticed the manner of disposing the appeal as highlighted by the Bombay High Court in the two judgments noticed herein-above and agreeing with the same, it would appear that the competent authority, in the instant case, while considering the application simply held that the appeal proceedings are separate and distinct from recovery proceedings and further proceeded to hold that 20% of the disputed demand has not been deposited in accordance with the guidelines dated 31-7-2017 and passed the order dated 7-3-2018. Thus, it is quite vivid that the application for stay of demand has not been considered in the manner it was required to be considered and dealt with. Deposit of 20% of the disputed demand has been made condition precedent for hearing the application for stay which is not contemplated either under the Act of 1961 or the CBDT guidelines dated 29-2- 2016 modified by the office memorandum dated 31-7-2017. It is only when the competent authority is of the opinion that the assessee has made out a case for grant of interim relief, stay can be granted subject to deposit of 20% of the disputed demand. Likewise, there is a further clause in the circular for reduction of 20% deposit if the petitioner makes out a case, it has also not been considered. In straightway, direction of deposit of 20% of the disputed demand has been made which is not the correct way of deciding the application for stay of the disputed demand.” 7 7. Since similar question is involved in this matter, the impugned order dated 20.01.2025 is set-aside and the matter is remitted to the competent authority to consider it afresh in light of the guidelines as stated above and pass a reasoned order within a period of 4 weeks from the date of receipt of a copy of this order. 8. Accordingly, the Writ Petition is allowed to the extent indicated herein above, leaving the parties to bear their own costs. Sd/- (Deepak Kumar Tiwari) Judge Priyanka