1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY BENCH AT AURANGABAD WRIT PETITION NO. 1571 OF 2010 M/s. Mula Pravara Electric Co-op. Society Ltd. .. Petitioner Versus The Union of India and others .. Respondents Shri A. P. Kolte, Advocate for the Petitioner. Shri Alok Sharma, Assistant Solicitor General for the Respondents. CORAM : A. P. DESHPANDE, AND N. D. DESHPANDE, JJ. DATE : 05TH MARCH, 2010. ORAL ORDER [Per A. P. DESHPANDE, J. ] : 01. On oral request made by learned counsel for the petitioner, leave to amend is granted for challenging the order dated 03rd March, 2010, passed by the Commissioner Income Tax - I, Pune. 02. The petitioner is a Co-operative Society engaged in the business of distribution of electricity in about 183 villages and 2 towns in five talukas in the District of Ahmednagar. By this petition, the petitioner is challenging the notice issued by respondent No. 3 under Section 226 (3) of the Income Tax Act to the bankers of the petitioner. A further prayer is made to restrain the respondents to proceed against the petitioner for recovery of income tax pertaining to the income assessed vide order dated 24th December, 2009, until the final disposal of the appeal which is pending before the Commissioner Income Tax (Appeal) Pune. 03. By an assessment order dated 24th December, 2009, the Deputy Commissioner of Income Tax Ahmednagar, reassessed the amount of net tax payable in the sum of Rs. 162,61,56,465/-, which lateron came to be rectified by an order dated 08th January, 2010 and the net tax payable is determined in the sum of Rs. 126,06,49,690/-. The said assessment is made under Section 143(3) of the Income Tax Act, which pertains to the assessment year 2002-2003. It's matter of record and revealed from the statement filed by the petitioner at Annexure - A, that the State Government granted waiver to the present petitioner for payment of dues of Maharashtra State Electricity Board for an amount of Rs. 541,80,37,753/-. According to the respondents, 3 the said waiver was not reflected as income in the return of the petitioner. The petitioner moved the Deputy Commissioner of Income Tax under Section 220(6) of the Income Tax Act with a view to seek stay of the demand. Perusal of the order passed by the Deputy Commissioner reveals that the prayer for stay was made principally on the ground that an appeal is pending. Holding that mere pendency of an appeal by itself would not be a ground to stay the demand. The Deputy Commissioner after considering the difficulty faced by the petitioner in the matter of payment of tax, opined that 50% of the demand can be stayed subject to the payment of the balance amount. The order further reveals that the authority concerned was also agreeable for granting suitable installments. 04. However, the petitioners showed total inability to make any payment whatsoever, and as such, the petitioner moved the Additional Commissioner of Income Tax, making the same prayer. Before the Additional Commissioner, the petitioner had relied upon CBDT instruction No. 96-F No. 1-6-69 (of the year 1969) to contend that, when the demand is high-pitched and exceeds double than the returned income, then there ought to be stay of the demand. The Additional Commissioner prima facie 4 being of the view that the order passed by the assessing officer is in tune with Section 41(1) of the Income Tax Act, declined to grant blanket stay of entire demand. However, granted stay to the extent of 50% of the demand. 05. Not being satisfied with the order passed by the Additional Commissioner, the petitioner carried the matter to the Commissioner of Income Tax, Pune. The petitioner placed reliance on the CBDT instruction No. 96-F No. 1-6-69 to seek blanket stay of the demand notice by urging that the return showed a loss, whereas the assessment order imposed tax of Rs. 126 corers. The Commissioner of Income Tax has dealt with the contention raised by the present petitioner touching the CBDT instruction No. 96-F No. 1-6-69 dated 21st August, 1969, by observing that the said instruction is no longer in force and has been superseded by instruction No. 1914 which came into operation with effect from 02nd December, 1993. The Commissioner whiling dealing with the request of the petitioner for grant of stay, directed stay of 50% of the demand, subject to the condition that the assessee pays the remaining amount of 50% by 31st March, 2010. Aggrieved by the order passed by the Deputy Commissioner of Income Tax, Additional Commissioner 5 Income Tax and Commissioner of Income Tax, the present petition has been filed. 06. The learned counsel for the petitioner mainly relies upon an interim order passed by the Delhi High Court which is reported in (2009) 222 CTR 521 (Delhi). The Division Bench in the facts of the said case granted stay to the demand notice. The Division Bench of Delhi High Court did consider the submission made by the learned counsel for the revenue that CBDT instruction No. 96-F does not hold the field any longer after issuance of instruction No. 1914 of 1993 dated 02nd December, 1993 and prima facie observed that even after issuance of instruction No. 1914 of 1993, CBDT instruction No. 96-F continues to operate. The Central Board of Direct Taxes having felt the need for issuing comprehensive instructions to regulate the recovery of outstanding tax demand, issued the instructions to regulate the subject of recovery of tax in order to streamline recovery procedure. The said instructions are issued in exercise of powers under Section 220 of the Income Tax Act. The instructions of 1993 categorically states that the instructions are issued in superannuation of all earlier instructions on the subject. The thrust of the instruction as a matter of principle is 6 that every demand should be recovered as soon as it becomes due and demand could only be kept in abeyance, if valid reasons are seen to exists. 07. The guide lines for staying the demand are contained in para 2-C of instruction No. 1914/1993. Perusal of the same reveals that a demand need to be stayed only if there are valid reasons for doing so. A few illustrative situations are also stated in the guide lines. Guide line C (ii) deals with grant of stay by the Assessing Officer and the conditions which could be imposed while grant of stay. On perusal of the instructions issued by the Central Board of Direct Taxes, we are of the view that the area covered by instruction No. 96-F dated 21st August, 1969 falls within the parameters of the Central Board of Direct Taxes instructions No. 1914 of 1993. In that view of the matter, with respect, we are not in agreement with the prima facie view expressed by the Division Bench of Delhi High Court while passing the interim order. The discretion to be exercised by the authorities under Section 220(6), no doubt, need to be exercised on sound principles. 08. Perusal of the impugned orders reveal that taking a very 7 realistic approach, the authorities have granted stay to the demand to the extent of 50%, however, subject to the condition that balance 50% of the amount is deposited by the petitioner. We do not see that the impugned orders suffer from any illegality or impropriety warranting any interference in exercise of writ jurisdiction. There being no case made out, petition stands summarily dismissed. [ N. D. DESHPANDE, J.] [A. P. DESHPANDE, J.] bsb/Mar.10