The court ruled that a petitioner must demonstrate a prima facie case and financial incapacity to obtain a stay on tax demand, which was not established in this case.

JUDGMENT :

Jitendra Jain, J.

1. Rule. Rule made returnable immediately at the request and with the consent of the learned counsel for the parties.

2. By this petition under Article 226 of the Constitution of India, the petitioner has challenged order dated 24 February 2023 passed by the ACIT [(Central Circle 1(2)], Pune, order dated 16 March 2023 passed by the PCIT (Central), Pune and the order dated 23 March 2023 passed by the PCIT (Central), Pune whereby the petitioner’s request for stay of demand for assessment year 2021-22, pending appeal, came to be rejected and the petitioner was directed to pay 20% of the demand in six installments.

3. The petitioner is a company engaged in the business of manufacturing M. S. Billets from melting MS Scrap. The petitioner filed its return of income declaring total income of Rs.7.52 crore. On account of search and seizure operation, the case of the petitioner was selected for complete scrutiny and an assessment order came to be passed on 30 December 2022 assessing income at Rs.23.39 crore. In the said assessment order, major additions are towards bogus purchases amounting to Rs.15.86 crore. Demand of Rs.5.86 crore was raised in the said order.

4. The petitioner filed an appeal against the aforesaid order challenging the additions and the said appeal is pending as of today.

5. On 9 February 2023, the petitioner made an application for stay of the demand of Rs.1.17 crore, being 20% of the original demand of Rs.5.86 crore. In the said application, it is stated that the petitioner has a prima facie good case and great hardship would be caused if full stay is not granted. The said application came to be rejected by the ACIT vide order dated 24 February 2023. The ACIT has relied upon the reasoning given in the assessment order to reject the prima facie case of the petitioner. The petitioner was directed to pay 20% of the disputed demand failing which, coercive action was to be taken.

6. On 25 February 2023, the petitioner made an application for stay of demand to the PCIT against the above order rejecting the prayer for complete stay of demand raised for AY 2021-22. The said application came to be rejected by the PCIT vide order dated 16 March 2023. However, the PCIT directed the petitioner to pay of 1.17 crore in six equal installments of Rs.0.19 crore starting from March 2023 till August 2023. The said order further states that on payment of installments, the balance demand of Rs.4.68 crore will be stayed till the appeal of the petitioner is decided.

7. On 20 March 2023, the petitioner once again filed an application for stay of demand and proposal to make payment of only Rs.0.11 crore only in two equal installments. The said application came to be rejected by the PCIT vide order dated 23 March 2023.

8. The petitioner, is now before this Court challenging the orders passed by the ACIT and PCIT rejecting the complete stay of the demand.

9. Mr. Walve, learned counsel for the petitioner, submits that the issue of bogus purchases involved is covered by various decisions of this Court and, therefore, directing payment of 20% of the demand would cause undue hardship. Learned counsel for the petitioner, therefore, prayed that this Court, in the exercise of its extraordinary jurisdiction, should stay the whole of the demand of Rs.5.86 crore without directing the petitioner even to pay 20% of the demand.

10. Mr. Suresh Kumar, learned counsel for the respondents, vehemently opposed the petition and the prayer and prayed for dismissal on the ground that no case is made out for a full stay of the demand. Mr Suresh Kumar further submitted that the PCIT had directed the petitioner to make payment of 20% of the demand in instalments which the petitioner has failed, and till today, no payment has been made. Mr. Suresh Kumar further submitted that additions are based on strong grounds as evident in the assessment order, no prima facie case is made out.

11. We have heard the learned counsel for the petitioner and the resp