Madan B. Lokur, J.

1. Since we have heard learned Counsel for the parties in detail, we propose to dispose of this writ petition as well as the application for interim relief.

2. Rule D.B.

3. In exercise of powers conferred by Section 120(4)(b) of the Income Tax Act,

1961 (for short the Act) the Central Board of Direct Taxes (for short the CBDT) issued a Notification dated 17th September, 2001 conferring the powers and functions of an Assessing Officer on Joint Commissioners of Income Tax which by virtue of Section 2(28C) of the Act includes an Additional Commissioner of Income Tax.

4. Under these circumstances, the return of the assessed for assessment year 2005-2006 was taken up for consideration by the Additional Commissioner of Income Tax. The returned income was Rs. 7.5 crores and on 31st December, 2007 the Additional Commissioner assessed the income at Rs. 58.68 crores. There was, thereforee, an eight-fold increase between the returned income and the assessed income. The tax liability on the assessed income works out to about Rs. 25.01 crores.

5. Feeling aggrieved by the assessment order, the assessed preferred an appeal before the Commissioner of Income Tax (Appeals) [CIT(A)] on 31st January, 2008.

6. On 1st February, 2008, the assessed moved an application before the Assessing Officer (the Additional Commissioner) requesting for a stay of the enforcement of the tax demand. This application was moved under Section 220(6) of the Act which reads as follows:

220. When tax payable and when assessed deemed in default.

.(1) to (5) xxx xxx xxx

.(6) Where an assessed has presented an appeal under Section 246 or Section 246A the Assessing Officer may, in his discretion and subject to such conditions as he may think fit to impose in the circumstances of the case, treat the assessed as not being in default in respect of the amount in dispute in the appeal, even though the time for payment has expired, as long as such appeal remains undisposed of.

7. Apparently when the assessed went to pursue the application for stay, it was advised by the Additional Commissioner to approach the Deputy Commissioner of Income Tax who had concurrent jurisdiction in the matter. Accordingly, the assessed moved an application on 8th February, 2008 requesting the Deputy Commissioner for staying the demand. While this request was pending, the assessed was served with a notice under Section 221 of the Act dated 14th February, 2008 requiring it to show cause why penalty should not be levied since the demanded tax has not been deposited by the assessed.

8. The assessed was, thereforee, prompted to move another application on 22nd February, 2008 before the Deputy Commissioner again requesting for a stay of the demand.

9. In the meanwhile, the assessed also appears to have met the Chief Commissioner of Income Tax with a request that the demand be not enforced against the assessed. Some discussions took place between the assessed and the Chief Commissioner of Income Tax but there is no record of those discussions.

10. Be that as it may, on 27th February, 2008, the Deputy Commissioner passed an order with reference to the letters dated 8th February, 2008 and 22nd February, 2008. It was stated in the order that the petition for stay was considered, and as per the request of the assessed, it was required to pay 15% of the net demand that is Rs. 3.75 crores on or before 3rd March, 2008.

11. According to learned Counsel for the assessed, no request was made by the assessed to pay 15% of the net demand but according to learned Counsel for the Revenue this is what was accepted by the assessed in the meeting held with the Chief Commissioner of Income Tax and that is why a demand was made for only 15% of the total tax due.

12. Immediately thereafter on 3rd March, 2008, the assessed addressed a letter to the Commissioner of Income Tax informing him that the assessed had earlier deposited Rs. 1 crore in two installments towards the tax liability. It was also p