JUDGMENT

Harsha Devani, J.

1. By this petition under article 226 of the Constitution of India, the petitioner has challenged the order dated 8.2.2019 passed by the first respondent Deputy Commissioner of Income Tax, Central Circle 2(3), Ahmedabad as well as the order dated 11.3.2019 passed by the second respondent Principal Commissioner of Income Tax, Ahmedabad and has prayed that the first respondent be prohibited from recovering any amount from the petitioner towards the demand raised till the disposal of the appeal preferred by the petitioner before the Commissioner of Income-tax (Appeals).

2. The facts stated briefly are that the petitioner is a partnership firm trading in gold and silver bullion. The petitioner had commenced its business operations in financial year 2012-13. Originally, the petitioner dealt in only wholesale trading and with effect from 6.7.2016, it began retail trading. The petitioner filed return of income for assessment year 2017-18 on 31.10.2017 declaring income of Rs. 26,39,110/-. A search action took place at the residential premises of the partners and a survey action took place at the business premises of the petitioner on 24.1.2017. The first respondent, thereafter, framed assessment under section 143(3) read with section 153A of the Income Tax Act, 1961 (hereinafter referred to as "the Act") at Rs. 9,42,82,954/- on alleged bogus sales through backdating entries under section 68 of the Act (Rs. 7,88,85,082/-) and on alleged excess stock under section 69B of the Act (Rs. 1,27,58,762/-).

2.1. By a letter dated 30.1.2019, the petitioner requested the first respondent to keep the demand in abeyance till the appeal is decided by the CIT (Appeals). By the impugned order dated 8.2.2019 passed under section 220(6) of the Act, the first respondent rejected the application of the petitioner and asked the petitioner to make payment of 20% of the demand in three days. Thereafter, vide letter dated 18.2.2019, the petitioner requested the second respondent to keep the demand in abeyance till the decision of the CIT (Appeals). By an order dated 11.3.2019, which was furnished to the petitioner on 22.3.2019, the application came to be rejected. It is further the case of the petitioner that on the next day of supplying the order of rejection of the application of stay of demand by the second respondent, a notice under section 226(3) dated 25.3.2019 came to be issued by the first respondent attaching the bank accounts of the petitioner. Being aggrieved, the petitioner has filed the present petition seeking the relief’s noted hereinabove.

3. Mr. B.S. Soparkar, learned advocate for the petitioner submitted that the impugned orders are patently bad and illegal and deserve to be quashed and set aside. It was submitted that the petitioner is most likely to succeed in the appeal and, therefore, temporary recovery of tax is harsh and illegal. It was submitted that the Central Board of Direct Taxes has issued Circular No. 1914 dated 2.2.1993 to streamline the issue relating to stay of demand but the same provides guidelines only and cannot be interpreted to mean that the demand of 20% is automatic. It was submitted that the first respondent was not justified in practically calling upon the petitioner to make payment of 20% of the demand and that too within a period of three days without giving the petitioner any time to approach the Principal CIT.

3.1. On the merits of the case, it was submitted that the assessment order itself is bad as no assessment could have been made under section 153A of the Act in the absence of a search at the premises of the petitioner. It was submitted that the additions are bad, and hence, the demand would not arise. It was submitted that no addition has been made in the case of the petitioner for the previous years and no addition in the case of the partners has been made for any of the six years. It was submitted that no search was conducted or initiated against the petitioner, and hence, the provis