THE COURT HELD THAT THE CIRCULAR OF THE CENTRAL BOARD OF DIRECT TAXES NO. 334 IS IN CONSONANCE WITH THE SPIRIT OF THE PROVISIONS CONTAINED IN SUB-SECTION (6) OF SECTION 220 OF THE INCOME-TAX ACT.

( 1 ) THIS is a writ petition under Article 226 of the Constitution of India for a writ of certiorari quashing the order dated July 7, 1995, passed by the Commissioner of Income-tax (Appeals), muzaffarnagar, whereby the stay application filed by the petitioner in the appeal against recovery proceedings has been rejected. A writ of mandamus has also been sought for restraining the respondents from recovering the amount of income-tax for the assessment year 1992-93 from the petitioner and for a direction to the Commissioner of Income-tax (Appeals) for disposal of the appeal forthwith.

( 2 ) I have heard Sri Rakesh Kumar Agarwal learned counsel for the petitioner and Sri Rakesh ranjan Agarwal for the opposite party and perused the material brought on record.

( 3 ) THE petitioner has filed a first appeal before the Commissioner of Income-tax (Appeals) at muzaffarnagar, in respect of the assessment year 1992-93, whereby the income-tax liability of rs. 31,41,142 was determined but before the disposal of the appeal, the assessing authority has initiated recovery proceedings for the said amount. The stay application against recovery proceedings filed by the appellant-petitioner before the Commissioner of Income-tax (Appeals), muzaffarnagar, has been rejected. The appeal has, however, not yet been listed for hearing.

( 4 ) LEARNED counsel for the petitioner has invited attention to the material which was produced before the Commissioner of Income-tax (Appeals) stating the grounds and details of financial hardship faced by the appellant. The Commissioner of Income-tax (Appeals) while disposing of the stay application, has found the requisite details and material wanting. This statement is not correct. Even if it is so, the Commissioner could have given an opportunity to the petitioner to produce the wanting details and requisite information. However, it has not been done. During the pendency of the appeal, it is really a case of great hardship to the appellant, if the assessed liability of income-tax of Rs. 33,04,450 is sought to be recovered. Learned counsel for the petitioner has invited attention to the circular of the Central Board of Direct Taxes bearing No. 334 (F. No. 400/3/81-ITCO) (sic) dated 3-4-1982, which reads as follows : "1. One of the points that came up for consideration in the 8th meeting of the Informal consultative Committee was that income-tax assessments were arbitrarily pitched at high figures and that the collection of disputed demands as a result thereof was also not stayed in spite of the specific provision in the matter in Section 220 (6 ). 2. The then Deputy Prime Minister had observed as under : ". . . . where the income determined on assessment was substantially higher than the returned income, say, twice the latter amount or more, the collection of the tax in dispute should be held in abeyance till the decision on the appeals, provided there were no lapse on the part of the assessee. 3. The Board desires that the above observations may be brought to the notice of all the income-tax Officers working under you and the powers of stay of recovery in such cases up to the stage of first appeal may be exercised by the Inspecting Assistant commissioner/commissioner of Income-tax. "

( 5 ) THIS circular is also in consonance with the spirit of the provisions contained in Sub-section (6) of Section 220 of the Income-tax Act.

( 6 ) ACCORDING to learned counsel for the petitioner, this circular of the Central Board of Direct taxes becomes applicable to the facts of the present case, as mentioned in paragraph 2 of the writ petition. The petitioner had submitted a return of income declaring total income of Rs. 11,710. The Deputy Commissioner of Income-tax, Special Range, Ghaziabad, did not accept the return and enhanced the income by making several additions and determined the tax at Rs. 33,04,450, i. e. , more than several times of the return. In such a situation, the appellant cannot be treated to be in