The court emphasized the necessity for the petitioners to participate in appeal proceedings actively to uphold stays previously granted under the Income Tax Act.

ORDER  :

Mr. Avinash Desai, learned Senior Counsel appears for Mr. Pranav Munigela, learned counsel for the petitioners; Mr. Naraparaju Avaneesh, learned counsel appears for respondent No.1 and Mr. N.Praveen Reddy, learned Standing Counsel for Income Tax Department appears for respondents No.2 to 6.

2. The Principal Commissioner of Income Tax (Central), Hyderabad (for short ‘PCIT(central)’), passed an order under Section 271DA of the Income Tax Act, 1961 (for short ‘the Act’), on 30.03.2025, granting absolute stay of recovery of the accumulated demand of Rs.428,98,50,568/-, on M/s.Vasavi Group of Cases (for short ‘the assessee’) involving the petitioner companies for various assessment years.

3. The order dated 30.03.2025 is extracted hereunder:

Sir/Madam/M/s,
Subject: Online service of orders – Letter
F.No.Pr.CIT(c)/Hyd/Stay/2024-25
To,
M/s VASAVI GROUP OF CASES
Sir,
Sub: Order u/s 220(6) of the IT Act – in the case of M/s VASAVI  GROUP OF CA

Ref: (i) Assessee’s letter received on 24.03.2025 for 65 Nos. of assessees.

(ii) Hearing conducted on 28.03.2025.

*****

A letter was filed by the assesse, M/s VASAVI GROUP OF CASES seeking stay of accumulated demand of Rs.428,98,50,568/- raised u/s 271DA of the IT Act, for various assessment years, vide the first reference cited above. On 28.03.2025, Shri B. Narsingh Rao, AR and Sri P. Ananda Rao, AR appeared and made the following submissions:

i). The assessee has cleared the quantum of demand raised during the assessment proceedings. No further appeal has been filed concerning this matter.

ii). The assessee's firm has duly honored the installment facility granted by the Principal Commissioner of Income Tax (Central), Hyderabad, and all installments have been paid as per the agreed schedule till date in respect of quantum demand raised in assessments.

iii). The present demand pertains to penalties levied u/s 271DA of the Act. The assessee has filed an appeal against the order passed under Section 271DA for all group cases and has requested that they not be treated as an "assessee in default concerning the disputed demand under Section 220 (6) of the Income Tax Act.

iv). Due to financial constraints, the assessee is currently unable to pay even the 20% of the demand raised under Section 271DA of the Act as per extant CBDT Instruction. To substantiate this, the assessee has provided a Cash Flow Statement, outlining the financial difficulties faced at present.

After careful consideration of the facts and circumstances of the case, financial hardship faced by M/s VASAVI GROUP OF CASES and co-operation during the course of assessment proceedings and payment of quantum demand raised earlier in search assessment instalments, their request to keep them as "assesse as not deemed to be in default" till disposal of the first appeal before CIT(A), Is favourably considered, for the 65 Nos. of assesses as annexed, in the light of the CBDT instruction No. 1941 dated 21.03.1996, which was further modified partially by CBDT, Office-Memorandum, dated 29.02.2016, subject to the following conditions:

i). The assesse will co-operate during the appeal proceedings without seeking adjournments.

ii). This order is valid till the disposal of first appeal pending with CIT(Appeal)

iii). Any Non-compliance to the above render the stay granted invalid and recovery proceedings will be initiated accordingly.

This issues with the approval of CCIT (in-situ) (Central), Hyderabad.

Sd/-

Income Tax Officer (Hqrs)

O/o Pr. Commissioner of Income-Tax (Central), Hy