Darul Uloom Rahmania v. The Commissioner of lncome Tax (Exemption)

Petition under Article 226 of lhe Constrtution of lndia praying that in the circumstances stated in the affidavit filed therewith, the High Court may be pleased to issue a Writ, order or direction more particularly one in the nature of a writ of Mandamus declarinE. (i) The lmpugned Order dated 2310812025 rejecting the stay application of the Petitioner bearing DIN No. ITBA/COM/F/'1 7 /2025- 2611079515941 (1) by Respondent No. 1 for the Assessment Year 2014-15,as arbitrary, illegal, unsustainable in law, without application of mind, against the provisions of the lncome Tax Act, 1961 and in violation of principles of natural justice and (ii) consequently, quash the same and (iii) grant stay of recovery of demand till the disposal of the appeal e-filed by the Petitioner on 2411012024 with acknowledgement No. 6381667 30241024pend ing before lhe learned CIT (A)/National Faceless Appeal Center (NFAC) lA NO: 1 OF 2025 Petition under Section 151 CPC praying that in the circ,tmstances stated in the affidavit filed in sLrpport of the petition, the High Court may be pleased pleased to stay the recovery of all taxes pursuant to the orde:r dated 2310812025 bearing DIN No. ITBA/COIV/F/1712025-2611079915941(1) passr:d by Respondent No. 1 for the Assessment Year 2014-15. Counsel for the Petitioner : SRI DT.C.P.RAMASWAMI Counsel for the Respondents: SRI VIJHAY K PUNNA, (SENIOR SC FOR ITD) The Court made the following: ORDER THE HON'BLE THE CHIEF JUSTICE SRI APARBSH KI'MAR SINGH THE HON'BLE SRI JUSTICE G,M.MOHII'DDIN AND WRIT PETITION No.28228 of 2025 ORDER: Learned counsel Dr. C.P.Ramaswami appears for the pe titioner Sri VShay K. Punna, learned Senior Standing Counsel for Income Tax Department, appears for the re sponden ts.

2. The application for stay on the recovery of the demand of Rs.98,62,830/- pending the appeal preferred by the petitioner on 24.10.2024 in respect of the assessment year 2074-2015 has been rejected by the Commissioner of Income Tax (Exemption) respondent No.1, by the following order dated 23.O8.2025 impugned herein (Annexure P- 1) "GOVERNMENT OF INDIA MINISTRY OF FINANCE INCOME TAX DEPARTMENT crr (EXEMPTION), tryD I To Darul Uloom Rahmania 23-l-133/3, Rangcli I( had ik i Tala b l(arta 500023, Telangar)a India 2 --fl PAN: AACAD29O2O Assessment Year 2014- 15 Dated: 23lOa 12025 'lo: DIN & Lett€r rTBA/COM F '17 12025-26 r l0799t5!,.11 I Sir, Madam/M/s, Subjcct: Online senrice of Orders - Letter Sub: Decision on Stay Application - Request for Partial Payment - Reg. This is with reicrence to ]'our application for sta_r' of coli,r t ion of ta-\cs. sL bmittcd belore the Commissioner oI Inco:rc 'l'ax (Exernpticns), ilyclerabad. ns per lhis the dcr,rand pa.,r. I c arc as u nder: Asst. Yr 2))!L 5 Out standin lJcrrand t 3447 590 After carefully cxamining all relevant facts and circumstanccs of your case, and also considering the recent order of the Hon'ble Andhra Pradesh Hlgh Court in the case of \t':: The General and T<zchntcal Education Soclety (IA No.1_ of 2025 i;t WP No.12728 of '2025) and also considering the Hon'ble Flish i)ourt of 'lelangilna crrder in the case of Zoos and Parks Auih)t tA of Telangano u. {:lT (E) (2024) 467 ITR 235 (Telar,gana) /,1(:1, }.our stay appli:atiorl has bcen consldered. It is, therefore, decided that your stay petitior is conr,idered provlded you pay an amount of RS.2OOOOOO/- on or before O1.O9.2O25 and produce copies of challans befo:'e the Assessing Offrcer of your case and marked a copy to the underslgned. Please no e thzrt if ,\ ou fall to comply with this directi\': t i the due date, thc Assesslng Officer will be at liberty to injtiate coercive recovery proceedings uncler scctlon 226(-:l o: the I.T.Act, 1961 without any further communication. Further r',ru arc informed to treat this matter \vith urger,-l and ensure compliance ulthin the stipulated timelrame to a\'ol, anY further action try the Department. BALA KRISHNA E]A IULA crT(ExtrMPIrOt l. HYD \ , 3 Copy to 1 Assessing Oflicer. 2. Additional Commissioner oI Income Tax (Exmp), Hyderabad BALA KRISHNA BAT'TULA CIT(EXEMPTION), HYD"

3. The petitioner had claimed an exemption of Rs.1,88,69,321 l- under Section 1 1 of the Income Tax Act, 196 1 (hereinafter referred to as, "the Act"), and declared "NIL" income in its return for the assessment year 2Ol4-

2015. At the relevant point of time, the petitioner, who claims to be a religious society constituted on 07 .10. 199 1 to provide educational facilities without profit motive and not to carry on any commerciai activities in that regard, did not have any registration under Section l2Al 72AA of the Act, which was later granted on 30.ll.2ol7. A demand of Rs.98,62,830/- was raised upon processing its return and an intimation under Section 1a3(1) of the Act was sent to the petitioner. It preferred rectification application under Section 154 of the Act in January 2Ol7 and later again on

05.02.2018 upon grant of registration under Section 12AA of the Act claiming the benefit of exemption for three prior years as per the proviso to Section l2A(2\ of the Act' The rectification application was rejected on 24.O9 '2024 ' The I I 4 -r petitioner thereafter filed an appeal against such rejection, which is pending. pending appeal, it filed the rapplication for stay before respondent No.l, inter alia, takiny; a number of grounds such as, that it has more than a ,..trima facie case in its favour and the baiance of convenie-r,::e is also rveighed agerinst the revenue. According to the ;retitioner, the order of rejection of the rectification app1lr:ertion was barred by limitation by six years in terms of sub-sectlon (g) of Section 154 of the Act. The petitioner also r,jled upon the Central Board of Direct Taxation (CBDT) Circular No.320, dated 1 1.01. 1982. The petitioner cont€ n ded that the majority of income received during the relevant financial year comprised of voluntary conrributions received in India and the foreign contributions. The petitioner also pleaded that it is eligible for exemption and the surplus income, if any, shall be taxable r.rnder the normal rates, As such, it was not liable to pay the tax and no demand shou]d have been raised. \ 4 . LearneC counsel for the petitioner submits t.hat the impugned orcler, however, in a cryptic ma.ner direr::ted the petitioner to pay an amount of Rs.20,00,000/_ on or before l Ol .Og.2025 and failure to comph'thereu'ith u'ould lead to initiation of coercive recovery proceedings under Section 226(g\ of the Act without any further communication' The respondent No.1 has, in the impugned order' not dealt with any of the grounds urged for stay of the demand' Therefore, the petitioner, being aggrieved' has approached this Court.

5. Learned counsel for the respondents has supported the impugned order. It is submitted that respondent No' 1 has taken into consideration the decisions rendered by the jurisdictional High Court and held to be applicable to the factsandcircumstancesofthecaseofthepetitioner. Therefore, no blanket stal' of the demand has been granted. Instead, 15"/o of the total demand has been directed to be deposited. Learned counsel for the respondent has, hor'"'ever, not been able to dispute that the specific grounds urged by the petitioner in the stay application have not been dealt with by the respondent No.1 in the imPugned order. I I 6

6. We have considered the submissions ol I re learned counsel for the parties.

7. The impugned order has been quoted lrt:reinabove. The grounds urged by the petitioner in the stal I'Lpplication are contained the writ affidavit and also in AnrLexure P-14, dated 14.1.2.2024. As noted above, responde:rt No.1 has failed to deal with the specific grounds urg-'d by the petitioner in the impugned order, except relyirrl1 upon the two decisions of this Court which, in his opinion, were relevant to the facts and circumstances of the ,::ase of the .opinion that the petitioner. As such, we are of the impugned order lacks reasons and applicatiorL rf mind to the specific grounds urged by the petitioner ir1 the sta,v applicatr ol i.

8. In that view of the matter, we are inclirl t:d to remrt ,'the matGr to respondenL No. 1 to take a fresh <:iecision on the stay apptcation of the petitioner in accorrlance with { 1aw'within a period of four weeks from the date of receipt oI a copy of thls order, after giving an opporturril.y of being 7 heard to the petitioner. The impugned order, dated

23.08.2025, is accordingly set aside.

9. The writ petition is accordingly disposed of. However, there shall be no order as to costs. Miscellaneous applications pending, if any, shall stand closed. //TRUE COPY// SD/-P. PONNA KRISHNA Asstsrnxr REGIsTRAR /,/ @ SECTION OFFICER To, 1 The Commissioner of lncome Tax (Ex-emption), Aayakar Bhavan, opp. L.B, si;i;, Br.hleioasn HYderabad - 5oooo4 The Centralized Processrng Center' 1st Floor' Prestige Aloha No 4Bl1 and 48 t2. Ber atenaasrah ara B"'s;; ii;d';tl'-a' Utt'iini iti Hbbli' Bensalu ru' Karnataka - 560100 The lncome Tax Officer, (Exemption), Ward- 1(!) Aayakar Bhawan' Opposite iii'sffii;; aZsn;eiealrr. Hvberarad - 500004 One CC to SRI DT C P RAMASWAIUI' Advocate lOPUCl One CC to SRI VIJHAY K PUNNA, (SENIOR SC FOR ITD) [OPUC] Two CD CoPies 2 J 4 5 6 M, BSK BS HIGH COURT DATE D : 1 910912025 2'- :fP 2U, r,l :t ORDER WP.No.28228 of 2025 DISPOSING OF THE WRIT PETITION WITHOUT COSTS I q td