High Court · 2025

...RESPONDENTS .. Petition under Article 226 of the Constitution of lndia praying that in the circumstances stated in the affidavit filed therewith, the High Court may be pleased to issue a Writ of Mandamus or any other appropriate writ, order or direction- (a) Set aside the decision on stay application issued by the 1st Respondent vide its letter dated 13.10.2025 demanding Rs 8 crores , the order of stay application as the matter being a huge amount for grant of stay on tax dernand is unjust, unconstitutionat, and detrimental to the charitable sector and society at large covered and contrary to the decision of the Hon,ble Court of Andhra Pradesh in Petitioner,s own case. lA NO: 1 oF 2025 Petition under Section 15'1 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased to grant stay of all further proceedings, including, any recovery, pursuant to the impugned order under Section 143(3) read with 1448 of the lncome Tax Act, 1961 dated13.10.2025 issued by the 'l 'Respondent, for the assessment year 2O23-24and grant, stay until the mafter is decided before CIT(A), NFAC as otherwise the Petitioner will be put to severe loss and hardship. Counsel for the Petitioner : ils.AKRUTl AGARWAL Counsel forthe Respondents ?{o.1to3 : VIJHAY K PUNNA (SENIOR SC FOR CBIC) Counsel for the Respondent No.4 : SRI MUKHERJEE, . rep, SRI N.BHUJANGARAO, DY.SOLICITOR GENERAL oF INDIA The Court made the following: ORDER )t -::,Li-.-.-.,4i ,.- -,, . -.-. /1' THE HON'BLE THE CHIEF JUSTICE SRI APARESH KUMAR SINGH AND THE HON'BLE SRI JUSTICE G.M.MOHIUDDIN WRIT No.3313 I of ?,025 ORD, ER: Heard Ms. Akruti Agarwal, learned counsel appearing for petitioner; Mr. Vijhay K Punna, learned Senior Standing Counsel for Income Tax appearing for respondent Nos.l to 3 and Sri B. Mukherjee, learned counsel appearing for Sri N. Bhujanga Rao, learned Deputy Solicitor General of India for respondent No.4

2. Earlier, the order dated 23.08.2025 passed by respondent No.1 - Commissioner of [ncome-tax (Exemption), Hyderabad (for short 'CIT (Exemption)'), granting a conditional stay of the demand on making partial payment of Rs.8.00 crore on or before 0L.09.2025 in relation to the proceedings for recovery of taxes for the Assessment Year 2023-24 during pendency of the appeal was set aside by this Court vide order dated

23.09.2025 in Writ Petition No.28734 of 2025 and remanded to CIT (Exemption) to pass a fresh speaking order after / / considering the grounds raised by the assessee in its stay 2 HCJ (AI{rS, J) & GMM, J w.P.No.3313l of 2025 petition. Detailed speaking order dated 13.L0.2025 passed thereafter by CIT (Exemption) whereby the petitioner was directed to deposit Rs.8.00 crore, which is less than the CBDT guidelines of 20Vo, on or before 28.10.2025 for the Assessment Year 2023-24 is under challenge in the present Writ Petition. The relevant part of the said order is extracted hereunder. "7. The submissions made by the assessee have been duly considered. However, the request for stay of collection of taxes without any payment cannot be accepted for the following reasons: l. Mere pendency of appeal does not warrant automatic stay of demand. As per settled principles of law. unlcss the assessee demonstrates a sfong prima facie case and financial hardship, stay of demand without payment cannot be granted.

2. T\e assessee has not provided any documentary evidence to substantiate the claim.of financial incapacity or to demonstrate that any steps have been taken to raise funds to meet the tax demand partially.

3. The high-pitched nature of the demand alone is not sufficient ground for granting soay, particularly when there is no material provided to establish ttrat part-payment is not possible under any circumstances.

4. The Assessing Officer, in the assessment order, has discussed in detail why in his view the assessee's activities do not qualify as charitable within the meaning of section 2(15). These issues pertain to the merits of ttre appeal and are noted here only for background. It is open to the assessee to advance all such contentions before the CIT(A), who is the statutory appellate authority. f ( , : : :'iii-i!Li:rii:i;r;i..;:r.-i.,.fii:ii.rj:;',:;.f; 1: :,;r1: r r li 3 HCJ (AIGS, J) & GMM, J W.P.No.33lBl of 2025 5' The assessee has reried on the Hon'bre Andhra pradesh High court's judgment in its own case for an earrier year. However, it has not specificalry demonstrated with supporting materiar that ttre factual matrix for the year under consideration is identical. Such issuesn in any case, fa, within the domain of the appellate authority for adjudication, and cannot be concrusivery examined in the present proceedings.

6. without prejudice to the above, it is emphasized that this office cannot step into the rore of the apperate authority and decide the merits of additions made by the Assessing officer. The assessee is at liberty to advance a, irs arguments before the GIT(A) in the appear proceedings. 7' The additional contention of the assessee regarding the Ao,s jurisdiction under section 143(3) read with secrion l2AB has been duly considered' However, the varidity or otherwise of trre assessment order and the scope of the Ao's powers are matters to be examined in appellate proceedings. While disposing a stay petition under section 220(6), this office cannor assume rhe powers of appellate auttrority. Such issues are squarery within ttre jurisdiction of the appellate authority where the assessee's appear is arready pending. Accordingly, this ground cannor be accepted as a basis for granting full stay of demand without any paymenr. , I 7'1 Further, in this regard. reliance is praced on the decision of the Hon'ble High court for the state of rerangana at Hyderabad in the writ Petition No. E7g4 0t 2023 in the case of 7-oos and parks Authority of Telangana vs. the Commissioner of lncome Tax (Exemptions), Hyderabad wherein the Hon'ble courr herd drat the ends of justice would meet if the petitioner deposited a sum of Rs. 3 crores within a period of fifteen days from the date of the order. Upon such deposit, the demand raised by the respondents for the Assessment years 2016'17 to 2o2r-22 was directed ro remain stayed t,r disposar of the appeals stated to be pending before the first appellate authority. 4 HCJ (AI(r5. JI & CMM. J w.P.No.3313l of 2025 ?.2 Reliance is also placed on the decision of the Hon'ble High Court of Andhra Pradesh 8t Amaraveti itr the writ petltion No. 22770 OF 2025, dtd. $.084y15, in the ehsc of Sasi Foundstion vs. the Commissioner of Income Tax (Bremptions), Hyderabad, wherein the Honble Court held as follows: (1) The impugnerl order, dated 23.08.2025 is modified to the extent that the petitioner shall deposit l0% of the outstanding amount within a period of four (04) weeks from the date of the order, and (2) The appellate authority shall dispose of the appeal within a period of ttrree (03) months fiom the date of receipt of a copy of this order.

7.3 Reliance is also placed on the.decision of the Hon'ble High Court of Andhra Pradesh at Amaravati it th.e writ petition No. 23494 OF 2025, dtd. O .OI30/I5,, in the caqe of Moulana Minorities Welfare and Educational sodety vs. Uritdn of Indie and Othcrs, wherein the Ilon'ble C-ourt hetd as followi:. (i) the impugned order, dated 23.08.2025 is modified io rhe extent that the petitioner shall deposit l0% of the outstanding aihodnt within a period of four (04) weeks lrom the date of the orderj and (2) Tlie appellate authority shall dispose of the appeal within a period of three (03) monttrs from the darc of receipt of a t opy of this order. ,-:, ll. Further, it is observed that the assessee's latest financials retlect a bank balance of Rs.53.79 ctrore.&lt on 3f.03.2025 No material has been placed to show that the said balance is earmarked or otherwise unavailable for meeting tdi' obiigations. In these circunlstances' the claim of financial hardship.is n6t siibstantiated, and it cannot be said that rhe assessee is unable to niike even a partial paymen( towards the outsunding demand. During'the hearing o 06.10.2025. the AR was also asked to submit the bank ac,qounts of the assessee along with resPective balances as on that date. However, by email dated l)7'10'2025' only account numbers were furnished, without balances' Thus' once again, the assessee has not established any genuine financial hardship.

9. In view of the above discussion, the assessee's request for complete stay of demand without any payment cannot be accepted' Considering ) 5 HCJ (AKrS, Jl & GNIM, J W.P.No.33131 ot 2025 fte assessee,s contentions,. the binding judicial precdents relied upon, the CBDT guidelines and the financial position of the assessee, it is ,necesiqy to strike a balance between the interests of the Revenue and the assessee. Accordingly, out of the lotal outstanding demand, the , '-'assessge ls dir*ted to paya Sumlof Rs. 8,00,00,000/- (which is less than ttie CBDT S{dplines of 20%) for AY 2023-24 on or before 28.10.2025. The assessee' ahill'n roirtr copies of challans to the Assessiltg 3ffrcer , cgncerne4 with a Copy marked to the undersigned. Subject to sucl'. paymelrt within the stipulated time, recovery of the balance demand shall remain stayed until disposal of the first appeal or 31.01.2026, whichever is earlier,

10. h this regard, it may please be noted that, if the demand as stated above is not, paid on or before 28.10.2025, the stay granted as above, will automatically stands cancelled without any further communication and the Asge;sing 'Offrcer shall initiate necessary lncome Tax proceedings for recovery of the demand- t l. It may bejnoted thu! payable on tlp putstan.ding demand u/s 220(2) etc, are appticable, in this other legal provisions of the Act like interest "!l . r.i.,". ,-. ' :.. case irrespeCtive pf g-ant of the stay o[the demand as mentioned above.

12. All stay petitions stand disposed of pursuant to this order."

3. Learned counsel for the petitioner submits that the petitioner is a charitable organization which is entitled to exemption under Section" 1tr of the lncome-tax Act, 196l (for short 'the Act') as it carries out micro finance activity which is a charitable activity.not being a business in terms of Section { { 2(15) of the Act..Therpetitioner also has registration under Section 12A of the Act. Reference is made to the judgment dated 10.07.2013 passed by the erstwhile High Court of 6 HCJ (AIiS, Jt& Glrn. J W P.No.33l3t of 2025 Andhra Pradesh in ITTA.No.304 of 2013 in the case of the same petitioner. The leamed counsel further submits that the impugned order would lead to onerous financial hardship to the petitiorrcr as it is a charitable organization. It is further submitted that CIT (Exemption) did not ask ttre petitioner to provide a bank statement in the hearing on 06.10.2025 but only the bank account numbers. Therefore, CIT (Exemption) has not accorded due consideration to the grounds urged by the petitioner by reiterating the earlier order dated 23.08.2025 directing the petitioner to make a partial payment of Rs.8.00 crore. Therefore, the impugned order may be set aside and stay til'recovery of the impugned demand may be granted pending disposal ofthe appeal.

4. Learrred counsel for the Income Tax has opposed the prayer. Hc has taken this Court to the contents of the impugned order and submiued that the petitioner failed to demonstrate the claim of financial incapacity to meet the tax demand partially. The CIT (Exemption) has rightly observed that contentions on merits are to be dealt with in the appellate proceedings and not while disposing of the stay petition. The 7 HCJ {AKrS, J} & CMM, J w.P.No.3313l of 2025 petitioner also did not show the bank balance in its accounts during the course of personal hearing on 06.10.2025 to demonstrate its , financial , inc.apacity. The direction to pay Rs.8.00 crore is less than 20P/o of the total demand recoverable as per GBDT guidelines for the relevant Assessment year 2023-24. Therefore, this court may refuse to interfere in the impugned order. 5 We have considered the .suUmissions of the learned counsel for the parties.

6. A perusal of the relevant part of the impugned order, extracted hereinabove, shows. that the petitioner has not been able to produce the bank statements reflecting the balance in "\ \& its accounts even during thd,lcourse of hearing to make out a , I case of financial incapacity. The bank statement of the petitioner reflected the balance of Rs.53.79 crore as on

31.03.2025. The contentions as to the exemptions permissibte to the petitioner as a charitable organization are matters which are pending before the appellate authority. Therefore, CIT (Exemption) has refrained from making any comments thereupon. The appeal is pending and in the absence of any 8 HCJ (AKrS, J) & GMM, J W.P.No.33l3l of 2025 'r*! serious financia[ incapacity, a direction to make partial payment of Rs.8.00 crore which is less than 20% of the total demand of Rs.53,74 ,67,1201- is commensurate with the requirement oi balance between the interests"of Revenue and the assessee during pendency of the appeal. Therefore, this Court is not inclined to interfere in the matter. The appellate authority would endeavour to dispose of the appeal reasonable time-bound manner. With the aforesaid observation, the instant Writ Petition is dismissed. There shall be no order as to costs. Miscellaneous applications, if any pending, shall stand closed. //TRUE COPY// I l I To, 1 The Commissioner of lncome Tax (Exemptions), Basheerbagh, Hyderabad, Telangana. REDDY i,tsecnoN oFFrcER Aayakar Bhavan,

2. The Assessment Unit, lncome Tax Department, Nationale-Assessment Center, Room No.401, 2ndFloor, E-Ramp, Jawaharla! Nehru Stadium, New Delhi-110 003.

3. fh_e lfnqip^al chief commissioner of lncome Tax, (Exemptions), R.No 2so4, E-2, Block 25th Floor, Civic Centre, New Delhi.

4. The secretary, Ministry of Finance, Government of lndia, North Block, New Delhi-110 001.

5. One CC to SRI AKRUTI AGARWAL, Advocate. [OPUC] 6. One CC to SRI VIJHAY K PUNNA (SEN|OR SC FOR CB|C). tOpUCl 7. One CC to SRI N.BHUJANGA RAO, Deputy/Additional Solicitor General of lndia, High Court for the State of Telangana at Hyderabad. IOPUC]

8. Two CD Copies. t# Ie HIGH COURT DATED:0411112025 [3 Et ru[ It -i, (" t, ,. l< .q :- a,1. x' ORDER WP.No.33131 ot 2025 DISMISSING THE WRIT PETITION WITHOUT COSTS fA \ t-\\ n l't