HC Reduces Pre-Deposit to 5% in Stay of Demand Due to High-Pitched Assessment

Case Details: Bali Nagwanshi v. Union of India - [2025] 177 taxmann.com 660 (Chhattisgarh)

Judiciary and Counsel Details

• Deepak Kumar Tiwari, J.
• Nikhilesh Begani & Apurv Goyal, Advs. for the Petitioner
• Ajay Kumrani, Adv. for the Respondent

Facts of the Case

The assessee filed his return of income under section 139(1). His case was selected for scrutiny under CASS, and a notice was issued under sections 143(2) and 142. An assessment order under Section 144 read with Section 144B was passed, determining the total income of the assessee at Rs. 46.66 crores, as against the returned income of Rs. 27.46 lakhs.

Aggrieved by the assessment order, the assessee filed an appeal before the Commissioner (Appeals) and also moved an application for stay of demand under section 220(6) before the jurisdictional Assessing Officer. The said application was decided with a direction to the assessee to deposit 20 per cent of the total demand. Later, an order was passed, whereby the assessee was directed to pay Rs. 5 lakhs per month until 20 per cent of the outstanding demand was paid, or until the decision of the Commissioner (Appeals) was received, whichever was earlier.

Aggrieved by the order, the assessee filed a writ petition to the Chhattisgarh High Court.

High Court Held

The High Court held that the assessee declared a returned income of Rs. 27,46,480. However, the Faceless Assessment Officer passed an ex parte assessment order determining the total income at Rs. 46,66,01,759, which is about 170 times higher. Undisputedly, the revenue had already seized the assessee’s bank account as well as his immovable property, and his annual income was reported to be Rs. 19 lakhs. Therefore, the condition imposed for hearing the appeal requiring the assessee to pay Rs. 5 lakhs per month until 20 per cent of the outstanding amount is paid appeared to be onerous, causing undue hardship to the assessee in pursuing the appeal against the impugned order.

Considering all the aspects of the matter, the assessee was directed to pay a sum of Rs. 1,00,000 (Rupees One Lakh only) per month, either until 5 per cent of the outstanding demand is paid or the decision of the Appellate Authority is received, whichever is earlier.

List of Cases Referred to

• Pr. CIT v. LG Electronics India (P.) Ltd. [2018] 96 taxmann.com 656 (SC) (para 6)
• Benara Valves Ltd. v. CCE (2006) 13 SCC 347 (para 6).