No Stay on Income Tax Demand as Assessee itself Proposed Instalment Payment before AO: Calcutta HC [Read Order]

The Calcutta High Court refused to stay the income tax demand as the assessee itself proposed the payment of Outstanding dues before the Assessing Officer. The court also noted that the appeal of assessee before the Income TaxAppellate Tribunal has not yet been restored.

Justice Om Narayan Rai, while entertaining writ petition seeking to stay the demand raised by the income tax department against the assessee - petitioner, A.D. Electrosteel Co. Pvt. Ltd directed the department not to treat the court order as to stay in demand. The bench granted liberty to take the actions independently.

The petitioner challenged notices and orders under Section 156 of the Income TaxAct, 1961. As per the facts, the petitioner challenged the order passed by the department for the AY 2012-13 before the Commissioner of Income tax (Appeals) [CIT(A)]. The same was dismissed for non-prosecution.

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Further, the assessee, as a second remedy approached the income tax appellate tribunal, where the same was also dismissed for non-prosecution by an order dated August 20, 2018. The assessee further filed an application to restore the appeal with a delay of 1757 days. However the same was again dismissed on April 22, 2024.

The petitioner challenged the same before the Division Bench of Calcutta High Court. On May 6, 2025, the court disposed of the appeal by setting aside the order dismissing restoration of appeal. The court also permitted to file a restoration application before the tribunal and the same is pending now.

Meanwhile, on the basis of the assessment order dated March 25, 2025, demand notices were issued to the assessee.

Adv. Arik Banerjee, the petitioner’s counsel submitted that the restoration of appeal application is still pending before the ITAT. In such a circumstance, the department is proceeding with the recovery, said the counsel. Also, the petitioner has filed an application under Section 220(6) to stay the demand.

On the other side, the department’s counsel, Mr. Dudhoria acknowledged the application filed for staying the demand and said that the petitioner could not have filed those as the bank account was being attached.

The counsel further submitted that through a letter dated October 17, 2025, which was written on behalf of the petitioner and the order dated November 25, 2025, the petitioner itself sought a monthly payment option vide e-mail dated October 17, 2025.

It has undertaken to make payment of the outstanding demand of Rs. 8,73,40,410/- (including interest under Section 220(2) of the said Act of 2017) in installments starting from 20th November 2025 of Rs, 50 lakh and remaining amount up to 30th April 2026 with a minimum payment of Rs. 75 lakh per month, submitted the department counsel. Also, through that representation, the bank account of the assessee was also lifted.

Therefore, the department submitted that stay on demand is not necessary.

However, rebutting the department’s claim, the petitioner’s counsel said that the petitioner never undertook to pay the outstanding demand.

Thus, the high court hearing all the submissions concurred with the assertions of the Department decided that as the ITAT appeal has not yet been restored and petitioner itself offered to pay the outstanding demand in instalments, ‘no mandatory order of stay of the demand can be passed by this Court.’

At the same time, the court allowed the department to take decision on the application for stay of notices issued under Section 156 within 4 weeks. Accordingly the petition was disposed of.

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