Spandana Rural and Urban Development Organisation vs. Commissioner of Income Tax (Exemptions)

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 / /

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.

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.

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.

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 (

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 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.

In view of the above discussion, the assessee's request for complete stay of demand without any payment cannot be accepted' Considering 4

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

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 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 6 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.

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.

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 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 , I 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, direction to make partial a 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 lna To, 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. REDDY //// i,tsecnoN oFFrcER 1 The Commissioner of lncome Tax (Exemptions), Basheerbagh, Hyderabad, Telangana. Aayakar Bhavan,

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.

The secretary, Ministry of Finance, Government of lndia, North Block, New Delhi-110 001. 5. One CC to SRI AKRUTI AGARWAL, Advocate. [OPUC]

One CC to SRI VIJHAY K PUNNA (SEN|OR SC FOR CB|C). tOpUCl

One CC to SRI N.BHUJANGA RAO, Deputy/Additional Solicitor General of lndia, High Court for the State of Telangana at Hyderabad. IOPUC]

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