Vijay Sai Prasad Kastury vs. The Union of India

13447l IN THE HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD . (Special Original Jurisdiction) MONDAY, THE FIFTH DAY OF OCTOBER TWO THOUSAND AND TWENTY SIX PRESENT THE HONOURABLE SRI JUSTICE P.SAM KOSHY AND THE HONOURABLE SRI JUSTICE NARSING RAO NANDIKONDA WRIT PETITION NO: 33348 OF 2026 Between: Vijay Sai Prasad Kastury, S/o Venkata Chalapathy Kastury, aged about 58 years, Occ. Salaried Employee, R/o Apartment 105, C18 Tower, Nab Al Yab Street, Corniche, Abu Dhabi, United Arab Emirates. (PAN. ATAPK6110E) ...PETITIONER AND 1. The Union of lndia, represented by its Secretary, Ministry of Finance, Department of Revenue, North Block, New Delhi - 1 10 001 . 2. The Commissioner of lncome Tax, (lnternational Taxation / lT and TP), Hyderabad, Aayakar Bhavan, Opposite L.B. Stadium, Basheerbagh, Hyderabad - 500 004. 3. The Assistant Director of lncome Tax, (lnternational Taxation)-1, Hyderabad, Aayakar Bhavan, Opposite L.B. Stadium, Basheerbagh, Hyderabad - 500 004. 4. The lncome Tax Officer, (lnternational Taxation)-'1 , Hyderabad, Aayakar Bhavan, Opposite L.B. Stadium, Basheerbagh, Hyderabad - 500 004. ...RESPONDENTS Petition under Arlicle 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, Order or Direction, more particularly one in the nature of a Writ of Mandamus declaring the action of 3rd Respondent in issuing order dated 04.09.2026 bearing DtN and Letter No. ITBA/COMlFl17l2026-2711092978526(1) under section 220(6) of the lncome-tax Act, 1961 for the Assessment Year 2020-21 as illegal'

arbitrary, highhanded anc violative of Articles 14 and 265 of the Constitution of lndia and set aside the same and consequently direct the Respondents to stay the recovery of the entire demand of Rs.12,58,1 1,700^raised pursuant to the assessment order dated 26.05.2026 bearing DIN ITBA/AST/5114712026-2711089197526(1)titt the disposal of the appeal pending before the Commissioner of lncome Tax (Appeals). l.A. NO: 1OF 2026 Petition under Secti,cn 151 CPC praying that in the circumstances stated in the affidavit filed in suppo( o1'the petition, the High Court may be pleased to suspend the operation of the orcer dated 04.09.2026 bearing DIN & Letter No. ITBAICOMIF 11712026-2711092978526(1) passed by the 3rd Respondent. Counsel for the Petitioner: SRI KAILASH NATH P.S.S Counsel for the Respondent No.1 : SRI N.BHUJANGA RAO, DEPUTY SOLICITOR GENERAL OF INDIA Counsel for the Responclent Nos.2 TO 4: SRI VIJHAY K.PUNNA, SENIOR SC FOR ITD The Court made the following: ORDER

IN THE HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD T EHON, LE RI USTICE P.SAM os Y AND E R IC N s G o N K D wRIT PETITION No.3334a of 20 6 (CNR No. HBHCoroesszrzozsl DATE: O5'1O'2O26 Between: Vijay Sai Prasad Kastury' ... Petitioner AND L U The Union of India, represented by its Secretary' fqiniat.y of Finance, Department of Revenue'- i.i".lt ril".L, New Delhi - 110 oo1 and 3 others' ... ResPondents 9[9EB: (pe. rio n'bte s lustice P sam Koshv) Heard Mr. Kailash Nath P S'S'' learned counsel for the petitioner; and Mr. Vijhay K Punna' learned Senior Standing counsel for Income Tax Department appearing fOr the respondents' 2. The instant ls a Wrlt Petition which has been filed by the petitioner under Article 226 of the Constitution of India assailing theorderdated04.0g.2026,passedbyrespondentNo.3,whereby the application seeking stay of demand' pending ths 6ppeal' filed

Page 2 of 5 by the petitroner under Section 220(6) ot the Income Tax Act, 1961 (for short the 'Act') has been decided to the extent of the petitioner being subject to payment of 2Oo/o of the outstanding dispute demand within 7 ,lays and the recovery of the remaining balance of amount shall rem ain stayed. 3. At the outset, learned counsel for the petitioner contended that the decision of respondent No.3 is solely relying upon the CBDT Circulars darted 29.O2.2016 and 31.07.2017 which prescribes pre-deposit of 20o/o in order to get the benefit of stay. That the by va riou s High Courts, has been held that an said Circulars have been dealt with inclu d in g application this High Court, wherein it under Section 220(6) of the Act has to be decided based upon prima facie case that the petitioner shall make out before the Assessing Officer and also the materials establishing prima facie case, and the balance of convenience and irreparable loss if interim protection is not granted. 4. It was further contented by the learned counsel for the petitioner that the Courts have taken a view that since the statute does not prescriber for a pre-deposit, the insistence on the basis of a CBDT instructiors for making pre-deposit of 2Oo/o is bad in law for the reason that the Assessing Officer thereafter does not get any chance of applyinc his mind to ascertain whether the petitioner has

Page 3 of 5 beenabletomakeoutastrongcaseforgrantofStayatall,andin every case irrespective of whether there is merit or not the assesse Shouldhavetomakepre-depositof2oo/owhileSeekingstayofthe recovery of remaining portion of demand ' 5. On the other hand, the learned Senlor Standing Counsel for Income Tax Department contended that so far as the CBDT instructionsareconcerned,therearejUdgmentswhichhavenot once but on repeat occasions held that the CBDT instructions are binding upon the Officers of the authorities and any decision has to be taken keeping in view the instructions which are issued from time to time, which includes the two Circulars involved in the present case i.e. the Circulars dated 29'02'2016 and 37'07 '2077 ' 6. Having heard the contentions put forth on either side and on perusal of records, undoubtedly this Court is of the firm view that in the course of deciding the impugned order dated 04 'O9 '2026 respondent No.3 had solely relied upon the two Circulars dated 29.02.2016 and 3t.07'20L7' Not once has the respondent No 3 pondered into the aspect whethet a prima facie case has been made out, whether balance of convenience has been established andalsoinrespectofirreparableloss,ifany,madeoutbythe petitionerinthecourseofpressingthestayapplication.Even otherwise there does not seem to be any application of mind in the

Page 4 of 5 course of deciding the application under Section 220(6) of the Act, as the decision has been primarily based upon the two Circulars a lone 7. We are, therefore of the considered opinion that based upon the judicial pronouncements rendered on the said subject, more particularly dealing with two Circulars dated 29.02.2016 and 3I.O7.2077, whereby the judicial pronouncements convey the view of the Courts thet, in the course of deciding the stay application the authorities cann()t be guided by the CBDT instructions alone, they have to apply tht-.ir mind independently while deciding the same. 8. Therefore, the impugned order dated 04.09.2026 passed by respondent No.3, to the aforesaid extend would not be sustainable and it is accordirrgly set aside, respondent No.3 to consider the application filed under Section 220(6) of the Acl: afresh without being in any manner influenced by the Circulars dal.ed 29.02.2016 and 3t.O7.2Ot7 Subject to the respondent No.3 taking up the matter, the petittoner would be at liberty to produce whatever materials he has to establish his case f or a prima facie stay . 9. With the aforesaid observations and directions, the present The matter stands remitted back to Writ Petition accordingly stands allowed

Page 5 of 5 10. As a sequel, miscellaneous petitions pending if any, shall stand closed. However, there shall be no order as to costs' SD/-T.SRINIVASA REDDY ASSISTANT REGISTRAR //TRUE COPY// To SEC FFICER The Secretary, Union of lndia' I\'4inistry of Finance' Department of Revenue' North Block, New Delhi - 110 001 2. The Commissioner of lncome Hyderabad, AaYakar Bhavan, OP [oPUC] ijne CC to SRI VIJHAY K.PUNNA, SENIOR SC FOR ITD [OPUC] Two CD CoPies LP hF6 Tax, (lnternationat Taxation / lT and TP), posite L.B. Stadium, Basheerbagh, Hyderabad - 1 500 004. 3. The Assistant Director of lncome Tax, (lnternational Taxation)-1 ' Hyderabad - nryuk"i gl.ruvan, Opposite L.B. Stadium, Basheerbagh' Hyderabad - 500 004' 4. The lncome Tax officer, (lnternational Taxation)-'l , Hyderabad, Aayakar Bhavan' Oppotit" L.B. Stadium, Basheerbagh, Hyderabad-- 500 004' s. oll Cc to sRl KAILASH NATH P.s.s, Advocate [oPUC] 6. o;; cc to snr N.BHUJANGA RAo, DEPUTY sollclroR GENERAL oF INDIA 7 8 PSK. PB

HIGH COURT DATED: 0511012026 ORDER WP.No.33348 of 2026 ALLOWING THE WRIT PETITION WITHOUT COS]'S a)'r- ttrc A a f, (J 2 n oci 2[26 >z * * (.\ur\'J\, n.b \\or 'vt' l I l