The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has granted conditional relief against recovery of an income tax demand of ₹66,46,560, directing the assessee to deposit ₹14 lakh before protection against recovery of the remaining amount takes effect.

The bench of Mahavir Singh (Vice President) and Sanjay Awasthi (Accountant Member) ordered that, once the deposit is made, the Revenue authorities must stay recovery of the residual demand and refrain from taking coercive action for its collection.

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The assessee approached the Tribunal after failing to obtain relief from the Commissioner of Income Tax (Appeals), Delhi-29. The first appellate authority had passed its order under Section 250 of the Income Tax Act, 1961, on August 17, 2026, confirming the additions made by the Assessing Officer.

According to the Tribunal’s order, the resulting demand amounted to ₹66,46,560 and had been communicated through a notice under Section 156 dated March 27, 2025.

While challenging the appellate order before the ITAT, the assessee filed a separate application seeking a stay on recovery of the demand. The application included detailed submissions on the merits of the underlying dispute.

Advocate Lakshay Kumar, appearing for the assessee, argued that the case was strong on merits and that the additions made by the Assessing Officer and confirmed by the Commissioner (Appeals) were legally unsustainable. He briefly took the bench through the additions and the findings recorded by the tax authorities.

Senior Departmental Representative E.V. Bhaskar defended the orders of the authorities below. He submitted that the proceedings were confined to deciding whether recovery of the demand should be stayed.

The Revenue also stated that the case against the assessee rested on facts and documents seized during search and seizure proceedings involving certain entry operators identified in the order as the Galaxy group.

The stay order does not describe the individual additions or make a final finding on the evidentiary value of the seized material.

After considering the documents and hearing both sides, the Tribunal clarified that the limited purpose of the proceedings was to determine whether recovery of the ₹66,46,560 demand could be stayed.

Taking account of the overall facts and circumstances, the bench considered it appropriate to direct an immediate deposit of ₹14 lakh. It observed that this amount would be in consonance with the mandate under Section 254(2A) of the Income Tax Act.

The protection granted by the Tribunal is conditional upon payment. The order directs the Revenue authorities to stay recovery of the remaining demand as soon as the assessee deposits ₹14 lakh.

After that deposit, the balance covered by the recovery protection would be ₹52,46,560.

The Tribunal expressly directed that no coercive action should be taken for recovery of the demand remaining after the ₹14 lakh deposit.

The stay will remain in force for 180 days from the date of the order or until disposal of the pending ITAT appeal, whichever occurs earlier. Although the protection becomes operative upon deposit, the order measures the 180-day period from the date of the order.

Accordingly, the assessee must fulfil the deposit condition to obtain the benefit of the recovery stay.

The Tribunal partly allowed the stay application on these terms. Its decision provides interim protection against recovery of the residual demand but does not delete the additions, cancel the tax demand or decide the substantive appeal.

Whether the disputed additions are sustainable will therefore be determined in the appellate proceedings. The present order addresses only the conditions under which recovery may remain suspended while that appeal is pending.

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