The Patna High Court has directed that no coercive action be taken against a Company over an outstanding income tax demand of ₹29,23,94,340 while its application for interim relief is considered.
The bench of Justice Rajeev Ranjan Prasad and Justice Sunil Dutta Mishra directed the Assessing Officer or the Income Tax Appellate Tribunal (ITAT), as the case may be, to decide the application within six weeks of receiving a copy of its judgment.
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The dispute concerns assessment year 2012–13. The company contends that several income tax notices and orders were issued in the name of the erstwhile Bihar State Electricity Board, although the Board had been dissolved with effect from November 1, 2012. The High Court did not decide whether those proceedings are invalid. That issue remains before the ITAT.
A Bihar government scheme transferred the former Electricity Board’s properties, rights, liabilities, obligations, proceedings and personnel to five successor companies, including Bihar State Power (Holding) Company Limited.
The company argued that an order dated February 10, 2022, under Section 154 of the Income Tax Act was made in the former Board’s name. It also sought rectification of other notices and orders concerning assessment year 2012–13 on the ground that they were issued or passed in the name of an entity that no longer existed.
Relying on the Supreme Court’s decision in Principal Commissioner of Income Tax v. Maruti Suzuki (India) Limited, the company submitted that an assessment made in the name of a non-existent entity would be void from the outset. It asked the Income Tax Officer to decide its rectification application dated April 2, 2025.
The company also challenged the prospect of recovery while the dispute was pending. It pointed to a notice dated May 8, 2026, seeking payment of the ₹29.24 crore demand and warning of action under the Income Tax Act if it failed to comply.
Its appeal against the February 2022 order was already before the ITAT’s Patna Bench. The company told the High Court that the appeal had previously been heard but was released for a fresh hearing because a judgment could not be delivered within 90 days. It said the matter was subsequently heard on August 25, 2026.
The Income Tax Department opposed the writ petition, arguing that the company had raised the same issues before the ITAT. On the recovery concern, the department submitted that the company could seek interim relief from the Tribunal or the Assessing Officer. The company responded that an interim application before the Assessing Officer had not been considered.
The bench declined to examine the challenge to the tax proceedings at this stage. It observed that the validity issue was pending before the ITAT and that comments from the High Court could interfere with the Tribunal’s independent consideration.
The bench nevertheless addressed the company’s concern about recovery. It directed the Assessing Officer or the ITAT, whichever is considering the interim application, to decide it within six weeks from the receipt or production of the judgment. Until then, the court ordered that “no coercive action, in any form” be taken against the company.
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