Court clarifies payment directive under Income Tax Act, dismisses challenge, allows application for stay.

The Court dismissed the petitioner's challenge under Article 226, emphasizing that the 20% payment directive was for stay under Section 220(6) of the Income Tax Act, not a pre-deposit for appeal under Section 246A. The petitioner was permitted to file an application for stay of the remaining 80% of the demand based on the Cooperative Society's financial condition. The writ petition was dismissed without costs, allowing for further action under Section 220(6).

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Issues:
1. Challenge to assessment order under Income Tax Act, 1961.
2. Pre-condition of deposit for filing an appeal.
3. Stay of demand under Section 220(6) of the Act.
4. Jurisdiction under Article 226 of the Constitution of India.

Analysis:
1. The petitioner, a Cooperative Society, challenged an assessment order dated 29.07.2021 under Section 144 of the Income Tax Act, 1961, through a writ petition seeking a Writ of Certiorari to quash the order.
2. The petitioner argued against a pre-condition of deposit for filing an appeal, contending that Section 246-A of the Act does not mandate a 20% deposit. The assessing officer directed the petitioner to pay 20% of the demand, leading to the writ petition.
3. The respondents stated that while no pre-condition of deposit is required for filing an appeal, seeking a stay of demand under Section 220(6) necessitates approaching the assessing authority. The assessing officer directed the petitioner to pay 20% of the demand for a stay.
4. The Court noted that the petitioner had filed an appeal without paying the 20% demand. Referring to a previous judgment, the Court clarified that the pre-deposit condition does not apply to filing an appeal but is for granting a stay under Section 220(6) of the Act.
5. The Court emphasized that the assessing authority's directive for 20% payment was not a pre-deposit for appeal under Section 246A but a condition for stay under Section 220(6). Thus, the petitioner's challenge under Article 226 was dismissed.
6. The Court allowed the petitioner to file an application under Section 220(6) for stay of the remaining 80% of the demand, considering the financial condition of the Cooperative Society. The writ petition was dismissed with no costs, allowing for further application under Section 220(6).

This detailed analysis of the judgment from the Madras High Court addresses the issues raised by the petitioner regarding the assessment order, pre-condition of deposit for appeal, stay of demand under Section 220(6), and the jurisdiction under Article 226 of the Constitution of India.

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