Interim stay of tax demand subject to security deposit and permitted refund adjustment, with accelerated appeal disposal.

Interim relief granted to the assessee staying the balance tax demand for the relevant assessment year subject to a security deposit arrangement; the court accepted deposit plus permitted adjustment of identifiable refunds towards that deposit and fixed a deadline for payment, failing which the stay ceases. The stay was ordered without deciding merits of limitation objections or assessment validity, and the tax department is authorised to adjust refunds against the demand. The appellate remedy is to be expedited with a request for disposal by the earlier of CIT(A) or ITAT within a specified short period.

---

---

Issues: (i) Whether interim relief in the form of a stay of the balance demand of Rs.377 crores for A.Y. 2017-18 should be granted and on what terms and conditions.

Analysis: The petition challenges rejection of a stay application and raises objection to the Order Giving Effect (OGE) dated 17th December 2025 on limitation grounds under Section 153(5) of the Income-tax Act, 1961, with related references to communication under Section 153(3) and the consequent issuance of a demand under Section 156. The assessment order's validity (alleged unsigned) and pending appeals before the CIT(A) and the ITAT are relevant to the interim position. Balancing the risk to revenue and the petitioner's contentions, a security deposit mechanism was applied as an equitable interim measure. Credit for refunds payable to the petitioner for other assessment years was permitted to be adjusted against the required deposit, and a time limit was fixed for deposit, failing which the stay would not operate. The stay was ordered without adjudicating the merits of the limitation or assessment validity issues and with a direction for expedited disposal of the ITAT appeal.

Conclusion: Interim relief is granted in favour of the assessee on the following terms: on depositing a total of Rs.10 Crores with credit allowed for refunds of Rs.3,63,50,550 and Rs.2,24,92,890 (resulting in a net deposit of Rs.4,11,56,560 to be paid by 31st March 2026), the balance demand for A.Y. 2017-18 shall be stayed until disposal of the appeal before the CIT(A) or the ITAT, whichever is earlier; the Income-tax Department may adjust the refunds against the demand; the ITAT is requested to dispose of the appeal expeditiously, preferably within four months of communication of this order.

---