Clearmedi Healthcare Private Limited Vs DCIT (Delhi High Court)
Stay of Demand Cannot Be Denied Mechanically — 20% Pre-Deposit Not a Mandatory Condition under Section 220(6): Delhi HC
The Hon’ble Delhi High Court held that the impugned order rejecting the stay application solely on the ground of non-payment of 20% of the disputed demand was non-speaking, mechanical, and unsustainable in law. The Court reiterated that CBDT Office Memorandums dated 29.02.2016 and 31.07.2017 neither prescribe nor mandate a fixed pre-deposit and cannot operate as a fetter on the quasi-judicial discretion vested in the Assessing Officer under Section 220(6). *It was emphasised that the AO is duty-bound to objectively examine the prima facie merits of the case, balance of convenience, undue hardship, and likelihood of success in appeal.* Mechanical reliance on administrative instructions, without due application of mind to relevant considerations, was held to be impermissible. The failure to discharge this statutory obligation rendered the impugned order arbitrary. Accordingly, the order was set aside and the matter remitted to the AO for fresh consideration in accordance with settled legal principles.
FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT
1. The petitioner has filed this petition, with the following prayers:-
“a. Issue a Writ of and/or Order and/or Directions in the nature of Certiorari, Prohibition, Mandamus or any other appropriate Writ, Order or Direction for setting aside and/or quashing the Impugned Order dated November 13, 2025 passed by Respondent No. 1, in complete disregard of the stay application(s) filed by Petitioner, and not treat the Petitioner/Assessee as “assessee-in-default” as per section 220(6) of the Act, and keep the demand in abeyance till the appeal assailing the assessment order is adjudicated upon by the Ld. CIT(A), and/or
b. Issue appropriate Writ, Order or Direction in the nature of Mandamus and/or any appropriate Writ, Order or Direction directing the Respondent(s) to consider the Application for stay of demand dated November 28, 2025, filed by the Petitioner before PCIT, and till such time keep the demand in abeyance and/or
c. Issue appropriate Writ, Order or Direction in the nature of Mandamus and/or any appropriate Writ, Order or Direction directing the Ld. CIT(A) for expeditious disposal of the Appeal filed by the Petitioner in a time-bound manner and keep demand in abeyance till the disposal of the said appeal and/or
d. Such further or other relief as this Hon’ble Court may deem fit and proper in the facts and circumstances of the case.
2. The challenge in this petition is primarily to the order dated 13.11.2025 (impugned order) whereby the respondents have rejected the application filed by the petitioner seeking stay of the demand till the disposal of the appeal pending before the Commissioner of Income Tax (Appeals) [CIT(A)]. It is noted that the petitioner filed its ITR for the Assessment Year (AY) 2023-24 on 21.11.2023 declaring a loss of Rs.58,35,700/-, which was selected for scrutiny.
