Bharat Electronics Limited Vs DCIT (Karnataka High Court)
The Karnataka High Court partly allowed the petition challenging the jurisdictional AO’s order dated 19.06.2026 and PCIT’s order dated 17.07.2026 concerning stay of a tax demand. The AO had marked 90% of the demand of ₹1,52,04,95,690 as stayed and 10%, amounting to ₹15,20,49,569, as collectible, subject to deposit. The PCIT upheld the terms and permitted payment of the 10% amount in two instalments.
The Court observed that neither the AO nor the PCIT had given reasons for requiring 10% of the demand to remain collectible. It held that where authorities are required to decide based on parameters under the relevant circulars, they must provide reasons.
The Court therefore quashed the PCIT’s order dated 17.07.2026 and restored the petitioner’s application for reconsideration under Clause (C) of the Office Memorandum dated 29.02.2016. The PCIT was directed to hear the petitioner and decide the application within seven days by a reasoned order. The petition was allowed in part.
FULL TEXT OF THE JUDGMENT/ORDER OF KARNATAKA HIGH COURT
The petitioner, a public sector undertaking, is aggrieved by these two orders: faJ the jurisdictional Assessing Officer’s Order dated 19.06.2026 [Annexure – B] and fbJ the order by the Principal Commissioner of Income-tax, Bengaluru-1 dated 17.07.2026 [Annexure – A]. The jurisdictional Assessing Officer has disposed of the petitioner’s application for stay stipulating that 90% of the amount in demand [Rs.1,36,84,46,121/-] is marked as stayed and the balance 10% [Rs.15,20,49,569/-] is marked as collectible.
2. The jurisdictional Assessing Officer’s order in effect states the demand under the Assessment Order is stayed subject to deposit of 10% of the demand recording that the petitioner’s appeal against the Assessment Order is pending. The petitioner has filed an application with the Principal Commissioner of Income-tax, Bengaluru-1, who, while upholding the terms of the order of stay, has permitted the petitioner to pay 10% in two installments viz., on 15.10.2026 and 31.12.2026. It is not in dispute that the petitioner’s application and the subsequent request for modification are dealt in terms of the Office Memorandum dated 29.02.2016 and the Corrigendum issued thereto on the quantum.
3. Mr. Prashanth S, the learned counsel for the petitioner, proposes to elaborate on why the jurisdictional Assessing Officer and the Principal Commissioner of Income-tax, Bengaluru-1, should have reduced the term of deposit below 10% of the demand under the Assessment Order underscoring that when prima facie case and financial burden are shown, it would definitely be within the jurisdiction of the Principal Commissioner of Income-tax, Bengaluru-1, to reduce the requirement for deposit below the threshold of 20% of the demand pending in appeal.
4. However, this Court has examined the merits of the petitioner’s grievance with the orders of both the jurisdictional Assessing Officer and the jurisdictional Principal Commissioner of Income-tax, Bengaluru-1 on perusal of the records and upon hearing Mr. M. Dilip, a learned Standing counsel who accepts notice for the respondents. This Court must observe that both the jurisdictional Assessing Officer and the jurisdictional Principal Commissioner of Income-tax, Bengaluru-1, Bengaluru have not reasoned why only 90% of the amount in demand must be marked as stayed and 10% as collectible. This Court is of the considered view that when the Authorities are required to reason based on certain parameters under the relevant Circulars, they must decide by giving reasons.
5. As reasons are not forthcoming in both the impugned orders, there is occasion for interference. At this stage, both Mr. Prashanth S. and Mr. M. Dilip are heard on the terms for interference. This Court concludes that the interference must be with the Order of the Principal Commissioner of Income-tax, Bengaluru-1 dated 17.07.2026 restoring the petitioner’s application which must be considered in terms of Clause (C) of the Office Memorandum dated 29.02.2016 after extending an opportunity to the petitioner by a reasoned order. Further, Mr. Prashanth S submits that written submissions are filed in the pending appeal and the final outcome is expected soon. This Court is of the view that the Principal Commissioner of Income-tax, Bengaluru-1 must hear the petitioner on the application and decide expeditiously by a reasoned order. Hence, the following.
ORDER
(A) The petition is allowed in part and the Order dated 17.07.2026 [Annexure – A] by the Principal Commissioner of Income-tax, Bengaluru-1 is quashed restoring the petitioner’s application for reconsideration stipulating that the petitioner, without any further notice of hearing, shall appear before the Principal Commissioner of Income-tax, Bengaluru-1 on 03.08.2026.
(B) The Principal Commissioner of Income-tax, Bengaluru-1 shall decide on the restored application within the next seven [7] days by a reasoned order.
[C] It is needless to observe that there cannot be any precipitation until the petitioner’s restored application is reconsidered.
