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2008 (8) TMI 502 - HC - Income TaxRecovery of tax- A search was conducted in the business premises of the petitioner. In the course of search cash to the extent of Rs. 17.92 lakhs was seized. The assessment order was passed assessing the petitioner’s income at Rs. 7.59 crores as against the returned income of Rs. 10.16 lakhs. A demand notice was issued in respect of the demand of Rs. 4.31 crores on the basis of the assessed income. The Deputy Commissioner issued notices to two banks where the petitioner held accounts. The effect of these notices were that the entire banking operation of the petitioner had come to a stand still. During the pendency of the application for stay of the demand before the Assessing officer, out of the cash seized. i.e. 17.92 lakhs. An amount of Rs. 17 lakhs was adjusted towards the demand by the department. Further a sum of Rs. 2.24 lakhs was recovered from the petitioner. Thereafter, the Assessing officer passed an order on the petitioner’s stay application by staying 50 percent of the outstanding demand. The petitioner also filed an appeal against the assessment order which was pending before the Commissioner (Appeals). On a writ petition contending that the returned income was Rs. 10.16 lakhs where the assessed income was very high pitched and in view of that the petitioner would be entitled to a stay and the notice ought to be quashed. Held that- allowing the petition, that in Instruction No. 96, it had been noted by way of illustration that assessment at twice the amount of the returned income would amount to being substantially higher or high pitched. Therefore, the notices were to be kept in abeyance till the jurisdictional commissioner decided the stay application which was pending before him. Though the petitioner would be permitted to carry on day-to-day business operations and to make payments for statutory liabilities out of the bank accounts, the petitioner shall not withdraw any money for any other purposes from the bank accounts.
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