Summary: The court dealt with a case involving the Vasavi Group, where a huge tax penalty was under dispute. The initial pause on the penalty was lifted because the company didn't attend appeal meetings, but they now have a chance to fix this.
The Vasavi Group faced a massive tax penalty of Rs. 428,98,50,568 under Section 271DA of the Income Tax Act. This was for various assessment years, and they initially got a pause on this demand.
The Principal Commissioner of Income Tax (Central), Hyderabad, granted a complete pause on the recovery of this penalty on March 30, 2025. The condition was that Vasavi Group had to cooperate during appeal meetings.
"The taxpayer will cooperate during the appeal meetings without asking for delays."
However, Vasavi Group failed to attend several appeal meetings due to personal reasons. This non-compliance led to the pause being canceled on October 21, 2025, and a demand notice was issued for Rs. 15,34,30,000.
The demand notice required Vasavi Group to pay at least 20% of the penalty by October 29, 2025, as per CBDT guidelines.
Vasavi Group argued that the demand notices violated basic fairness principles and didn't follow proper steps under Section 222 of the Act. They also claimed financial difficulty.
The court, led by Chief Justice Sri Aparesh Kumar Singh and Justice G.M. Mohiuddin, decided that the Vasavi Group should take part in appeal meetings without delay. They can apply to cancel the demand notices by November 7, 2025.
"The petitioners should participate in the appeal meetings diligently."
The PCIT (Central) will make a new decision within two weeks of receiving the application. Until then, recovery actions are on hold.
The court's decision offers Vasavi Group a chance to address their issues by participating in the appeal meetings and potentially having the demand notices canceled.
