Patna High Court Grants Interim Protection To Bihar Power Co. Against ₹29.23 Crore Tax Demand

The Patna High Court on 22 September temporarily protected Bihar State Power (Holding) Company Limited from coercive recovery of an income tax demand of Rs. 29.23 crore.

A Division Bench comprising Justices Rajeev Ranjan Prasad and Sunil Dutta Mishra directed the Assessing Officer/Income Tax Appellate Tribunal (ITAT), as the case may be, to consider the company's application for interim protection within six weeks. Until then, no coercive recovery action can be taken against the company. The judges observed:

“This Court directs the Assessing Officer/Income Tax Appellate Tribunal, as the case may be, to consider the application of the petitioner for an interim order within a period of six weeks... In the meantime, no coercive action, in any form, shall be taken against the petitioner.”

The company approached the High Court after receiving a demand notice for Rs. 29.23 crore. It argued that the tax proceedings had been initiated in the name of the erstwhile Bihar State Electricity Board, which had already been dissolved and reorganised.

The Income Tax Department opposed the petition, submitting that the main dispute was already pending before the ITAT. It also submitted that the company could seek interim protection against recovery before the Tribunal or the Assessing Officer.

The High Court declined to examine the validity of the tax demand, noting that any observation on the issue could affect the ITAT's independent consideration of the pending dispute.

Accordingly, the Bench directed the competent authority to consider the company's application for interim protection within six weeks and restrained coercive recovery action against the company until then.

For the Petitioner: Senior Advocate Ajay Kumar Rastogi, assisted by Advocates Anubhav Khowala and Smriti Singh.

For the Income Tax Department: Senior Standing Counsel Archana Sinha @ Archana Shahi, assisted by Advocates Rani Singh and Manish Kumar Parwan.