High Court Declines Parallel Section 154 Writ Intervention But Restrains Coercive Recovery Pending Stay Application
Issue
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Whether the High Court, under its extraordinary writ jurisdiction, should adjudicate a challenge to a Section 154 rectification order when the exact legality and validity of the order is currently pending consideration before the Income Tax Appellate Tribunal (ITAT).
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Whether the Revenue should be restrained from taking coercive recovery action against the outstanding tax demand while the interim stay application remains unaddressed during the pendency of the appeal before the Assessing Officer or the Tribunal.
Facts
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Dissolution & Rectification Application: For Assessment Year 2012-13, the assessee filed a rectification application under Section 154, alleging that income tax assessment proceedings were invalidly continued in the name of the erstwhile Bihar State Electricity Board after its legal dissolution.
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Adverse Section 154 Order: The Assessing Officer passed an order under Section 154 dated February 10, 2022, rejecting/adjudicating the assessee’s claims.
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Parallel Appeal before Tribunal: The assessee challenged the Section 154 order before the Income Tax Appellate Tribunal (ITAT), where the appeal remained pending for adjudication.
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Writ Petition: The assessee simultaneously approached the High Court through a writ petition seeking directions to the Revenue regarding the Section 154 application and challenging the order dated February 10, 2022.
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Threat of Coercive Action: The assessee sought interim protection against coercive tax recovery because its stay application before the Assessing Officer remained pending without any formal decision.
Decision
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Writ Jurisdiction Refused During Pending Appeal: The High Court declined to entertain the substantive challenge to the Section 154 order under its extraordinary writ jurisdiction, holding that parallel judicial interference might prejudice or affect the Tribunal’s independent consideration of the pending appeal [In favor of Revenue].
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Interim Protection Granted: The High Court directed the Assessing Officer or the Income Tax Appellate Tribunal, as the case may be, to consider and pass orders on the assessee’s interim stay application within six weeks [In favor of assessee].
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No Coercive Action: In the interim, the Court ordered that no coercive recovery action in any form shall be taken against the assessee until the stay application is decided [In favor of assessee].
Key Takeaways
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Avoidance of Parallel Remedies: High Courts will refrain from exercising writ jurisdiction under Article 226 when the same statutory order is actively sub-judice before an appellate forum like the ITAT.
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Protection Against Unaddressed Recovery: Tax authorities cannot undertake coercive recovery measures while an assessee’s stay application remains pending without an official hearing or decision.
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Time-Bound Adjudication: Courts mandate a time-bound disposition (typically within six weeks) for interim stay applications to ensure procedural fairness to taxpayers facing high-value tax demands.
HIGH COURT OF PATNA
Bihar State Power (Holding) Company Ltd.
v.
Income-tax Officer
Rajeev Ranjan Prasad and Sunil Dutta Mishra, JJ.
Civil Writ Jurisdiction Case No. 8252 of 2026
SEPTEMBER 22, 2026
Ajay Kumar Rastogi, Sr. Adv., Anubhav Khowala and Ms. Smriti Singh, Advs. for the Petitioner. Mrs. Archana Sinha, Sr. SC, Ms. Rani Singh and Manish Kumar Parwan, Advs. for the Respondent.
JUDGMENT
Rajeev Ranjan Prasad, J. – Heard Mr. Ajay Kumar Rastogi, learned Senior Counsel assisted by Mr. Anubhav Khowala, learned counsel for the petitioner and Ms. Archana Sinha, learned Senior Standing Counsel for the Department of Income Tax.
2. The petitioner in the present writ application has prayed for the following reliefs:-
| (ii) | For issuance of an appropriate writ, order or direction restraining the Respondents from taking any coercive steps pursuant to Notice dated 08.05.2026 (“Recovery Notice”) issued by Respondent No.1 directing payment of outstanding demand of Rs.29,23,94,340/- for the Relevant A.Y., till consideration of the rectification application filed by the Petitioner under Section 154 of the Act and/or till the next effective date of hearing of the Petitioner’s appeal before the learned Income Tax Appellate Tribunal, Patna Bench, Patna (“Ld. ITAT”) in ITA No. 14/pat/2023. Copy of the Notice dated 08.05.2026 issued by Respondent No.1 is annexed and marked as Annexure-P2. |
| (iii) | For issuance of an appropriate writ, order or direction taking note of the substantial jurisdictional issue arising from continuation of proceedings in the name of erstwhile Bihar State Electricity Board (“BSEB”) after its dissolution w.e.f. 01.11.2012, which issue is presently pending consideration before the learned Income Tax Appellate Tribunal, Patna Bench, Patna in ITA No.14/pat/2023 as also before Respondent No.1 by way of rectification application dated 02.04.2025 filed vide letter no.1011 under Section 154 of the Act. |
| (iv) | For issuance of any other appropriate writ, order, or direction which this Hon’ble Court may deem fit and proper in the facts and circumstances of the present case.” |
3. In course of his submissions before this Court, Mr. Rastogi, learned Senior Counsel for the petitioner submits that the order under Section 154 of the Income Tax Act, 1961 (hereinafter referred to as the ‘I.T. Act’) dated 10.02.2022 pertaining to the assessment year 2012-13 has been made in the name of M/s Bihar State Electricity Board.
4. Referring to the notification of the Department of Energy, Government of Bihar dated 30.10.2012 as contained in Annexure ‘P3’, learned Senior Counsel submits that by virtue of the power conferred by Sections 131, 133 and other applicable provisions of the Electricity Act, 2003, the Government of Bihar has made a scheme whereunder the properties, interests, rights, assets, liabilities, obligations, proceedings and personnel of the Bihar State Electricity Board have been transferred to the transferees. The transferees are defined under paragraph ‘2 (p)’ of the said scheme. The Bihar State Power (Holding) Company Limited, Bihar State Power Generation Company Limited, Bihar State Power Transmission Company Limited, South Bihar Power Distribution Company Limited, North Bihar Power Distribution Company Limited are the transferees.
5. Learned Senior Counsel submits on the strength of the judgment of the Hon’ble Supreme Court in the case of Pr. CIT v. Maruti Suzuki India Ltd (SC)/(2020) 18 SCC 331 that the assessment order passed by the Assessing Officer in the name of a non-existent entity would be void ab initio.
6. It is submitted that the order under Section 154 of the I.T. Act dated 10.02.2022 is under challenge before the learned Income Tax Appellate Tribunal. Earlier, the learned Tribunal had heard the matter but because the judgment could not be delivered within a period of 90 days, the case was released vide order dated 27th February 2026. It is submitted that the hearing of the appeal has again been taken on and it was lastly heard on 25th August 2026.
7. It is submitted that, in the meantime, as advised, the petitioner has filed a petition under Section 154 for the rectification of mistake in assessment order dated 02.02.2015, initiation of proceeding under Section 147/148 vide notice dated 30.03.2017, assessment order under Section 143(3)/147 dated 30.12.2017, order under Section 271(1)(c) dated 15.06.2018 and order under Section 154 dated 24.01.2020, notices dated 28.06.2012, 17.08.2021 and 06.10.2021 under Section 154 and order under Section 154 dated 10.02.2022 for the assessment year 2012-13. The main contention of the petitioner before the Income Tax Officer is that the aforementioned orders have been passed and the notices issued were in the name of the non-existent entity.
8. Prayer of learned Senior Counsel for the appellant is to issue a direction to the Income Tax Officer Ward-2(1), Patna to consider the petition dated 02.04.2025 (Annexure ‘P1’).
9. In course of hearing of the matter, this Court has been informed that the issue raised in the rectification application vide Annexure ‘P1’ have also been raised before the learned Income Tax Appellate Tribunal and the same is pending consideration with other issues raised by the petitioner.
10. It is, however, submitted that during pendency of the matter before the Appellate Tribunal, the petitioner is getting demand notices and coercive action have been threatened. In this connection, attention of this Court has been drawn towards the request for payment of outstanding tax demand vide Annexure ‘P2’. There is stipulation in Annexure ‘P2’ that failure to comply will invite necessary action as per the I.T. Act. It is submitted that even recently, the petitioner has brought to the notice of the Income Tax Officer vide Letter No. 1106 dated 11.05.2026 certain directions of the Central Board of Direct Taxes (CBDT) and has requested for passing the rectification orders.
11. The writ application has been opposed by Ms. Archana Sinha, learned Senior Standing Counsel for the Department of Income Tax. It is submitted that the issues being raised before this Court by the petitioner are pending consideration before the learned Income Tax Appellate Tribunal. The learned Tribunal is in seisin of the matter, therefore, at this stage, if the writ application is entertained and an order is passed, it would amount to usurping the role of the learned Tribunal which is not required.
12. So far as the submission of learned Senior Counsel for the petitioner that coercive action is being taken to realise the demand is concerned, learned Senior Standing Counsel for the Department has submitted that the petitioner may apply for an appropriate interim order before the learned Tribunal and also before the Assessing Officer.
13. To this, Mr. Rastogi, learned Senior Counsel has responded saying that there is already an application for interim order before the Assessing Officer but that has not been considered and in the meantime, coercive steps are being taken.
14. Having heard learned Senior Counsel for the parties, this Court is of the considered opinion that sitting in its extraordinary writ jurisdiction, this Court need not entertain a challenge to the rectification order on the ground stated in Annexure ‘P1’ or in Annexure ‘P12’ at this stage. It is an admitted position that the legality and validity of the assessment order (Annexure ‘P6’) dated 10.02.2022 is pending consideration before the learned Income Tax Appellate Tribunal. Any observation of this Court at this stage is likely to interfere with the independent assessment and opinion of the learned Tribunal, therefore, this Court would refrain from doing so.
15. So far as the threat of taking of coercive action against the petitioner for release of the demand is concerned, 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 from the date of receipt/production of a copy of this judgment. In the meantime, no coercive action, in any form, shall be taken against the petitioner.
16. This writ application stands disposed of accordingly.