My Black Money Act appeal is pending and part of the demand is stayed. Can I stop the penalty proceedings until the appeal is decided?
No. The Rajasthan High Court declined to stay penalty proceedings under the Black Money Act while the appeal against the assessment was pending before the appellate authority. The pendency of an appeal does not by itself suspend penalty proceedings, the authority has to complete them within the period fixed by s.47, and any penalty order can itself be appealed. Liberty was reserved to move against coercive steps taken after the penalty order.
Decided by the High Court (Manindra Mohan Shrivastava, Acting Chief Justice and Sameer Jain J) on 2022-03-31, reported as D.B. Civil Writ Petition No. 4836/2022. It bears on section BMA s.15, section BMA s.41, section BMA s.46, section BMA s.47, section BMA s.30 of the Income Tax Act 1961, in Penalty, Appeals and Demand, Recovery & Stay matters.
Answers a request practitioners make constantly. The reason it fails is the limitation in s.47 - the officer cannot hold the penalty proceeding in abeyance because his own time runs out - so the answer is to contest the penalty on its merits and appeal it, not to seek a stay of it.
Binding within that High Court's jurisdiction. Persuasive elsewhere.
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An assessment order dated 31 March 2021 fixed a liability of about Rs 42 to 43 crore. The petitioner appealed and by an order of 5 January 2022 a major part of the tax liability was kept in abeyance. Penalty proceedings were then taken and the petitioner sought their stay pending disposal of the appeal, relying on the Supreme Court in Commissioner of Income-tax v. Bhupen Champak Lal Dalal. The Revenue replied that the assessment had established a liability of over Rs 43 crore, that there was no stay from the appellate authority, that the authority has no discretion about initiating penalty within the prescribed period, that the filing of an appeal does not suspend penalty proceedings, and that any penalty order could itself be appealed.
The stay application was rejected. The Court was not inclined to stay the penalty proceedings, but left it open to the petitioner to move appropriate applications before the authority in accordance with law if coercive steps were initiated after the penalty proceedings were concluded.
The Court accepted the Revenue's submission on limitation, that penalty proceedings must be completed within one year from the end of the financial year in which the notice is issued, and treated that statutory requirement as significant. It noted that the petition sought only a stay of the penalty proceedings and that the petitioner did not challenge the jurisdiction of the authority but asked for a discretionary suspension pending the appeal. On that footing the discretionary relief was refused, with liberty as to coercive steps.
we are not inclined to stay the penalty proceedings
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Handle my notice → Ask a CA on WhatsAppNo. The Rajasthan High Court declined to stay penalty proceedings under the Black Money Act while the appeal against the assessment was pending before the appellate authority. The pendency of an appeal does not by itself suspend penalty proceedings, the authority has to complete them within the period fixed by s.47, and any penalty order can itself be appealed. Liberty was reserved to move against coercive steps taken after the penalty order. This was decided by the High Court (Manindra Mohan Shrivastava, Acting Chief Justice and Sameer Jain J) and bears on section BMA s.15, section BMA s.41, section BMA s.46, section BMA s.47, section BMA s.30 of the Income Tax Act 1961. It is reported as D.B. Civil Writ Petition No. 4836/2022. Answers a request practitioners make constantly. The reason it fails is the limitation in s.47 - the officer cannot hold the penalty proceeding in abeyance because his own time runs out - so the answer is to contest the penalty on its merits and appeal it, not to seek a stay of it. If it applies to you, the first step is this: Do not expect a stay of penalty proceedings merely because the quantum appeal is pending; the officer is bound by the period in s.47.
An assessment order dated 31 March 2021 fixed a liability of about Rs 42 to 43 crore. The petitioner appealed and by an order of 5 January 2022 a major part of the tax liability was kept in abeyance. Penalty proceedings were then taken and the petitioner sought their stay pending disposal of the appeal, relying on the Supreme Court in Commissioner of Income-tax v. Bhupen Champak Lal Dalal. The Revenue replied that the assessment had established a liability of over Rs 43 crore, that there was no stay from the appellate authority, that the authority has no discretion about initiating penalty within the prescribed period, that the filing of an appeal does not suspend penalty proceedings, and that any penalty order could itself be appealed. The matter was decided on 2022-03-31 by the High Court (Manindra Mohan Shrivastava, Acting Chief Justice and Sameer Jain J). On those facts the High Court held as follows. The stay application was rejected. The Court was not inclined to stay the penalty proceedings, but left it open to the petitioner to move appropriate applications before the authority in accordance with law if coercive steps were initiated after the penalty proceedings were concluded.
The Court accepted the Revenue's submission on limitation, that penalty proceedings must be completed within one year from the end of the financial year in which the notice is issued, and treated that statutory requirement as significant. It noted that the petition sought only a stay of the penalty proceedings and that the petitioner did not challenge the jurisdiction of the authority but asked for a discretionary suspension pending the appeal. On that footing the discretionary relief was refused, with liberty as to coercive steps. In the words reproduced by the source cited on this page: "we are not inclined to stay the penalty proceedings"
It was decided by the High Court on 2022-03-31 and is reported as D.B. Civil Writ Petition No. 4836/2022. Binding within that High Court's jurisdiction. Persuasive elsewhere. A High Court decision binds the assessing officer, the Commissioner (Appeals) and the Income Tax Appellate Tribunal within that state, and is persuasive elsewhere. If your assessment is in a different jurisdiction, check whether your own High Court has taken the same view before relying on it. On section BMA s.15, section BMA s.41, section BMA s.46, section BMA s.47, section BMA s.30, the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It helps the department, and it appears in this library for that reason — you need to know what the Assessing Officer will cite against you. The stay application was rejected. The Court was not inclined to stay the penalty proceedings, but left it open to the petitioner to move appropriate applications before the authority in accordance with law if coercive steps were initiated after the penalty proceedings were concluded. It arises in Penalty, Appeals and Demand, Recovery & Stay matters, on section BMA s.15, section BMA s.41, section BMA s.46, section BMA s.47, section BMA s.30 of the Income Tax Act 1961, and was decided by Manindra Mohan Shrivastava, Acting Chief Justice and Sameer Jain J. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Participate in the penalty proceeding and put the merits on the record, since the penalty order carries its own right of appeal under s.15(1)(c). If the assessment is stayed in part, get that on the record, but understand it does not carry the penalty with it. Reserve the position on coercive recovery after the penalty order; that is the liberty the Court gave.
Searched for later treatment; none was found. That is not the same as a source affirming it. Decided 31 March 2022. Nothing applying, doubting or overruling it was located. The order refuses interlocutory relief and does not decide the writ petition, so its weight is that of a reasoned refusal of a stay rather than of a final determination. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
This is an order on a stay application, not a judgment disposing of the writ petition; what happened to the petition afterwards was not traced. The order refers to the limitation for completing penalty proceedings as one year from the end of the financial year in which the notice is issued, which corresponds to s.47 of the Black Money Act; the section is tagged on that footing though the order does not set out its text. Section 30 is mentioned in the order among the provisions in play but nothing is decided about it. The petitioner here is not the same assessee as in the Tribunal orders in Krishna Das Agarwal decided at Jaipur; that has not been verified either way and should be checked. No reporter citation is printed on the pages read. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
The stay application was rejected. The Court was not inclined to stay the penalty proceedings, but left it open to the petitioner to move appropriate applications before the authority in accordance with law if coercive steps were initiated after the penalty proceedings were concluded.
TaxSphere, “Krishna Das Agrawal v Income Tax Department”, https://taxnotice.vittsphere.com/caselaw/case/krishna-das-agrawal-v-income-tax-department-bma-41-penalty-not-stayed/ (validity last checked 2026-09-16)
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