ORDER : Mr. Avinash Desai, learned Senior Counsel appears for Mr. Pranav Munigela, learned counsel for the petitioners; Mr. Naraparaju Avaneesh, learned counsel appears for respondent No.1 and Mr. N.Praveen Reddy, learned Standing Counsel for Income Tax Department appears for respondents No.2 to 6. 2. The Principal Commissioner of Income Tax (Central), Hyderabad (for short ‘PCIT(central)’), passed an order under Section 271DA of the Income Tax Act, 1961 (for short ‘the Act’), on 30.03.2025, granting absolute stay of recovery of the accumulated demand of Rs.428,98,50,568/-, on M/s.Vasavi Group of Cases (for short ‘the assessee’) involving the petitioner companies for various assessment years. 3. The order dated 30.03.2025 is extracted hereunder: To M/s. Vasavi Group of Cases 4th Floor, Vasavi Corporate Building, Road No.12, Bhola Nagar, Banjara Hills, Hyderabad, 500034, Telangana, India Dated: 30/03/2025 DIN & Letter No : ITBA/COM/F/17/2024-25/1075273680(1) Sir/Madam/M/s, Subject: Online service of orders – Letter F.No.Pr.CIT(c)/Hyd/Stay/2024-25 To, M/s VASAVI GROUP OF CASES Sir, Sub: Order u/s 220(6) of the IT Act – in the case of M/s VASAVI  GROUP OF CA Ref: (i) Assessee’s letter received on 24.03.2025 for 65 Nos. of assessees. (ii) Hearing conducted on 28.03.2025. ***** A letter was filed by the assesse, M/s VASAVI GROUP OF CASES seeking stay of accumulated demand of Rs.428,98,50,568/- raised u/s 271DA of the IT Act, for various assessment years, vide the first reference cited above. On 28.03.2025, Shri B. Narsingh Rao, AR and Sri P. Ananda Rao, AR appeared and made the following submissions: i). The assessee has cleared the quantum of demand raised during the assessment proceedings. No further appeal has been filed concerning this matter. ii). The assessee's firm has duly honored the installment facility granted by the Principal Commissioner of Income Tax (Central), Hyderabad, and all installments have been paid as per the agreed schedule till date in respect of quantum demand raised in assessments. iii). The present demand pertains to penalties levied u/s 271DA of the Act. The assessee has filed an appeal against the order passed under Section 271DA for all group cases and has requested that they not be treated as an "assessee in default concerning the disputed demand under Section 220 (6) of the Income Tax Act. iv). Due to financial constraints, the assessee is currently unable to pay even the 20% of the demand raised under Section 271DA of the Act as per extant CBDT Instruction. iv). Due to financial constraints, the assessee is currently unable to pay even the 20% of the demand raised under Section 271DA of the Act as per extant CBDT Instruction. To substantiate this, the assessee has provided a Cash Flow Statement, outlining the financial difficulties faced at present. After careful consideration of the facts and circumstances of the case, financial hardship faced by M/s VASAVI GROUP OF CASES and co-operation during the course of assessment proceedings and payment of quantum demand raised earlier in search assessment instalments, their request to keep them as "assesse as not deemed to be in default" till disposal of the first appeal before CIT(A), Is favourably considered, for the 65 Nos. of assesses as annexed, in the light of the CBDT instruction No. 1941 dated 21.03.1996, which was further modified partially by CBDT, Office-Memorandum, dated 29.02.2016, subject to the following conditions: i). The assesse will co-operate during the appeal proceedings without seeking adjournments. ii). This order is valid till the disposal of first appeal pending with CIT(Appeal) iii). Any Non-compliance to the above render the stay granted invalid and recovery proceedings will be initiated accordingly. This issues with the approval of CCIT (in-situ) (Central), Hyderabad. Sd/- Income Tax Officer (Hqrs) O/o Pr. Commissioner of Income-Tax (Central), Hyderabad 4. The absolute stay was granted on the conditions that the assessee will cooperate during the appeal proceedings without seeking adjournment; the order was valid till the disposal of the first appeal pending with CIT(A) and any non-compliance to the above conditions would render the stay invalid and recovery proceedings would be initiated. 5. It is not in dispute that the assessee was not able to attend on several dates in the appeal proceedings due to personal reasons, which led to vacation of the order of stay by PCIT vide (central) letter dated 21.10.2025 and issuance of impugned demand notice dated 23.10.2025 by the Assistant Commissioner of Income Tax, Central Circle-3(2), Hyderabad. The said demand notice reads as under: To, Hilland Petra Rocks Private Limited 4th Floor, Vasavi Corporate Building Road No-12, Banjara Hills, Banjara Hills S.O Khairatabad Hyderabad 5000034, Telangana, India PAN: AADCH0782N Dated: 23/10/2025 DIN & Letter No: ITBA/COM/F/17/2 025-6/1081956017(1) Sir/Madam/M/s. Subject: Online services of orders-Letter Sub: Payment of penalty demand u/s 271DA of the I.T. act in your case-Regarding. The said demand notice reads as under: To, Hilland Petra Rocks Private Limited 4th Floor, Vasavi Corporate Building Road No-12, Banjara Hills, Banjara Hills S.O Khairatabad Hyderabad 5000034, Telangana, India PAN: AADCH0782N Dated: 23/10/2025 DIN & Letter No: ITBA/COM/F/17/2 025-6/1081956017(1) Sir/Madam/M/s. Subject: Online services of orders-Letter Sub: Payment of penalty demand u/s 271DA of the I.T. act in your case-Regarding. The Pr.CIT (Central), Hyderabad vide letter dated 21.10.2025 has vacated the stay Order dated 28.03.2025 issued in your case staying the penalty demand totaling to Rs.15,34,30,000/- as detailed under: Sl No. AY Amount (in Rs.) Section 1 2022-23 10,20,30,000 271DA 2 2023-24 5,14,00,000 271DA Total 15,34,30,000 In view of the above, you are hereby treated as assessee ni default in respect of the above outstanding demands. Therefore, you are requested to pay atleast 20% of the above demand as per CBDT Circular No.1914 dated 21.3.1996 read with OM dated 31.07.2017 and furnish copy of challan to this Office on or before 29.10.2025. Sd/- Seetaramanjaneyulu Nukala Central Circle-3(2) Hyderabad 6. Assessee was treated as assessee in default in respect of the above outstanding demand. Similar notices have been issued in respect of the petitioners in all these matters, which are being decided by the present common order. 7. Being aggrieved by the impugned demand notices, all the inter alia petitioners have preferred the present Writ Petitions on the following grounds; (i) That the impugned demand notices are in gross violation of the principles of natural justice. (ii) That the impugned demand notices are in the teeth of Section 222 of the Act, which requires the respondent authorities to draw tax recovery certificates, when the assessee is in default or is deemed to be in default in making the payment of tax. The procedure in Schedule II of the Act requiring mandatory notice upon the petitioners requiring them to pay the amounts within fifteen days from the date of service of such notices has also not been followed. (iii) Petitioners’ accounts have now been marked as lien for the amounts demanded in the penalty orders under Section 271DA of the Act. (iv) No notices under Section 226 (3)(iii) of the Act have been issued as is evident from the e-portal. (iii) Petitioners’ accounts have now been marked as lien for the amounts demanded in the penalty orders under Section 271DA of the Act. (iv) No notices under Section 226 (3)(iii) of the Act have been issued as is evident from the e-portal. (v) The respondents ought to have seen that the circumstances and conditions, prevalent at the time of passing the initial order of stay of payment of the amount pending disposal of the appeal, still persist. 8. Based on the above contentions, learned Senior Counsel appearing for the petitioners submits that the CIT(A) may be directed to dispose of the appeal in a time bound manner and till then the impugned demand may be stayed. 9. Learned Standing Counsel for the Income Tax Department submits that by the initial order dated 30.03.2025, the PCIT (central) granted an absolute stay on the demand raised under Section 271DA of the Act, which had accumulated to the tune of Rs.428,98,56,568/- in respect of the assessee, but with a condition that the assessee would cooperate during the appeal proceedings without seeking adjournments and in case the assessee fails to do so, stay will be rendered invalid, followed by recovery proceedings. 10. The conduct of the assessee in not attending the proceedings for various personal reasons is evident from the affidavits filed in the respective Writ Petitions. Therefore, the PCIT (central) had no option rather than to recall the stay granted in favour of the assessee and proceed for recovery of 20% of the penalty demand for the relevant assessment years as per CBDT Circular No.1914 dated 21.03.1996 read with OM dated 31.07.2017. It is submitted that in such circumstances, this Court may decline to interfere with the impugned notices. The petitioners may be directed to cooperate in the appeal proceedings, and if so advised, approach the PCIT (central) for an interim stay of the impugned recovery proceedings subject to such conditions as may be imposed afresh. 11. We have taken note of the contentions urged on behalf of the parties. 12. The facts noted above are explicit that the petitioners being the group of companies of the assessee failed to attend the appeal proceedings even after grant of an order of absolute stay on the demand under Section 271DA of the Act. 11. We have taken note of the contentions urged on behalf of the parties. 12. The facts noted above are explicit that the petitioners being the group of companies of the assessee failed to attend the appeal proceedings even after grant of an order of absolute stay on the demand under Section 271DA of the Act. The entire endeavour to dispose of the appeal in a time bound manner keeping in account the limitation applicable to the appeal proceedings could have been defeated due to the conduct of the petitioners in not participating in the appeal proceedings. In such circumstances, PCIT (central) resorted to vacation of the interim order and issuance of the impugned notices by the Assistant Commissioner of Income Tax, Central Circle-3(2), Hyderabad, for recovery of the demand to the extent of 20% as per the aforesaid CBDT circular. However, the petitioners now undertake to participate in the appeal proceedings without any default. It is also evident that the PCIT (central) had granted a blanket stay on the impugned demand with certain conditions of cooperation of the assessee in appeal proceedings. 13. Therefore, this Court is of the view that the petitioners should participate in the appeal proceedings diligently without any default or without seeking unnecessary adjournment so that the appeal can be disposed of within the period of limitation. Petitioners are also allowed to make a fresh application for recall of the impugned notices dated 23.10.2025 before the PCIT (central), by 7 th November, 2025. 14. Within two weeks of such application being filed, the PCIT (central) shall take a fresh decision thereon. 15. Till such decision is taken by the PCIT (central), the respondents would not proceed to recover the amount indicated in the impugned notices from the petitioners. 16. However, it is made clear that if the petitioners fail to make such an application within the stipulated time, it would be open for the respondents to proceed for recovery of the demand. 17. With the aforesaid observations, the instant Writ Petitions are disposed of. No costs.