Stay of Demand under s.220(6)-CBDT Circulars

Board’s letter F.No.1/6/69-ITCC (Instruction No.96)
Minutes of the 8th Meeting of the Informal Consultative Committee held on 13th May, 1969 –
Implementation of assurance given regarding stay of recovery in certain cases – Sec. 220(6) of the IT Act,

1961
“RECOVERY
SECTIONS 220,
One of the points that came up for consideration in the 8th Meeting of the Informal Consultative Committee
was that income-tax assessments were often arbitrary pitched at higher figures and that the collection of
disputed demand as a result thereof was also not stayed inspite of the specific provision in the matter in
s. 220(6) of the IT Act, 1961.
2.The then Deputy Prime Minister had observed as under:
“Where the income determined on assessment was substantially higher than the returned income, say
twice the latter amount or more, the collection of the tax in dispute should be held in abeyance till the
decision on the appeal provided there were no lapses on the part of the assessees.”
3.The Board desire that the above observations may be brought to the notice of all the ITOs working
under you and the powers of stay of recovery in such cases up to the stage of first appeal may be exercised
by the IAC/CIT.

“Circular No.530 dated 6th March 1989

Exercise of discretion under S. 220(6) of the IT Act, 1961 to treat the assessee as not being in
default in respect of the amounts disputed in first appeal pending before Dy. CIT (A)/CIT(A)
“1. Under section 220(6) of the I.T. Act, 1961 where an assessee has presented an appeal u/s 246 of
the Act before the Deputy Commissioner (Appeals) or the Commissioner (Appeals), the Assessing Officer
may, in his discretion, and subject to such conditions as he may think fit to impose in the circumstances of
the case, treat the assessee as not being in default in respect of the amount in dispute in the appeal, even
though the time for payment has expired, as long as such appeal remains undisposed of.
2.Having regard to the proper and efficient management of the work of collection of revenue, the
Board has considered it necessary and expedient to order that on an application being filed by the
assessee in this behalf, the Assessing Officer will exercise his discretion u/s 220(6) of the Act (subject to
such conditions as he may think fit to impose) so as to treat the assessee as not being in default in respect of
the amount in dispute in the appeal in the following situations:

(i) the demand in dispute has arisen because the Assessing Officer had adopted an interpretation of
law in respect of which, there exist conflicting decisions of one or more High Courts or, the High
Court of jurisdiction has adopted a contrary interpretation but the Department has not accepted
that judgment, or (ii) the demand in dispute relates to issue that have
been decided in favour of the assessee in an earlier order by an appellate authority or Court in assessee’s
own case.
3. It is clarified that in the situations mentioned in para 2 above, the assessee will be treated as not in
default only in respect of the amount attributable to such disputed points. Further, where it is subsequently
found that the assessee has not co-operated in the early disposal of appeal or where a subsequent
pronouncement by a higher appellate authority or Court alters the situation referred to in para 2 above,
the Assessing officer will no longer be bound by the instructions and will exercise his discretion
independently.”

“Circular No.589 dated 16th January, 1991
Exercise of discretion under S. 220(6) of the IT Act, 1961 to treat the assessee as not being in default in
respect of the amounts disputed in first appeal pending before Dy. CIT (A)/CIT(A)
“XXX
3.Representations have been received by the Board that the exclusion of financial capacity of the
assessee to pay the demand, from the factors relevant
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