Collection of tax in dispute be held in abeyance till the decision on the appeal by the AAC. - Income Tax - 1067/CBDT

INSTRUCTION NO. 1067/CBDT Dated : June 21,1977 Section(s) Referred: 220(6) Statute: Income - Tax Act, 1961 Reference is invited to *Board's Instruction No. 95 (F.No. 1/6/69/ITCC) dated 21-8-1969, wherein it was stated that in a case 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 by the AAC provided there was no lapse on the part of the assessee. It was also stated therein that the powers of stay of recovery in such cases upto the stage of first appeal might be exercised by the Inspecting Assistant Commissioner/Commissioner of Income-tax. The said Instruction of the Board has also been referred to in the Rajasthan High Court's decision in the case of C I T (Recovery) vs. Official Liquidator M/s Gocha Properties (p) ltd. (reported in 1974 TLR 445). It has been held therein that the said Instruction was binding on the Income-tax authorities employed in the execution of the Income-tax Act. 2. In one case it has been recently represented to the Board that the said instruction was not followed and certain additional payments were insisted upon by the CIT even though an appeal before the AAC was pending. 3. Attention is also drawn to *Board's Instruction No.635 (F.No.385/89/73-ITB) dated 12.11.73, wherein it was stated that the demand should be stayed in cases where substantial points of dispute are involved. The effect of these two Instructions is that collection of tax under dispute should be held in abeyance till the decision of appeal by the AAC. (i) In cases where the income determined on assessment is substantially higher than the returned income, say, twice the returned income or more, provided there were no lapses on the part of the assessee; and (ii) in other cases where the dispute is not flimsy grounds and ITO is satisfied that the recovery of the disputed demand is likely to cause hardship to the assessee. 4. Instruction No.95 and Instruction No.635 stated that the stay of recovery in such cases should be given by IAC/CIT and CIT/ACIT respectively. In modification of these instructions, it is hereby clarified that the necessary order under section 220(6) may be passed by the ITO on his own in all cases except those cases where the disputed demand relates to additions made in pursuance of directions of the IAC under section 144A or 144B or otherwise; in the latter type of cases, the order under section 220(6) should be passed by the ITO after obtaining, administratively, the prior approval of the IAC. 5. In order to prevent any substantial rise in arrears as a result of granting stay under section 220(6), the Commissioners should ensure strict adherence to the Instructions contained in para 2 of the Board Instructions No.317 (F.No.279/142/71-ITJ) dated 4th August, 12971, regarding early disposal of high demand appeals by AACs. They should obtain list of cases where such demands are kept in abeyance pending disposal of appeals, supply them to the Appellate assistant Commissioners and ensure that such appeals are disposed of, as far as possible, within 3 months of their institution, so that the demand which is found due after appeal can be collected expeditiously. 6. For removal of doubts, it is clarified that these instructions are not in any way meant to fetter the discretion available to the ITO under section 220(6) to stay the disputed demand in other suitable cases.