Income-tax Officer may exercise the discretion conferred on him u/s 220(6). - Income Tax - 1158/CBDT

INSTRUCTION NO. 1158/CBDT Dated : March 27, 1978 Section(s) Referred: 220(6) Statute: Income - Tax Act, 1961 Reference is invited to Board's Instruction No.1067 dated 21st June, 1977. 2. In this connection a question has been raised whether, while acting under section 220(6) of the Income-tax Act in the light of the aforesaid Instruction, the Income-tax Officer can ask for suitable security being furnished by the assessee before the Income-tax Officer agrees to treat the assessee as not being in default within the meaning of the said section. 3. Section 220(6) specifically provides that the Income-tax Officer may exercise the discretion conferred on him under that section "subject to such conditions as he may think fit to impose in the circumstances of the case". The Madras High Court, in the case of K.M.Rahmalh Bidi (72 ITR 73 at page 77), has observed as under: "Sub-section (6)...... gives a very wide scope to the discretion entrusted to the officer as well as to the conditions which he may stipulate in the exercise of his discretion. The only limitation appear to be that the conditions stipulated must, in his opinion, be fit in the circumstances before him". This case provides a clear authority for the view that the Income-tax Officer can ask the assessee to furnish suitable security while staying the demand. 4. Instruction No.1067 dated 21st June, 1977 was only intended to lay down certain guidelines regarding some types of cases in which the Income-tax Officer may pass an order under section 220(6) agreeing to keep the tax in abeyance in such cases. It was not intended to be a comprehensive Instruction on the scope of section 220(6). Accordingly, it is hereby clarified that in suitable cases, where the Income-tax Officer considers it necessary in the interest of safeguarding the revenue that the assessee should furnish security for the amount of tax held in abeyance, he may furnish security for the amount of tax held in abeyance, he may do so, after taking into account all the circumstances of the case.