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TMI BlogStay of Tax Demand: Interpreting the Discretionary Power u/s 220(6) of the Income Tax ActX X X X Extracts X X X X X X X X Extracts X X X X ..... first appeal stage. Arguments Presented The petitioner, an assessee, challenged the actions of the respondents (tax authorities) who had adjusted the available refunds against the outstanding tax demand for the Assessment Year (AY) 2018-19 without considering the petitioner's application for stay of demand u/s 220(6) of the Income Tax Act. The respondents relied on the CBDT's OM dated July 31, 2017, which stated that a stay of demand could be granted subject to the deposit of 20% of the disputed demand as a standard rate. The respondents contended that the petitioner was obliged to tender or place evidence of having deposited 20% of the disputed demand before their application for stay could be considered. Discussions and Findings o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as an inviolate or inflexible condition. Principles for Granting Stay The Court discussed the principles governing the grant of stay pending appellate remedies, as laid down by the Supreme Court in BENARA VALVES LTD. ORS. Versus CCE ANR. - 2006 (11) TMI 6 - Supreme Court and Monotosh Saha Versus Special Director, Enforcement Directorate And Anr. - 2008 (8) TMI 9 - Supreme Court . The Court emphasized that while exercising discretion, factors such as prima facie case, undue hardship, and the likelihood of success must be considered. The Court also referred to the decision of the Allahabad High Court in ITC. LTD. Versus COMMISSIONER (APPEALS) , CUS. C. EX., MEERUT-I - 2003 (10) TMI 70 - ALLAHABAD HIGH COURT , which provided a lucid explanati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Summary of the Judgment The High Court, in this judgment, clarified the interpretation and application of the CBDT Office Memorandums concerning the grant of stay of tax demand u/s 220(6) of the Income Tax Act, 1961 . The Court held that the Assessing Officer's discretion to grant stay cannot be fettered by the terms of the OM, which merely provide guidelines. The Court emphasized that the Assessing Officer must consider factors such as prima facie case, undue hardship, and the likelihood of success while exercising discretion u/s 220(6). The Court found that the respondents had erred in assuming that the petitioner's application for stay could not be entertained without a pre-deposit of 20% of the disputed demand, as per the OM. T ..... X X X X Extracts X X X X X X X X Extracts X X X X
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