What does the department's own instruction actually say about staying a demand?
It sets out the guidelines the AO is to follow when an assessee asks for a stay pending first appeal, including the standard percentage to be deposited — which the courts have read as guidance, not a mandatory bar.
Decided by the CBDT Circulars & Instructions on 1993-02-02, reported as Instruction No. 1914, dated 2-2-1993; Office Memoranda in F.No. 404/72/93-ITCC dated 29-2-2016, 31-7-2017 and 25-8-2017. It bears on section 220(6), section 156 of the Income Tax Act 1961, in Demand, Recovery & Stay matters.
A circular binds the department, not you. Where it is beneficial you may rely on it; where an officer treats it as removing his own discretion, that is the point to take.
Binding on the department, not on the assessee or the courts. An assessee may rely on a circular that is beneficial to them.
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Instruction No. 1914 was issued on 2 February 1993 in supersession of all earlier instructions on recovery of tax demand, and became the governing framework for recovery and for stay of demand. It was partially modified by the Office Memorandum of 29 February 2016, which fixed a standard payment of 15% of the disputed demand as the price of a stay pending first appeal before the Commissioner (Appeals). The Office Memorandum of 31 July 2017 revised that standard rate to 20%, leaving the rest of the 2016 memorandum unchanged, and a third Office Memorandum of 25 August 2017 clarified that the change to 20% is prospective, so that matters already decided under the 2016 memorandum before 31 July 2017 are not to be reviewed merely on the strength of it. Note that the Board's own documents describe the instruction inconsistently: the memoranda of 29 February 2016 and 31 July 2017 both refer to 'Instruction No. 1914 dated 21-3-1996', while that of 25 August 2017 refers to 'Instruction No.1914, dated 2-2-1993'.
Every demand is to be recovered as soon as it becomes due, and may be kept in abeyance only for valid reasons under the guidelines. A demand will be stayed only if there are valid reasons; the mere filing of an appeal against the assessment order is not a sufficient reason. The instruction gives three illustrations where stay could be granted - the disputed issue has been decided in the assessee's favour by an appellate authority or court, conflicting High Court decisions exist on the interpretation the Assessing Officer adopted, or the jurisdictional High Court has taken a contrary view that the Department has not accepted - and directs that even then stay is only for the amount attributable to the disputed points. The decision is normally for the Assessing Officer or Tax Recovery Officer and his immediate superior; a higher superior authority should interfere only in exceptional circumstances, such as an assessment order that appears unreasonably high-pitched or where genuine hardship is likely. Stay petitions must be disposed of within two weeks. Conditions may be imposed - security, a reasonable lump sum or instalments, an undertaking to cooperate in the early disposal of the appeal, a reserved right of review after about six months, and adjustment of refunds. Instalments may be liberally allowed so as to collect the demand within a period not exceeding eighteen months. Because the phrase 'stay of demand' does not appear in section 220(6), the officer must use the statutory language and record that he agrees to treat the assessee as not being in default, and must communicate his decision by a speaking order. On the pre-deposit, the standard set by the Office Memorandum of 29 February 2016 was 15%, raised to 20% by that of 31 July 2017, with a reference to the Principal Commissioner or Commissioner where a higher or lower figure is warranted, a right of review, and disposal within two weeks.
The instruction starts from the proposition that recovery is the rule and abeyance the exception, and then confines the exception in three ways. It limits the grounds - a stay needs a reason connected to the merits of the dispute, and the illustrations are all about the strength of the assessee's case rather than its cash position. It limits the amount - stay is only for the tax attributable to the disputed points, so an assessee disputing part of an assessment cannot hold up the rest. And it limits the forum - Part B(iii) makes the decision one for the Assessing Officer or Tax Recovery Officer and his immediate superior, with a higher authority interfering only exceptionally, for instance where the assessment looks unreasonably high-pitched or genuine hardship is likely; the same paragraph tells higher authorities to discourage routine or frivolous review petitions. Alongside that, the instruction is careful about form: the officer must use the statutory expression in section 220(6) rather than the language of stay, must consider all relevant factors and must pass a speaking order. The Office Memoranda work on a different axis. They do not change the grounds; they standardise the price, because field authorities were insisting on a very high proportion of the disputed demand and causing hardship. Fifteen per cent became the standard in 2016 and twenty per cent in 2017, with the 2016 memorandum's own examples showing the figure is meant to move both ways - higher where the same addition has been upheld before or the Supreme Court or jurisdictional High Court is with the revenue, lower where it has been deleted or those courts are with the assessee. The courts have read the figure accordingly: in Pr. CIT v. LG Electronics India (P.) Ltd. the Supreme Court held it is open to the tax authorities, on the facts of individual cases, to grant stay on a deposit of less than twenty per cent, and the Delhi High Court applied that in Dr. B.L. Kapur Memorial Hospital v. CIT (TDS), holding that twenty per cent is not a pre-requisite in all cases and setting aside non-reasoned orders which had not considered prima facie case, balance of convenience and irreparable injury.
A higher superior authority should interfere with the decision of the AO/TRO only in exceptional circumstances e.g. where the assessment order appears to be unreasonably highpitched or where genuine hardship is likely to be caused to the assessee.
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Handle my notice → Ask a CA on WhatsAppIt sets out the guidelines the AO is to follow when an assessee asks for a stay pending first appeal, including the standard percentage to be deposited — which the courts have read as guidance, not a mandatory bar. This was decided by the CBDT Circulars & Instructions and bears on section 220(6), section 156 of the Income Tax Act 1961. It is reported as Instruction No. 1914, dated 2-2-1993; Office Memoranda in F.No. 404/72/93-ITCC dated 29-2-2016, 31-7-2017 and 25-8-2017. A circular binds the department, not you. Where it is beneficial you may rely on it; where an officer treats it as removing his own discretion, that is the point to take. If it applies to you, the first step is this: Quote the instruction back to the officer where it helps you.
Instruction No. 1914 was issued on 2 February 1993 in supersession of all earlier instructions on recovery of tax demand, and became the governing framework for recovery and for stay of demand. It was partially modified by the Office Memorandum of 29 February 2016, which fixed a standard payment of 15% of the disputed demand as the price of a stay pending first appeal before the Commissioner (Appeals). The Office Memorandum of 31 July 2017 revised that standard rate to 20%, leaving the rest of the 2016 memorandum unchanged, and a third Office Memorandum of 25 August 2017 clarified that the change to 20% is prospective, so that matters already decided under the 2016 memorandum before 31 July 2017 are not to be reviewed merely on the strength of it. Note that the Board's own documents describe the instruction inconsistently: the memoranda of 29 February 2016 and 31 July 2017 both refer to 'Instruction No. 1914 dated 21-3-1996', while that of 25 August 2017 refers to 'Instruction No.1914, dated 2-2-1993'. The matter was decided on 1993-02-02 by the CBDT Circulars & Instructions. On those facts the CBDT Circulars & Instructions held as follows. Every demand is to be recovered as soon as it becomes due, and may be kept in abeyance only for valid reasons under the guidelines. A demand will be stayed only if there are valid reasons; the mere filing of an appeal against the assessment order is not a sufficient reason. The instruction gives three illustrations where stay could be granted - the disputed issue has been decided in the assessee's favour by an appellate authority or court, conflicting High Court decisions exist on the interpretation the Assessing Officer adopted, or the jurisdictional High Court has taken a contrary view that the Department has not accepted - and directs that even then stay is only for the amount attributable to the disputed points. The decision is normally for the Assessing Officer or Tax Recovery Officer and his immediate superior; a higher superior authority should interfere only in exceptional circumstances, such as an assessment order that appears unreasonably high-pitched or where genuine hardship is likely. Stay petitions must be disposed of within two weeks. Conditions may be imposed - security, a reasonable lump sum or instalments, an undertaking to cooperate in the early disposal of the appeal, a reserved right of review after about six months, and adjustment of refunds. Instalments may be liberally allowed so as to collect the demand within a period not exceeding eighteen months. Because the phrase 'stay of demand' does not appear in section 220(6), the officer must use the statutory language and record that he agrees to treat the assessee as not being in default, and must communicate his decision by a speaking order. On the pre-deposit, the standard set by the Office Memorandum of 29 February 2016 was 15%, raised to 20% by that of 31 July 2017, with a reference to the Principal Commissioner or Commissioner where a higher or lower figure is warranted, a right of review, and disposal within two weeks.
The instruction starts from the proposition that recovery is the rule and abeyance the exception, and then confines the exception in three ways. It limits the grounds - a stay needs a reason connected to the merits of the dispute, and the illustrations are all about the strength of the assessee's case rather than its cash position. It limits the amount - stay is only for the tax attributable to the disputed points, so an assessee disputing part of an assessment cannot hold up the rest. And it limits the forum - Part B(iii) makes the decision one for the Assessing Officer or Tax Recovery Officer and his immediate superior, with a higher authority interfering only exceptionally, for instance where the assessment looks unreasonably high-pitched or genuine hardship is likely; the same paragraph tells higher authorities to discourage routine or frivolous review petitions. Alongside that, the instruction is careful about form: the officer must use the statutory expression in section 220(6) rather than the language of stay, must consider all relevant factors and must pass a speaking order. The Office Memoranda work on a different axis. They do not change the grounds; they standardise the price, because field authorities were insisting on a very high proportion of the disputed demand and causing hardship. Fifteen per cent became the standard in 2016 and twenty per cent in 2017, with the 2016 memorandum's own examples showing the figure is meant to move both ways - higher where the same addition has been upheld before or the Supreme Court or jurisdictional High Court is with the revenue, lower where it has been deleted or those courts are with the assessee. The courts have read the figure accordingly: in Pr. CIT v. LG Electronics India (P.) Ltd. the Supreme Court held it is open to the tax authorities, on the facts of individual cases, to grant stay on a deposit of less than twenty per cent, and the Delhi High Court applied that in Dr. B.L. Kapur Memorial Hospital v. CIT (TDS), holding that twenty per cent is not a pre-requisite in all cases and setting aside non-reasoned orders which had not considered prima facie case, balance of convenience and irreparable injury. In the words reproduced by the source cited on this page: "A higher superior authority should interfere with the decision of the AO/TRO only in exceptional circumstances e.g. where the assessment order appears to be unreasonably highpitched or where genuine hardship is likely to be caused to the assessee."
It was decided by the CBDT Circulars & Instructions on 1993-02-02 and is reported as Instruction No. 1914, dated 2-2-1993; Office Memoranda in F.No. 404/72/93-ITCC dated 29-2-2016, 31-7-2017 and 25-8-2017. Binding on the department, not on the assessee or the courts. An assessee may rely on a circular that is beneficial to them. A CBDT circular or instruction binds officers of the department but not the assessee and not the courts. Where a circular helps you, you may hold the department to it. Where it hurts you, it cannot override the Act or a judgment. On section 220(6), section 156, the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It cuts both ways and is cited by both sides. Every demand is to be recovered as soon as it becomes due, and may be kept in abeyance only for valid reasons under the guidelines. A demand will be stayed only if there are valid reasons; the mere filing of an appeal against the assessment order is not a sufficient reason. The instruction gives three illustrations where stay could be granted - the disputed issue has been decided in the assessee's favour by an appellate authority or court, conflicting High Court decisions exist on the interpretation the Assessing Officer adopted, or the jurisdictional High Court has taken a contrary view that the Department has not accepted - and directs that even then stay is only for the amount attributable to the disputed points. The decision is normally for the Assessing Officer or Tax Recovery Officer and his immediate superior; a higher superior authority should interfere only in exceptional circumstances, such as an assessment order that appears unreasonably high-pitched or where genuine hardship is likely. Stay petitions must be disposed of within two weeks. Conditions may be imposed - security, a reasonable lump sum or instalments, an undertaking to cooperate in the early disposal of the appeal, a reserved right of review after about six months, and adjustment of refunds. Instalments may be liberally allowed so as to collect the demand within a period not exceeding eighteen months. Because the phrase 'stay of demand' does not appear in section 220(6), the officer must use the statutory language and record that he agrees to treat the assessee as not being in default, and must communicate his decision by a speaking order. On the pre-deposit, the standard set by the Office Memorandum of 29 February 2016 was 15%, raised to 20% by that of 31 July 2017, with a reference to the Principal Commissioner or Commissioner where a higher or lower figure is warranted, a right of review, and disposal within two weeks. It arises in Demand, Recovery & Stay matters, on section 220(6), section 156 of the Income Tax Act 1961. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Where the officer says the memorandum ties his hands, point out that it cannot oust the discretion the statute gives him.
Superseded by amendment. Instruction No. 1914 has not been withdrawn and its grounds for stay stand, but its pre-deposit position has been overtaken. The Office Memorandum of 29 February 2016 issued revised guidelines in partial modification of the instruction, fixing 15%; that of 31 July 2017 revised the standard rate to 20% and left the rest of the 2016 memorandum unchanged; and that of 25 August 2017 clarified that the change is prospective and that matters decided under the 2016 memorandum before 31 July 2017 are not to be reviewed merely on that ground. The Supreme Court in Pr. CIT v. LG Electronics India (P.) Ltd., Civil Appeal No. 6850 of 2018, decided 20 July 2018, held that it is open to the tax authorities, on the facts of individual cases, to grant stay against recovery on deposit of a lesser amount than 20% of the disputed demand pending disposal of the appeal. The Delhi High Court applied that in Dr. B.L. Kapur Memorial Hospital v. CIT (TDS) [2023] 146 taxmann.com 422 (Manmohan and Manmeet Pritam Singh Arora, JJ., W.P.(C) Nos. 16287 and 16288 of 2022, 25 November 2022), holding that payment of 20% is not a pre-requisite in all cases and that the precondition can be relaxed - but the relief given was a remand to the Commissioner for fresh adjudication, not a grant of stay. No later CBDT instruction superseding Instruction No. 1914, and no reissued guidance under the Income-tax Act, 2025, was found. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
IMPORTANT for anyone drafting a stay application: 'unreasonably highpitched' and 'genuine hardship' are in Part B(iii) of Instruction No. 1914, which is about when a higher superior authority may interfere with the Assessing Officer's or Tax Recovery Officer's decision. They are not the test for granting stay - that is Part C, which requires valid reasons and gives three illustrations turning on the strength of the assessee's case. Cite them to the right part. The instruction is dated 2 February 1993; the Board's memoranda of 29 February 2016 and 31 July 2017 both describe it as dated 21 March 1996, and its own memorandum of 25 August 2017 describes it as dated 2 February 1993, so the discrepancy is the Board's, not a reporting error. Do not overlook the third memorandum, of 25 August 2017, which makes the move from 15% to 20% prospective, or the instruction's own directions that instalments may be allowed so as to collect within eighteen months and that an order under section 220(6) must use the statutory language of treating the assessee as not in default and must be a speaking order. Pr. CIT v. LG Electronics India (P.) Ltd. was read only as reproduced and relied on in Dr. B.L. Kapur Memorial Hospital v. CIT (TDS); the Supreme Court's own order in Civil Appeal No. 6850 of 2018 was not read. Whether the guidelines have been reissued under the Income-tax Act, 2025, and what the counterpart of section 220(6) is in that Act, were not established. The instruction records that it applies mutatis mutandis to demands under other direct tax enactments, which was not followed up. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
Every demand is to be recovered as soon as it becomes due, and may be kept in abeyance only for valid reasons under the guidelines. A demand will be stayed only if there are valid reasons; the mere filing of an appeal against the assessment order is not a sufficient reason. The instruction gives three illustrations where stay could be granted - the disputed issue has been decided in the assessee's favour by an appellate authority or court, conflicting High Court decisions exist on the interpretation the Assessing Officer adopted, or the jurisdictional High Court has taken a contrary view that the Department has not accepted - and directs that even then stay is only for the amount attributable to the disputed points. The decision is normally for the Assessing Officer or Tax Recovery Officer and his immediate superior; a higher superior authority should interfere only in exceptional circumstances, such as an assessment order that appears unreasonably high-pitched or where genuine hardship is likely. Stay petitions must be disposed of within two weeks. Conditions may be imposed - security, a reasonable lump sum or instalments, an undertaking to cooperate in the early disposal of the appeal, a reserved right of review after about six months, and adjustment of refunds. Instalments may be liberally allowed so as to collect the demand within a period not exceeding eighteen months. Because the phrase 'stay of demand' does not appear in section 220(6), the officer must use the statutory language and record that he agrees to treat the assessee as not being in default, and must communicate his decision by a speaking order. On the pre-deposit, the standard set by the Office Memorandum of 29 February 2016 was 15%, raised to 20% by that of 31 July 2017, with a reference to the Principal Commissioner or Commissioner where a higher or lower figure is warranted, a right of review, and disposal within two weeks.
TaxSphere, “CBDT Instruction 1914 and the Office Memorandum on stay of demand”, https://taxnotice.vittsphere.com/caselaw/case/cbdt-instruction-1914-stay-of-demand/ (validity last checked 2026-08-19)
The judgment itself is a government work and may be quoted freely. The summary, the validity note and the reasoning on this page are this library's own writing: quote them with attribution, and please do not present either as the words of the court — this page keeps the two apart and so should a quotation of it.
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My appeal is filed and part-heard, but the Assessing Officer says pay 20% or recovery continues, and my bank account is attached. What can the High Court do?
The department has attached my bank account under s.226(3) because I did not pay the 20%. I say I have already paid more than that. Will the High Court interfere?
The AO rejected my stay application and issued a garnishee notice to my bank the same day. Is that permissible?
My appeal is pending before the Tribunal and recovery of the demand is going on. Can the Tribunal stay recovery when no section gives it that power?
