Whether Assessing Officer can exercise discretion under section 220(6) to treat assessee as not being in default in respect of amounts disputed in first appeal pending before Deputy Commissioner (Appeals)/Commissioner (Appeals)
Circular No. 530 was issued by the Central Board of Direct Taxes on 6 March 1989. Its subject is Whether Assessing Officer can exercise discretion under section 220(6) to treat assessee as not being in default in respect of amounts disputed in first appeal pending before Deputy Commissioner (Appeals)/Commissioner (Appeals).
Directs Assessing Officers to grant stay under section 220(6) in two named situations. Where an appeal under section 246 is pending before the Deputy Commissioner (Appeals) or the Commissioner (Appeals), the officer is on an application by the assessee to exercise his discretion, subject to such conditions as he thinks fit, and treat the assessee as not in default where the disputed demand arises from an interpretation of law on which there are conflicting High Court decisions, or on which the jurisdictional High Court has taken a contrary view that the Department has not accepted, or where the issue has already been decided in the assessee's favour by an appellate authority or court in his own case. The protection extends only to the amount attributable to those disputed points, and the officer ceases to be bound if the assessee does not co-operate in the early disposal of the appeal or a later pronouncement of a higher authority or court alters the position. In all other cases the officer is to weigh all relevant factors and pass a speaking order, and paragraph 4 as originally framed says the assessee's financial capacity to pay is not relevant.
The Board considered it necessary and expedient, for the proper and efficient management of revenue collection, to lay down when the section 220(6) discretion should be exercised in the assessee's favour.
| Under the 1961 Act | Now |
|---|---|
| s.220 | s.411 |
Whether Assessing Officer can exercise discretion under section 220(6) to treat assessee as not being in default in respect of amounts disputed in first appeal pending before Deputy Commissioner (Appeals)/Commissioner (Appeals)
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 about, the Assessing officer will no longer be bound by the instructions and will excercise his disertion independently.
4. In respect of other cases, not covered by para 2 above, the Assessing Officer will take into account all the relevant factors and communicate his decision to the assessee in the form of a speaking order. While exercising discrtion under the provision, the financial capacity of the assessee to pay demand will not be relevant.
Circular : No. 530, dated 6-3-1989.
In an application for stay of demand after an assessment order, and in the order under section 220(6) that grants or refuses it.
Source: the Income Tax Department’s own published text — its page for this instrument.