Section 246

Section 246 — the law in short

What the courts have decided on section 246, in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.

• Harsh Dipak Shah v Union of India (Gujarat) High CourtHelps taxpayerValidity unconfirmed
  Is 20% a floor? Can the Commissioner order me to deposit less — 5% or 10% — pending appeal?
  Yes. The Gujarat High Court held there is nothing magical about the figure of 20%: it is a starting point, not a floor, and the authority may direct 5% or 10% instead if the equities so require. The discretion under s.220(6) is coupled with a duty to be exercised judicially on prima facie case, financial stringency and balance of convenience. Note the limits of what that reasoning produced here: of the three writ applications heard together the Court allowed only Special Civil Application No. 19804 of 2021, setting aside the order and remitting it for fresh consideration, and in the two connected applications it expressly declined to interfere having regard to the quantum of the amount involved, leaving those applicants to move the Commissioner (Appeals).
• M/s. Queen Agencies v ACIT High CourtHelps taxpayerValidity unconfirmed
  The Assessing Officer has rejected my stay application in two lines saying pay 20%. Is that order sustainable, and can he order less than 20% without going to the Principal Commissioner?
  No, a non-speaking order under s.220(6) that simply directs payment of 20% is liable to be set aside; the Assessing Officer must pass a speaking order applying the three parameters - prima facie case, financial stringency and balance of convenience. And yes: because the Assessing Officer exercises a quasi-judicial power, he can himself direct a deposit of LESS than 20% without any reference to the Principal Commissioner; a reference upward is needed only if he wants MORE than 20%.
• Bhupendra Murji Shah v DCIT High CourtHelps taxpayerValidity unconfirmed
  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 Bombay High Court directed that during the pendency of the appeals the assessee not be called upon to pay any sum, much less 20%, and that any attachment on his bank account be raised forthwith. The reasoning is that a statutory right of appeal must not be rendered illusory and nugatory by recovery that would make the appeal infructuous before it is heard. But read the order to the end: the Court itself said it cannot be treated as a precedent for all cases of this nature.
• Flipkart India Private Limited v ACIT High CourtHelps taxpayerValidity unconfirmed
  Did the 2016 Office Memorandum wipe out Instruction No. 1914 and its hardship tests?
  No. The 2016 memorandum only partially modifies Instruction No. 1914; both must be read together. The tests of an unreasonably high-pitched assessment and of genuine hardship survive, and a mechanical demand for a percentage without reasons will not stand.
• Smt. Shantibai v CIT High CourtHelps taxpayerSuperseded by amendment
  The Assessing Officer has determined the income at nil after the Tribunal cancelled the assessment, but has noted that the tax already deposited will not be refunded. Is that refusal appealable, or must I file a writ?
  It is appealable. An order of the officer refusing to refund an amount the assessee claims to be in excess of the tax properly chargeable is, in substance, an order under section 237, and an appeal lies against it — under section 246(n) as it then stood, and under section 246A(1)(i) today. That the same obligation could also be enforced by a mandamus or a civil suit does not take away the statutory right of appeal.

Listed strongest first: Supreme Court, then High Court, then Tribunal, then CBDT. Nothing here has yet been read in full by a chartered accountant — open an entry to see where it came from.