Covers s.220(6), s.226(3), s.246A, s.156, s.245, s.179, s.220, s.244A and 19 more. 38 entries, strongest first, with what each one decided in a sentence. Read down the list, then open the entry that fits your facts. The Demand, Recovery & Stay hub cross-lists everything that touches this area, including entries filed under another subject.
The department has provisionally attached my receivables. Can I go straight to the High Court, or must I appeal first? You can go to the High Court where no appeal lies and the statutory conditions have been breached. The Supreme Court held that a provisional attachment ordered by a Joint Commissioner acting as the Commissioner's delegate is not appealable, so the writ petition under Article 226 was maintainable and the High Court was wrong to dismiss it for alternative remedy. On the merits, the power of provisional attachment is draconian, the conditions must be strictly fulfilled, the opinion must rest on tangible material that the assessee is likely to defeat the demand, and the opportunity of being heard on objections is mandatory. The attachments were set aside.
Your Tribunal stay lapsed at 365 days through no fault of yours. Is that constitutional? No. The third proviso to s.254(2A), which vacated a stay after 365 days even where the delay was not attributable to the assessee, violates Article 14. A stay now vacates only where the delay is attributable to you.
Is 20% of the disputed demand a fixed price for a stay, or can the officer take less? Less is possible. The CBDT Office Memoranda of 29 February 2016 and 31 July 2017 do not fetter the quasi-judicial discretion of the officer or the Commissioner, who may on the facts grant stay on a deposit of under 20%.
The sole proprietor died while a demand was pending. Can the department carry on the assessment against his widow and daughters? Not under the Central Excises and Salt Act 1944. The Supreme Court held that assessment proceedings against a dead person's legal representatives cannot continue where the statute contains no machinery provision for it, and that Act, unlike the Income-tax Act, has none. Section 11 deals only with modes of recovery of sums already payable and says nothing about dead persons. Equitable or moral considerations, including unlawful enrichment, have no place in construing a taxing statute. The Kerala High Court's Division Bench judgment was set aside and the Single Judge's order quashing the proceedings restored.
My settlement application was admitted years before the Commission passed its final order — can it charge me section 234B interest for that whole period, and reopen the settled order later to add interest it forgot? No to both. A Constitution Bench of the Supreme Court held on 21 October 2010 that sections 234A, 234B and 234C do apply to Settlement Commission proceedings, but only up to the order admitting the case under section 245D(1). Parliament did not extend the liability beyond the date of the settlement application, so no interest runs between admission and the final order under section 245D(4). Hindustan Bulk Carrier, which had taken the section 245D(4) date as the terminus, does not survive on that point. And the Commission cannot reopen its concluded proceedings under section 154 to levy interest it did not levy at the time, section 245I making its order final.
Can interest under ss.234A, 234B and 234C be waived? Not by the authority hearing your case. The levy is mandatory and automatic, and even the Settlement Commission cannot reduce or waive it. The only route to relief is a CBDT circular issued under s.119.
The TRO has attached property the defaulter transferred years ago and calls the transfer void. Can he do that? No. In a Rule 11 enquiry under the Second Schedule the Tax Recovery Officer can only decide who is in possession and in what capacity; he has no power to declare a transfer by the assessee to a third party void under s.281. To get that declaration the Department must file a suit.
I have a strong case against the demand. Will the High Court stay recovery if I offer a bank guarantee for the amount? Not on that alone. The Supreme Court set aside interim orders that had restrained collection of revenue against a bank guarantee, holding that even an established prima facie case is not sufficient justification for such an order. Where public revenue is concerned more is required: the balance of convenience must be clearly in favour of an interim order and there must not be the slightest indication of likely prejudice to the public interest. Governments are not run on bank guarantees, and liquid cash is necessary to run a government as much as any other enterprise. The appeal was allowed with costs.
My assessment was reduced in appeal after the officer had already sent a recovery certificate to the Collector and my property was attached. Can he carry on with the old certificate? No, on the law as it then stood. By a majority the Supreme Court held that once the assessment order is revised in appeal, the notice of demand founded on it, the default and the recovery proceedings that followed are superseded. There cannot be two defaults in respect of one liability, so the officer must serve a fresh notice of demand for the amount now due, give the assessee an opportunity to pay, and only then treat him as in default. The Mysore High Court had rightly quashed the certificates and the attachment. Shah J dissented, holding that a modification which does not vacate the assessment leaves the earlier default intact.
Can a bank account be provisionally attached under s.281B at all, and how much can be attached? Yes. A Division Bench of the Kerala High Court held that money in bank accounts is property liable to provisional attachment under s.281B, reversing a single judge who had held otherwise. But the attachment must be commensurate with the probable demand including penalty, and must not be a blanket order attaching property worth far more than that demand.
Can the interest on my tax demand be waived because paying it is a genuine hardship? Only if all three conditions in s.220(2A) are satisfied together — genuine hardship, default due to circumstances beyond your control, and cooperation in the inquiry or the recovery proceedings. Failing any one limb defeats the application, and the Bombay High Court will not re-appreciate a reasoned rejection by the Chief Commissioner.
The officer has attached my cash credit account under 226(3). Can an unutilised overdraft limit be garnished? No. Section 226(3) is garnishee machinery: it reaches money due to the assessee or held for him, which presupposes a debtor-creditor relationship. A bank that has merely sanctioned a cash credit or overdraft limit owes the customer nothing until it is drawn — if anything, drawing makes the customer the debtor.
Does a stay granted under s.220(6) lapse after six months, freeing the department to adjust your refund? No. A stay under s.220(6) operates until the appeal is disposed of. Combined with the missing prior intimation under s.245, the adjustment was quashed and Rs 211.42 crore was ordered refunded with interest.
The department wants to recover the company's tax dues from me because I was a director. Can they? No, not on directorship alone. Section 179(1) is subject to an escape clause, and once the director puts material on record showing the non-recovery was not due to his gross neglect, misfeasance or breach of duty, the burden is discharged and the officer must deal with that material.
Can the department recover a private company's tax from you personally as a director? Only after it has tried and failed to recover from the company. Section 179 is engaged where the tax cannot be recovered, and the notice and order must show what recovery steps were taken. Bare notices were quashed.
Your bank accounts are provisionally attached and the business cannot operate. Is there a way out short of paying? Yes — offer security. Provisional attachment exists to protect the revenue, not to freeze a business indefinitely. Where a bank guarantee and directors' undertakings could secure the revenue, continuation of the attachment was set aside.
The CPC has adjusted my entire refund against a demand that is under appeal. Do I have to file a separate stay application before I can complain? No. The Rajasthan High Court held that nowhere in section 220(6) is it specified that a stay application has to be filed; once an appeal under section 246A has been filed within time and in the prescribed form, the assessee is not to be treated as an assessee in default. Adjusting the whole refund suo motu, without the intimation and opportunity that section 245 requires, was held to be de hors sections 245 and 220(6) and outside the recovery machinery of sections 222 and 223. The Court directed refund, with statutory interest, of everything adjusted beyond twenty per cent of the disputed demand.
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).
Your refund was adjusted against an old demand. Did they have to tell you first? Yes, and beforehand. Intimation under s.245 must be given before the set-off is effected — not at the same time, and not afterwards. Failure to do so made the adjustment wholly illegal, and the refund was ordered with interest.
Your refund was adjusted against demands that were already stayed. Is that lawful? No. Section 245 requires previous intimation of the proposed adjustment, not simultaneous intimation — and the demands adjusted were covered by subsisting stay orders. The full refund was ordered paid within four weeks.
The department has passed an order under s.179 making me liable for my company's tax. Must the notice first show that recovery from the company failed? Yes. That the tax cannot be recovered from the company is a condition precedent to any action under s.179, and the satisfaction of it must appear in the show-cause notice and in the order itself. A notice silent on what steps were taken against the company cannot be saved by explaining it later in an affidavit-in-reply. The order and the consequential s.226(3) notices to the banks were quashed.
The AO rejected my stay application in a few lines and told me to pay 20%. Can that order stand? No. An order under s.220(6) that brushes aside the assessee's submissions and mechanically directs payment of 20% is not a speaking order and will be quashed. The Gujarat High Court also held that a penalty demand is not 'tax', so the CBDT's 20% benchmark and the parameters that govern a tax demand do not simply carry across to a penalty appeal.
The stay order just says 'pay 20% as per Board's circular'. Is that a decision? No. Stay applications must be decided by reference to prima facie case, financial stringency and balance of convenience, and communicated as a speaking order. CBDT circulars are guidelines and cannot substitute those basic tests.
Must you pay 20% while your first appeal is still undecided? On this decision, no. During the pendency of the appeal the petitioner was not to be called upon to pay any sum, much less 20%, and the bank attachment was directed to be raised — because a statutory right of appeal should not be rendered illusory.
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.
My ITAT stay has crossed 365 days and the appeal is still not decided. Can the Tribunal extend it? Yes, where the delay is not attributable to you. The Bombay High Court held that the Tribunal retains the power to extend a stay beyond 365 days despite the substituted third proviso to s.254(2A), because the power to grant interim relief must be read as coextensive with the power to grant final relief under s.254(1).
Under s.179 the burden is on me to disprove gross neglect. Does the Tax Recovery Officer have to deal with what I say? Yes. The burden under the proviso to s.179(1) is cast in the negative and lies on the director, but once he places the necessary facts before the Tax Recovery Officer, the officer must apply his mind and record definite findings. Here the three grounds on which the Officer had found gross neglect were held unsustainable and the order was quashed. The Court also held the department need not wait for the company's appeal to be decided before invoking s.179.
The AO rejected my stay application and issued a garnishee notice to my bank the same day. Is that permissible? The Delhi High Court held that issuing a notice under s.226(3) on the very day the stay application was rejected, and emptying the bank account two days later, carried an element of impropriety and arbitrariness, even though it could not be said to be illegal. The Court ordered the money reversed to the account and restrained coercive steps until the Tribunal decided the stay application.
You can afford to pay. Does that mean the stay must be refused? The stay was granted, but not on the ground the entry previously gave. The Court held that the power to stay recovery is a judicial power and that the authorities owe a duty of fairness. On the facts — a demand twice reduced on rectification, arguable submissions on each of the three additions still to be considered in appeal, and Rs 78 lakh of the demand already met by adjustment of a refund — the Commissioner ought to have considered more carefully whether a stay was warranted, and recovery of the balance of Rs 40.54 lakh was stayed pending the appeal.
Can they attach your bank account while the stay application is still pending? No. Recovery should not be made pending expiry of the appeal period or disposal of the stay application, and for a reasonable period after — so you can approach a higher forum. Reasonable prior notice must also precede withdrawal from an attached account.
The Commissioner (Appeals) wiped out my demand and the tax was refunded; then the Tribunal restored the assessment. Am I charged s.220(2) interest for the years in between? Yes, on this decision, and the reason matters. The Delhi High Court held that where an assessment is restored on appeal the original demand revives from inception, so interest under s.220(2) runs on the unpaid amount from the expiry of thirty days from the notice of demand, and an intervening appellate order in the assessee's favour — even one that wiped out the demand and produced a refund — makes no difference to the liability for interest. The boundary of the holding is that the assessee here had not paid the full demand: where the demand was satisfied in full and promptly, Vikrant Tyres Ltd. v. First ITO [2001] 247 ITR 821 (SC) holds that no interest can be charged, and this judgment distinguishes that case rather than displacing it.
My assessment is many times my returned income, the Assessing Officer has refused stay and attached my bank account. Can the Commissioner (Appeals) stay the demand while my appeal is pending? Yes. The Rajasthan High Court held that the first appellate authority - the Commissioner (Appeals) or Deputy Commissioner (Appeals) - has inherent, implied and ancillary power to stay recovery of a disputed demand while an appeal under section 246 or 246A is pending, even though the Act confers no express power. It followed ITO v. M.K. Mohammed Kunhi. It also held that section 220(6) is not a stay power at all but a discretion not to treat the assessee as in default, and that on a high-pitched assessment - in the spirit of CBDT Instruction No.95 of 1969, where the assessed income is twice the returned income or more - that discretion should ordinarily be exercised in the assessee's favour.
Your bank account was attached while the stay application was still pending. Was that lawful? On this reasoning, no. Section 226(3)(iii) uses 'shall', so notice to you before attachment is mandatory, and where a stay application is on file with an appeal pending the officer should decide it before attaching.
My tenant deducted tax from my rent but never paid it over or gave me a Form 16A. The department is now recovering it from me - can it? No. The Karnataka High Court quashed the demand to that extent. Section 205 bars a direct demand on the assessee to the extent tax has been deducted from her income, and the section says nothing about the deducted tax having been remitted. The word deduct in section 205 cannot be read as deducted and remitted. The person deducting acts as an agent of the Revenue under a statutory compulsion the payee cannot resist, so his default cannot be visited on her. The Revenue must recover from the deductor, and was restrained from enforcing the demand against the landlord by any coercive method.
What is the officer actually required to do when deciding your stay application? Four things: set out your case briefly, give short prima facie reasons if directing a part deposit, indicate whether you are financially sound, and check whether the time to appeal has expired. Coercive measures should generally not be used during the appeal period.
The department has provisionally attached my bank accounts under s.281B while the assessment is still going on. What are the limits on that power? Provisional attachment under s.281B is in the nature of attachment before judgment under the Code of Civil Procedure. It is a drastic power, to be exercised with extreme care and caution, only where there is sufficient material to justify a satisfaction that the assessee is about to dispose of property to thwart collection, and only to the extent required. Attachment should be of immovable property where that protects the revenue; attachment of bank accounts and trading assets is a last resort.
I want to sell an asset or mortgage business assets while a tax demand is pending. How do I get permission? Apply to the Assessing Officer in the prescribed form at least thirty days before the proposed transaction. Permission is to be granted where there is no demand and none likely within six months, where an undisputed demand is paid with interest, or where a disputed demand is stayed and secured by bank guarantee, sufficient other assets or a departmental first charge; refusal must be by a reasoned order approved by the range head.
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.
Nothing here is written from memory. Every entry was found through a search, and the page for it links to where it was found, so you can check it rather than take our word for it. What has not happened yet is the part that matters most: nobody has read the certified copy of each judgment and signed off the summary against it. Until that is done, each page says Not yet CA-verified, and it means exactly what it says. Read the source before you rely on an entry in a reply to an Assessing Officer or in an appeal.