Exercise of discretion under section 220(6) of the Income-tax Act, 1961, to treat the assessee as not being in default in respect of the amounts disputed in first appeal pending before Deputy Commissioner Appeals)/Commissioner of Income-tax (Appeals) - Income Tax - 530/1989

Exercise of discretion under section 220(6) of the Income-tax Act, 1961, to treat the assessee as not being in default in respect of the amounts disputed in first appeal pending before Deputy Commissioner Appeals)/Commissioner of Income-tax (Appeals) Circular No. 530 Dated 6/3/1989 Under section 220(6) of the Income-tax Act, 1961, where an assessee has presented an appeal under section 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 under section 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 exists 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 issues that have been decided in favour of the assessee in an earlier order by an appellate authority or court in the 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 above, the Assessing Officer will no longer be bound by these instructions and will exercise his discretion 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 discretion under this provision, the financial capacity of the assessee to pay the demand will not be relevant. 5. The Chief Commissioners and Directors-General of Income-tax may please bring these guidelines to the notice of all officers in their regions. The guidelines will apply, mutatis mutandis, to the demands created under other Direct Tax Laws also. (sd.) V.K. Mangotra, Secretary, Central Board of Direct Taxes.