ISSUE FOR CONSIDERATION
The tax demanded vide a notice under section 156, issued in pursuance of an order of assessment, is required to be paid within 30 days of the demand. A provision is made under section 220 for a stay of the recovery proceeding in deserving cases on an application to the AO in cases where an appeal is filed before CIT(A) against the assessment order. A similar provision is made under section 253(7) in cases where an appeal is filed before the Appellate Tribunal. No specific criteria have been laid down by section 220(6) or section 253(7) for the grant of stay, and the decision to stay the demand or otherwise is left to the discretion of the AO or the Tribunal. The Courts have held from time to time that a demand for tax should be stayed on satisfaction of troika of conditions which are financial stringency, prima facie case or high-pitched assessment and the possibility of success in appeal, and lastly the balance of convenience.
The CBDT, under the Ministry of Finance, has issued guidelines, addressed to the AO, for stay of the recovery proceeding in the circumstances specified in the guidelines issued from time to time. The Board has advised the AO to stay the recovery proceeding in cases of financial difficulties and also in cases of high pitched assessment, and in cases where the issue in appeal is covered in favor of assessee by the order of Courts, where an appeal has been filed by the assessee, and i
