Power of AO to Grant Stay — Whether Discretionary or Controlled By the Instructions and Circulars

1. GENERAL BACKGROUND AND SCOPE

1.1 Upon completion of the assessment of total income by the Assessing Officer (AO), the amount of tax payable by the assessee is determined. It is quite common to see huge additions being made, in many cases, which result in huge demands arising as a result of a tax on additions made to the returned income and interest thereon under section 234B (and in cases where the return of income was filed beyond due date than under section 234A as well). The amount determined to be payable by the assessee is stated in the notice of demand issued under section 156 and the amount so mentioned is generally payable within 30 days from the date of issue of the notice of demand. The notice of demand issued under section 156 of the Act accompanies the assessment order.

1.2 Non-payment of the amount specified in the notice of demand, which is validly served on the assessee, within the time mentioned in the notice will mean that the assessee becomes an `assessee in default’ and consequently is liable to not only interest and penalty being levied on the amount of demand which is unpaid but also coercive steps being taken for recovery of the unpaid amount. Refunds of other years may be adjusted against such demands which have arisen as a r