FAQs on Stay of Demand under Section 220(6)

Stay of Demand Under Section 220(6) of the Income-tax Act — FAQs Guide

Section 220(6) of the Income-tax Act, 1961 provides relief to taxpayers who have received a Notice of Demand under Section 156 but have filed an appeal against the underlying order. The provision empowers the Assessing Officer to treat the taxpayer as not being in default in respect of the disputed demand, subject to conditions.

In practical terms, Section 220(6) is the primary statutory protection against coercive recovery during pendency of appeal. This FAQ explains the scope, conditions, procedure, taxpayer rights, administrative instructions, and practical approach to seeking stay of demand under Section 220(6).

Stay of demand under Section 220(6) of the Income Tax Act explained through FAQs

FAQs On Stay of Demand Section 220(6)

Stay of demand under section 220(6) refers to the power of the Assessing Officer to grant relief to a taxpayer by treating him as not in default in respect of a tax demand, where an appeal against the assessment order has been filed.

A taxpayer can apply for stay of demand under section 220(6) after filing an appeal against the assessment order or intimation that has resulted in a tax demand.

Yes. Filing of a valid appeal is a pre-condition for seeking stay of demand under section 220(6). Without an appeal, stay cannot be granted under this provision.

No. Stay of demand under section 220(6) is not automatic. It is discretionary and subject to satisfaction of conditions by the Assessing Officer.

The Assessing Officer generally considers factors such as prima facie merits of the case, balance of convenience, financial hardship, and compliance with administrative instructions issued by the CBDT.

As per CBDT administrative instructions, stay may be granted on payment of a specified percentage of the disputed demand, subject to facts and circumstances of the case. However, rigid insistence on percentage payment is not mandatory in all cases.

Recovery proceedings should normally not be initiated once a stay application under section 220(6) is filed and is pending consideration, unless there are exceptional circumstances.

Stay of demand under section 220(6) generally remains valid till disposal of the appeal or for such period as specified in the stay order, subject to compliance with conditions imposed.

Yes. Stay granted under section 220(6) may be withdrawn if the taxpayer violates conditions of stay or if there is material change in facts.

If stay is rejected, the taxpayer may approach higher administrative authorities or seek judicial relief in appropriate cases.

FAQs on stay of demand under Section 220(6) during pendency of income tax appeal
Understanding stay of demand under Section 220(6) when tax demand is disputed in appeal

Key Takeaway

Section 220(6) acts as a critical safeguard against premature recovery of disputed tax demands. While the provision grants discretion to the Assessing Officer, such discretion must be exercised judiciously, keeping in view the taxpayer’s right to appellate remedy. The provision ensures that the appeal process is meaningful and not rendered illusory by coercive recovery.

In practice, timely filing of appeal, prompt submission of stay application, and proper articulation of financial hardship and legal merits are essential to secure relief under section 220(6). Taxpayers should treat a Notice of Demand as actionable immediately and proactively seek stay where the demand is disputed, to avoid recovery proceedings and interest accumulation.

Next steps

Key official sources

Section 220(6) stay of demand protecting taxpayers from income tax recovery
FAQs explaining stay of demand under Section 220(6) and protection from income tax recovery during appeal

Disclaimer

This FAQ is for informational purposes only and does not constitute legal or professional advice. Tax positions should be evaluated based on individual facts and applicable law.