CBDT's clarification on instructions on Stay of Demand
Letter [F.No. 404/10/2009-ITCC], dated 1-12-2009
Many queries have been received regarding the applicability of Instruction number 95 dated 21.8.1969 vis-à-vis Instruction number 1914 dated 2.12.1993. Many assesses are taking the plea that Instruction No. 1914 does not supercede Instruction No. 95 dated 21.8.1969.
2. Instruction No. 95 dated 22.8.1969 was an assurance given by the then Deputy Prime Minister during the 8th Meeting of the Informal Consultative Committee held on 13th May, 1969. The observations made by the Deputy Prime Minister were as under:-
"Where the income determined on assessment was substantially higher than the returned income, say twice the latter amount or more, the collection of the tax in dispute should be held in abeyance till the decision on the appeal provided there were no lapses on the part of the assesses."
The above observations were circulated to the field officers by the Board as Instruction number 95 dated 21.8.1969.
2. The matter has been considered by the Board and the decision of the Board has been approved by the Finance Minister. It is hereby clarified that subsequent to Instruction No. 95 following Instructions/clarifications on the stay of demand were issued till 15th October 1980:-
(i)Clarification to Instruction number 95 was issued on 14/09/1970 stating that it relates to disputed demands only.
(ii) Instruction number 635 was issued on 12/11/1973 stating that stay should be granted only in those cases where demands are attributable to substantial points of dispute.
(iii)Clarification to Instruction number 95 dated 13/07/1976 held that the Instruction becomes operative only in cases where there are no lapses on the part of the assessee.
(iv)Instruction number 1067 dated 21/06/1977 held that the ITO can pass the necessary orders u/s 220 (6) in all cases except cases under section 144A or 144B where the approval of IAC is required.
(v) Instruction number 1158 dated 27th March 1978 held that in suitable cases the assessee may be allowed to furnish security.
(vi) Instruction number 1282 dated 4th October 1979 held that requests should be made to CIT(A) and ITAT for early disposal of appeals and constant watch should be kept on progress of appeals.
(v) Instruction number 1362 was issued on 15/10/1980 in supersession of all the earlier Instructions. It was an Instruction covering the issue in detail and in para 4 of the same there was a clear reference to the proposition laid down in Instruction number 95 which is as follows:-
In exercising this discretion, the Income-tax Officer should take into account factors such as: whether the points in dispute relate to facts; whether they arise from different interpretations of law; whether the additions have been made as a result of detailed investigation; whether the additions are based on materials gathered through enquiry/survey/search and seizure operations; whether the disputed addition to income has been assessed elsewhere by way of protective assessment and the tax thereon has been paid by such person etc. The magnitude of addition to income returned cannot be the sole determinant in this regard. Each disputed addition will need to be considered to arrive at the quantum of tax that may need to be stayed.
3. It is clear that the substance of the assurance as laid down in Instruction number 95 dated 21.8.1969 was submerged in the Instruction number 1362 dated 15/10/1980 which was issued in supersession of all earlier Instructions on the subject. Instruction No. 1914 dated 2.12.1993 was issued subsequently in super-session of all the earlier Instructions on the subject and the said Instruction also covers unreasonably high pitched assessment order and genuine hardship cases.
4. It is therefore clarified that there is no separate existence of the Instruction number 95 dated 21.8.1969. Instruction number 95 and all subsequent Instructions on the issue ceased to exist from the date Instruction No. 1362 came into operation. In turn Instruction number 1362 and all subsequent Instructions on the issue also ceased to exist the day Instruction number 1914 came into operation i.e. 2/12/1993.The Instruction number 1914 holds the field currently and a copy of Instruction number 1914 is enclosed for reference.