Stay applications under the Income-tax Act require a speaking order before coercive recovery or attachment can proceed.

Section 220(6) permits an assessee to seek treatment as not being in default for disputed demand while the appeal is pending, and the provision is not confined by the expiry of the demand period. A stay application under that provision must be decided on its merits by a speaking order, after considering the relevant factors and the assessee's grounds. Coercive recovery, including attachment of bank accounts or immovable property, should not proceed while such an application remains undecided or is rejected without application of mind. Board instructions on stay petitions likewise require prompt, reasoned disposal before recovery action is taken.

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Issues: Whether the Assessing Officer was required to decide the assessee's stay application under section 220(6) of the Income-tax Act, 1961 before resorting to coercive recovery and whether the attachment notices and the order imposing 50% pre-deposit could be sustained.

Analysis: Section 220(3) applies where extension of time for payment or instalments is sought before the due date, whereas section 220(6) empowers the Assessing Officer to treat an assessee as not being in default in respect of the disputed demand while the appeal remains pending, and that provision contains no limitation period. The refusal to entertain the stay application on the ground that it was filed after expiry of the demand period was therefore inconsistent with the scope of section 220(6). The Board instructions governing stay petitions required a prompt decision and a speaking order after considering relevant factors, and the impugned order was found to be a standard non-speaking order that did not address the assessee's grounds or the material circumstances. Coercive steps, including attachment of the bank account and flats, were taken while the stay application remained undecided, which was held impermissible.

Conclusion: The impugned order and recovery notices were unsustainable and were quashed, with consequential relief against the attachments.

Final Conclusion: The assessee obtained relief against coercive recovery, and the demand was directed to remain stayed on conditions pending disposal of the appeal.

Ratio Decidendi: A stay application under section 220(6) of the Income-tax Act, 1961 must be decided on its merits by a speaking order, and coercive recovery should not proceed while such application remains pending or is disposed of without application of mind.

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