Judicial exercise of discretion under tax recovery stay provisions cannot be refused mechanically when an appeal is pending.

Section 220(6) of the Income-tax Act, 1961 requires the Assessing Officer to exercise discretion judiciously, with application of mind, when considering stay of recovery of a disputed demand during pendency of appeal. A stay request cannot be rejected mechanically merely because an appeal has been filed, and it is improper to comment on the merits of issues still pending in appeal while deciding the stay application. The order rejecting stay was therefore unsustainable, and the writ petition was allowed with the impugned rejection set aside and quashed.

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Issues: Whether the order rejecting stay of recovery of tax demand under section 220(6) of the Income-tax Act, 1961, was vitiated for having been passed mechanically and without proper exercise of discretion.

Analysis: Section 220(6) empowers the Assessing Officer, where an appeal is pending, to treat the assessee as not being in default in respect of the disputed demand, subject to such conditions as may be imposed. The discretion under the provision is required to be exercised judiciously and with application of mind. The impugned order rejected the stay application merely because an appeal had been filed and also commented upon the merits of the assessment, even though those matters were pending in appeal. Such reasoning was inconsistent with the statutory scheme and showed a mechanical exercise of discretion.

Conclusion: The rejection of the stay application was unsustainable and was set aside and quashed. The assessee succeeded on this issue.

Final Conclusion: The writ petition was allowed, and the pending appeal was directed to be disposed of expeditiously.

Ratio Decidendi: Discretion under section 220(6) of the Income-tax Act, 1961, must be exercised judiciously on relevant considerations and cannot be rejected mechanically merely because an appeal is pending.

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