Tax demand stay under Section 220(6) must be reconsidered on merits when rejection rests on an erroneous instruction-based premise.

An order rejecting a request to keep tax demand in abeyance under Section 220(6) could not be sustained where it rested solely on the view that the assessee was outside the scope of Instruction No. 1914 and the related office memoranda. The HC found that this premise was erroneous and that the stay request had to be examined under the applicable statutory framework and instruction. The impugned order was therefore set aside, and the interim stay application was remitted to the Assessing Officer for fresh consideration on merits and in accordance with law.

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Issues: Whether the order rejecting the petitioner's request to keep the tax demand in abeyance under Section 220(6) of the Income-tax Act, 1961, solely on the ground that Instruction No. 1914 dated 02.12.1993 and the subsequent Office Memoranda did not apply, was liable to be set aside and the matter remitted for reconsideration.

Analysis: The rejection order proceeded only on the premise that the petitioner was outside the scope of the applicable stay instruction. That premise was not disputed and was found to be erroneous. Since the interim request had to be examined with reference to the instruction read with Section 220(6), the order could not stand on the sole basis adopted by the Assessing Officer.

Conclusion: The impugned order was set aside and the interim stay application was remitted to the Assessing Officer for fresh consideration on merits and in accordance with law, including application of the relevant instruction.

Final Conclusion: The petitioner obtained relief against the rejection of the stay request, but the request itself remains open for reconsideration by the Assessing Officer.

Ratio Decidendi: An order declining stay of demand cannot be sustained where it rests solely on an erroneous view that the assessee is outside the governing stay instruction, and the matter must be reconsidered on its merits under the applicable statutory framework.

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