Stay of income-tax demand requires reasoned consideration of relevant factors before instalment recovery is enforced.

An order fixing payment of disputed income-tax demand in instalments under Section 220(6) must reflect proper application of mind to the relevant stay factors and be issued as a speaking order. CBDT Circular No. 1914/1993 dated 02.02.1993 requires consideration of all material circumstances before deciding a stay application. Where the order does not show such consideration, it is liable to be set aside for fresh determination on merits, and recovery may be kept in abeyance pending reconsideration.

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Issues: Whether the impugned order passed under Section 220(6) of the Income-tax Act, 1961, fixing payment of the disputed demand in instalments, could be sustained when it was challenged for want of proper consideration and whether the matter required reconsideration in the light of the CBDT circular governing stay of demand.

Analysis: The order under challenge required the petitioner to deposit the demand in instalments. The Court noted that the impugned order did not disclose proper application of mind to the relevant factors bearing on the stay application. It also relied on the CBDT guidelines under Circular No.1914/1993 dated 02.02.1993, which contemplate consideration of all relevant factors and communication of the decision by a speaking order. Following the earlier decision referred to in the order, the Court held that the matter should be reconsidered by the authority on merits.

Conclusion: The impugned order was set aside to the extent of requiring fresh consideration and the matter was remitted to the first respondent for a fresh order on merits. Recovery proceedings were directed to remain in abeyance until such reconsideration.

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