Stay application under Income-tax Act requires reasoned consideration; mechanical 20% deposit condition was set aside.

An order on a stay application under the Income-tax Act is unsustainable if it mechanically insists on a 20% deposit without independently examining the stay request or recording brief reasons. The authority must consider the assessee's case, assess whether unconditional stay or partial deposit is justified, and give short prima facie reasons for any coercive recovery. Recovery should not ordinarily proceed before the appeal period expires and the stay application is disposed of. The impugned stay order was set aside and the matter remitted for fresh decision by a reasoned order.

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Issues: Whether an order on a stay application under the Income-tax Act, 1961 could be sustained when it directs deposit of 20% of the outstanding demand without independently considering the stay request and without a reasoned order.

Analysis: The settled position requires the authority deciding a stay application to briefly set out the assessee's case, consider whether unconditional stay or partial deposit is warranted, and record short prima facie reasons. Recovery should not ordinarily proceed before the appeal period expires and disposal of the stay application, and coercive recovery must be supported by brief reasons where justified. A mechanical insistence on 20% pre-deposit as a condition precedent for hearing the stay application is not in conformity with these principles or the CBDT guidelines referred to in the judgment.

Conclusion: The impugned stay order was unsustainable and was set aside, with the matter remitted to the competent authority to decide the stay application afresh by passing a reasoned order.

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