Whether Assessing Officer can exercise discretion under section 220(6) to treat assessee as not being in default in respect of amounts disputed in first appeal pending before Deputy Commissioner (Appeals)/Commissioner (Appeals)
1. Reference is invited to Board’s Circular No. 530 [F. No. 404/82/88-ITCC], dated March 6, 1989 regarding the above-mentioned subject.
2. According to paragraph 2 of the said Circular, the Assessing Officer is, in the two situations referred to in that paragraph, bound to treat the assessee as not in default in respect of the amount in dispute in appeal. In respect of other cases, the Circular stated in paragraph 4—
“In respect of other cases, not covered by para 2 above, Assessing Officer will take into account all the relevant factors and communicate his decision to the assessee in the form of a speaking order. While exercising discretion under this provision, the financial capacity of the assessee to pay the demand will not be relevant.”
3. Representations have been received by the Board that the exclusion of financial capacity of the assessee to pay the demand, from the factors relevant for exercise of Assessing Officer’s discretion under section 220(6) of the Income-tax Act, is prejudicial to those assessees who are not financially sound.
4. The matter has been reconsidered by the Board. It has been decided to substitute paragraph 4 of Circular No. 530 by the following paragraph :
“In respect of other cases not covered by paragraph 2 above, the Assessing Officer, while considering the situation for treating the assessees to be not in default, would consider all relevant factors having a bearing on the demand raised and communicate his decision to the assessee in the form of a speaking order.”
Circular : No. 589, dated 16-1-1991.
