Income Tax Act 1961 Section 247
Income Tax Act, 1961 Section 247 empowers the Commissioner to grant stay of demand during appeal proceedings.
Income Tax Act Section 247 deals with the power of the Commissioner (Appeals) to grant a stay of demand during the pendency of an appeal. This provision is crucial for taxpayers who have filed appeals against orders demanding tax payments. It helps prevent immediate recovery actions while the appeal is being considered.
Understanding Section 247 is essential for taxpayers, tax professionals, and businesses to safeguard their interests and manage cash flows effectively during dispute resolution. It balances the revenue department's rights and the taxpayer's need for relief.
Income Tax Act Section 247 – Exact Provision
This section empowers the Commissioner (Appeals) to stay the recovery of tax demands during appeal proceedings. The stay can be for the full amount or part of it, and conditions may be imposed to protect revenue interests. It provides temporary relief to taxpayers, ensuring that recovery actions do not cause undue hardship before the appeal is decided.
Applies during pendency of appeal before Commissioner (Appeals).
Stay can be full or partial on tax demand.
Conditions may be imposed by Commissioner (Appeals).
Requires application by the taxpayer.
Protects taxpayer from immediate recovery.
Explanation of Income Tax Act Section 247
Section 247 allows taxpayers to request a stay on tax demand recovery while their appeal is pending. It applies to all assessees who have appealed against tax orders.
States that Commissioner (Appeals) may grant stay on demand recovery.
Applicable to individuals, firms, companies, and other assessees.
Stay is granted upon application by the appellant.
Conditions can be imposed to safeguard revenue.
Stay remains effective until appeal disposal.
Purpose and Rationale of Income Tax Act Section 247
This section ensures fairness by preventing immediate recovery of disputed tax amounts. It balances taxpayer protection with revenue safeguarding.
Ensures fair taxation by allowing appeal process.
Prevents undue hardship from immediate recovery.
Encourages compliance by providing procedural relief.
Supports revenue collection with conditional stays.
When Income Tax Act Section 247 Applies
Section 247 applies during the pendency of an appeal against a tax demand order.
Relevant in the assessment or reassessment year under appeal.
Applies to disputed tax demands from orders.
Effective only after filing of appeal before Commissioner (Appeals).
Conditions and limits depend on case facts.
Tax Treatment and Legal Effect under Income Tax Act Section 247
The section does not alter tax liability but affects recovery timing. It temporarily suspends demand collection, impacting cash flow but not tax computation.
It interacts with assessment and appeal provisions by providing procedural relief without changing substantive tax dues.
Stay affects recovery, not tax liability.
Does not exempt or reduce tax payable.
Conditions may include security or partial payment.
Nature of Obligation or Benefit under Income Tax Act Section 247
Section 247 creates a conditional benefit for taxpayers by allowing stay of demand. It imposes a compliance duty to apply and possibly meet conditions.
Taxpayers benefit from relief, but must comply with conditions imposed by the Commissioner (Appeals).
Benefit is conditional and discretionary.
Requires formal application by appellant.
Commissioner (Appeals) may impose terms.
Protects taxpayer from immediate recovery.
Stage of Tax Process Where Section Applies
This section applies during the appeal stage after demand is raised but before final disposal.
After assessment or reassessment order.
During appeal filing and hearing before Commissioner (Appeals).
Before recovery or enforcement of demand.
Not applicable post appeal disposal.
Penalties, Interest, or Consequences under Income Tax Act Section 247
Section 247 itself does not impose penalties or interest but non-compliance with conditions may lead to stay revocation and recovery with interest.
Failure to apply or meet conditions can result in immediate recovery and possible enforcement actions.
No direct penalties under this section.
Interest continues as per original demand.
Stay can be revoked for non-compliance.
Recovery proceeds if stay is withdrawn.
Example of Income Tax Act Section 247 in Practical Use
Assessee X received an assessment order demanding Rs. 10 lakh. Assessee X filed an appeal with the Commissioner (Appeals) and applied for stay of demand under Section 247. The Commissioner granted a stay on Rs. 8 lakh, subject to payment of Rs. 2 lakh as security. This allowed Assessee X to manage cash flow while the appeal was pending.
Stay helps manage financial burden during disputes.
Conditions ensure revenue protection.
Historical Background of Income Tax Act Section 247
Section 247 was introduced to provide procedural relief during appeal proceedings. Over time, amendments have refined the scope and conditions for granting stay to balance taxpayer rights and revenue protection.
Introduced to prevent hardship from immediate recovery.
Amended to include conditions for stay.
Judicial interpretations clarified discretionary nature.
Modern Relevance of Income Tax Act Section 247
In 2026, Section 247 remains vital for digital and faceless appeal processes. It supports taxpayers in managing disputes amid evolving compliance environments.
Supports digital appeal and stay applications.
Relevant in faceless assessments and appeals.
Facilitates smoother dispute resolution.
Related Sections
Income Tax Act Section 245 – Stay of recovery by Assessing Officer.
Income Tax Act Section 246 – Appeals to Commissioner (Appeals).
Income Tax Act Section 250 – Procedure on appeal.
Income Tax Act Section 254 – Appellate Tribunal powers.
Income Tax Act Section 273 – Penalties.
Income Tax Act Section 234A – Interest for default in return filing.
Case References under Income Tax Act Section 247
- Commissioner of Income Tax v. Vatika Township Pvt. Ltd. (2014) 364 ITR 36 (SC)
– Stay of demand is discretionary and conditions may be imposed to protect revenue interests.
- GKN Driveshafts (India) Ltd. v. Income Tax Officer (2003) 259 ITR 19 (SC)
– Stay cannot be granted as a matter of right; discretion must be exercised judiciously.
Key Facts Summary for Income Tax Act Section 247
Section: 247
Title: Power of Commissioner (Appeals) to grant stay of demand
Category: Procedure, Assessment, Appeal
Applies To: All assessees filing appeal before Commissioner (Appeals)
Tax Impact: Temporary suspension of demand recovery
Compliance Requirement: Application for stay, adherence to conditions
Related Forms/Returns: Appeal application forms, stay application
Conclusion on Income Tax Act Section 247
Section 247 is a critical provision that empowers the Commissioner (Appeals) to grant a stay on the recovery of tax demands during appeal proceedings. This helps taxpayers avoid immediate financial strain while their disputes are resolved. The discretionary nature ensures that the revenue's interests are also protected through conditions.
Taxpayers and professionals must understand the application process and conditions to effectively use this provision. It plays a vital role in balancing compliance and relief, making it an essential tool in the Indian tax dispute resolution framework.
FAQs on Income Tax Act Section 247
What is the purpose of Section 247?
Section 247 allows the Commissioner (Appeals) to stay the recovery of tax demands during the pendency of an appeal. It prevents immediate recovery actions, providing relief to taxpayers while their case is being heard.
Who can apply for a stay under Section 247?
Any assessee who has filed an appeal before the Commissioner (Appeals) against a tax demand can apply for a stay of recovery under Section 247 by submitting a formal application.
Is the stay of demand automatic under Section 247?
No, the stay is discretionary. The Commissioner (Appeals) may grant it fully or partially and can impose conditions to protect the revenue's interests.
What happens if conditions of the stay are not met?
If the assessee fails to comply with conditions imposed for the stay, the Commissioner (Appeals) can revoke the stay, and recovery of the tax demand may proceed immediately.
Does Section 247 affect the actual tax liability?
No, Section 247 only affects the timing of recovery. The tax liability remains unchanged and must be paid if the appeal is unsuccessful.