CHAPTER XVII - COLLECTION AND RECOVERY OF TAX | D.—COLLECTION AND RECOVERY
CHAPTER XVII - COLLECTION AND RECOVERY OF TAX | D.—COLLECTION AND RECOVERY
Section 225 — Stay of Proceedings in Pursuance of Certificate and Amendment or Cancellation Thereof
Case Laws & Commentary — Income-tax Act, 1961 (as amended by the Finance Act, 2026) — bharattax.co Treatise
Status: Live; empowers the TRO to grant time and stay recovery, and obliges him to stay the reduced portion of a demand pending further proceedings and to amend/cancel the certificate when the order becomes final.
Finance Act, 2026: No amendment by the Finance Act, 2026.
Mechanism: TRO may grant time to pay and, when he does, must stay recovery for that period (225(1)) → where the demand is reduced in appeal but is the subject of further proceedings, the TRO must stay recovery of the reduced part for the period those proceedings remain pending (225(2)) → when the order becomes final and conclusive, the TRO must amend or cancel the certificate accordingly (225(3)).
Litigation profile: Lightly litigated; works in tandem with section 220(6) stay jurisprudence at the recovery stage.
A. COMMENTARY
Stay at the recovery stage
While section 220(6) governs stay by the Assessing Officer pending first appeal, section 225 operates at the TRO/certificate stage. It allows the TRO to grant time (with an automatic stay for that period) and, importantly, mandates a stay of the reduced portion of a demand where an appellate order reduces the demand but is itself under challenge. Sub-section (3) closes the loop by requiring the certificate to be amended or cancelled once the underlying order is final and conclusive.
Practical effect
Section 225 ensures the certificate never overstates the live arrears and that recovery does not outrun the finally-determined liability. The KEC International / UTI Mutual Fund discipline on stay applications informs the exercise of the TRO's power to grant time, although the primary stay battleground remains section 220(6).
B. STATUTORY TEXT (verbatim)
Reproduced from the Income-tax Act, 1961 as amended up to the Finance Act, 2025; the Finance Act, 2026 makes no amendment to this section. Editorial '[Omitted...]' notes are those of the Legislature.
Stay of proceedings in pursuance of certificate and amendment or cancellation thereof.
225. (1) It shall be lawful for the Tax Recovery Officer to grant time for the payment of any tax and when he does so, he shall stay the proceedings for the recovery of such tax until the expiry of the time so granted.
(2) Where the order giving rise to a demand of tax for which a certificate has been drawn up is modified in appeal or other proceeding under this Act, and, as a consequence thereof, the demand is reduced but the order is the subject-matter of further proceeding under this Act, the Tax Recovery Officer shall stay the recovery of such part of the amount specified in the certificate as pertains to the said reduction for the period for which the appeal or other proceeding remains pending.
(3) Where a certificate has been drawn up and subsequently the amount of the outstanding demand is reduced as a result of an appeal or other proceeding under this Act, the Tax Recovery Officer shall, when the order which was the subject-matter of such appeal or other proceeding has become final and conclusive, amend the certificate, or cancel it, as the case may be.
C. AUTHORITIES
Candour rule applied; the cognate stay-discipline authorities (under section 220(6)) inform the TRO's power to grant time.
1. Cognate stay-discipline authorities
UTI Mutual Fund v. ITO (2012) 345 ITR 71 (Bombay)
Relevance Recovery should not be coercive while a stay/appeal is pending; a reasonable opportunity must be allowed to approach a higher forum — principles that inform the TRO's exercise of the power to grant time and stay under section 225.
Use Cited at the recovery stage to resist coercive steps despite a subsisting reduction/challenge.
KEC International Ltd. v. B.R. Balakrishnan (2001) 251 ITR 158 (Bombay)
Relevance Guidelines on reasoned disposal of stay applications; applied by analogy to the TRO's discretion to grant time and stay recovery.
Use Supports a speaking order when the TRO declines to grant time.
CHAPTER XVII - COLLECTION AND RECOVERY OF TAX | D.—COLLECTION AND RECOVERY
Section 225 — Stay of Proceedings in Pursuance of Certificate and Amendment or Cancellation Thereof
Case Laws & Commentary — Income-tax Act, 1961 (as amended by the Finance Act, 2026) — bharattax.co Treatise
Status: Live; empowers the TRO to grant time and stay recovery, and obliges him to stay the reduced portion of a demand pending further proceedings and to amend/cancel the certificate when the order becomes final.
Finance Act, 2026: No amendment by the Finance Act, 2026.
Mechanism: TRO may grant time to pay and, when he does, must stay recovery for that period (225(1)) → where the demand is reduced in appeal but is the subject of further proceedings, the TRO must stay recovery of the reduced part for the period those proceedings remain pending (225(2)) → when the order becomes final and conclusive, the TRO must amend or cancel the certificate accordingly (225(3)).
Litigation profile: Lightly litigated; works in tandem with section 220(6) stay jurisprudence at the recovery stage.
A. COMMENTARY
Stay at the recovery stage
While section 220(6) governs stay by the Assessing Officer pending first appeal, section 225 operates at the TRO/certificate stage. It allows the TRO to grant time (with an automatic stay for that period) and, importantly, mandates a stay of the reduced portion of a demand where an appellate order reduces the demand but is itself under challenge. Sub-section (3) closes the loop by requiring the certificate to be amended or cancelled once the underlying order is final and conclusive.
Practical effect
Section 225 ensures the certificate never overstates the live arrears and that recovery does not outrun the finally-determined liability. The KEC International / UTI Mutual Fund discipline on stay applications informs the exercise of the TRO's power to grant time, although the primary stay battleground remains section 220(6).
B. STATUTORY TEXT (verbatim)
Reproduced from the Income-tax Act, 1961 as amended up to the Finance Act, 2025; the Finance Act, 2026 makes no amendment to this section. Editorial '[Omitted...]' notes are those of the Legislature.
Stay of proceedings in pursuance of certificate and amendment or cancellation thereof.
225. (1) It shall be lawful for the Tax Recovery Officer to grant time for the payment of any tax and when he does so, he shall stay the proceedings for the recovery of such tax until the expiry of the time so granted.
(2) Where the order giving rise to a demand of tax for which a certificate has been drawn up is modified in appeal or other proceeding under this Act, and, as a consequence thereof, the demand is reduced but the order is the subject-matter of further proceeding under this Act, the Tax Recovery Officer shall stay the recovery of such part of the amount specified in the certificate as pertains to the said reduction for the period for which the appeal or other proceeding remains pending.
(3) Where a certificate has been drawn up and subsequently the amount of the outstanding demand is reduced as a result of an appeal or other proceeding under this Act, the Tax Recovery Officer shall, when the order which was the subject-matter of such appeal or other proceeding has become final and conclusive, amend the certificate, or cancel it, as the case may be.
C. AUTHORITIES
Candour rule applied; the cognate stay-discipline authorities (under section 220(6)) inform the TRO's power to grant time.
1. Cognate stay-discipline authorities
UTI Mutual Fund v. ITO (2012) 345 ITR 71 (Bombay)
Relevance Recovery should not be coercive while a stay/appeal is pending; a reasonable opportunity must be allowed to approach a higher forum — principles that inform the TRO's exercise of the power to grant time and stay under section 225.
Use Cited at the recovery stage to resist coercive steps despite a subsisting reduction/challenge.
KEC International Ltd. v. B.R. Balakrishnan (2001) 251 ITR 158 (Bombay)
Relevance Guidelines on reasoned disposal of stay applications; applied by analogy to the TRO's discretion to grant time and stay recovery.
Use Supports a speaking order when the TRO declines to grant time.