TMI Blog2000 (12) TMI 242X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 1,35,95,400 and the assessment was completed under section 143(3) on 30-3-2000 and the Assessing Officer assessed the income at Rs. 40,15,33,766. However, the assessee feeling aggrieved with the order of the Assessing Officer filed the appeal before the CIT(Appeals) which was decided on 20-10-2000 by the CIT(A) whereby books of account were rejected by the CIT(Appeals) and directed that an estimate of profit at 15 per cent GP rate should be adopted in the place of gross profit returned by the assessee and allow the appeal of the assessee partly. The assessee feeling aggrieved with the order of the CIT(Appeals) filed the appeal before the Tribunal on 6-12-2000 within limitation alongwith this stay petition. The Assessing Officer issued revised order giving effect to the order of the CIT(A) on dated 22-11-2000 and demanded tax of Rs. 1,75,99,062. According to the Assessing Officer, the demand was served on the assessee on 1st Dec., 2000. The Assessing Officer also raised demand under section 220(1) of the Income-tax Act, on 22-11-2000 and the same was served on the assessee on 1-12-2000. The Assessing Officer also issued interest demand under section 220(2). The same was also se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sal of the stay petition. However, this stay petition was adjourned to 11-12-2000 and under these circumstances, the Assessing Officer in spite of being aware of the pendency of the stay petition before the Tribunal proceeded with coercive action in mode of recovery and encashed the fixed deposits held by the assessee in the aforesaid Bank on 9-12-2000 towards the entire net demand of Rs. 1,75,99,062. According to the assessee, they have incurred a business loss in next year and have financial difficulties. The assessee further submitted that the recovery action of the Assessing Officer is without complying with the provisions of section 220 of the Act and, therefore, the Assessing Officer has acted arbitrarily and illegally. Therefore, in view of the aforesaid facts and statements the assessee prayed before us that on the ground of natural justice and equity to pass an appropriate order granting stay which is status quo anti with direction to the Assessing Officer to refund the said sum coercively acquired by the Department. Notices were given to the Revenue for both the petitions. 4. The learned counsel for the assessee besides relying upon the facts stated in both the stay pet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ximately. According to the learned counsel the assessee is assessed for the last 30 years and it was not a case of urgency and the business of the assessee is completely affected because of the illegal recovery made by the Assessing Officer and according to him, no demand notice was issued for the revised demand and no reasons have been given by the Assessing Officer under section 220 of the Act. The learned counsel also filed the letter dated 14-12-2000 of Indian Bank whereby the Banker of the assessee has directed it to confine overdraft limit to Rs. 25 lakhs only as the Department has attached their F.D. Rs. and the assessee has only limited overdraft facility as their business is badly affected. 5. On the other hand, the learned Departmental Representative through the Assessing Officer has filed written submissions which is on record and submitted that no valid appeal is pending before the Tribunal and tax amount has already been recovered from the assessee and as such, the stay petitions have become infructuous. According to him, the assessee has not made out any case for financial stringency and the assessee has not availed alternative remedy before the CIT administration. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h the parties, it would be appropriate if all these points are considered separately. We therefore consider appropriate to mention those points before further discussion on the matter. According to us the following points arise for consideration by this Tribunal: (i) Whether the Income-tax Appellate Tribunal has power to order and direct the Revenue on stay petitions, directions mandatory in nature or in the nature of anti status quo to refund or return the amount of tax already collected by the Revenue, (ii) Prima facie case, (iii) Balance of convenience, (iv) Financial status of the assessee, (v) Interest of the Revenue. 7. Point No. 1--Whether the Income-tax Appellate Tribunal has power to order and direct the Revenue on stay petitions, direction, mandatory in nature or in the nature of anti status quo to refund or return the amount of tax already collected by the Revenue:--The powers of the I.T.A.T. are defined under section 254(1) of the Act in which it is mentioned that:--The Appellate Tribunal may, after giving both the parties to the appeal an opportunity of being heard, pass such orders thereon as it thinks fit." Section 255(6) of the Act is reproduced for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he power of enhancement) which are conferred on the Appellate Assistant Commissioner by section 31." 9. The Hon'ble Bombay High Court in New India Life Insurance Co. Ltd. v. CIT [1957] 31 ITR 844 has held "The position of the Income-tax Appellate Tribunal is the same as a court of appeal in the Civil Procedure Court and its powers are "identical" with the powers enjoyed by the Appellate Court under the Code". 10. The Hon'ble Bombay High Court in CIT v. Hazarimal Nagji Co. [1962] 46 ITR 1168 has held "The powers of the Appellate Tribunal are similar to the powers of the Appellate Court" under the Civil Procedure Code. 11. The Hon'ble Kerala High Court in CIT v. Smt. P. K. Noorjehan [1980] 123 ITR 3 has held "The right of appeal to the Tribunal and the powers of the Appellate Tribunal are to be found in section 254 of the Act. Under section 254, the Tribunal is to pass "such orders on the appeal as it thinks fit". This is a wide power that is conferred upon the Tribunal. Unlike the case of a second appeal to this court under section 100 of the C.P.C., the power of interference by the Tribunal is not in any way limited to consideration of questions of law or otherwise, so that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icial or quasi-judicial Tribunal is an impartial legal discretion to be exercised in conformity with the spirit of law and in a manner to sub-serve rather than to defeat substantial justice. 14. The Hon'ble Supreme Court in the case of CIT v. Bansi Dhar Sons [1986] 157 ITR 665 has held "The power to grant stay is incidental and ancillary to appellate jurisdiction. What is true of appellate jurisdiction cannot be predicated of the advisory or consultative jurisdiction. 15. The Hon'ble Apex Court in the case of Esthuri Aswathiah v. CIT [1967] 66 ITR 478 has held "The function of the Appellate Tribunal in hearing an appeal is purely judicial. It is under a duty to decide all questions of fact and law raised in the appeal before it; for that purpose it must consider whether on the materials relied upon by the assessee his plea is made out. Conclusive proof of the claim is not predicated; the Tribunal may act upon probabilities, and presumptions may supply gaps in the evidence which may not, on account of delay or the nature of the transactions or for other reasons, be supplied from independent sources. But the Tribunal cannot make arbitrary decisions, it cannot found its judgment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A.T. has exercised its power earlier also to direct the Revenue to refund the tax amount already recovered during the pendency of the appeal and the stay petitions. 18. The Hon'ble Delhi High Court in the case in 1988 Rajdhani Law Reporter has held "that the mandatory injunction would be granted by the Courts in interim relief also." 19. Relying on the aforesaid catena of authorities and particularly, Esthuri Aswathiah's case, Industrial Credit Investment Corpn. of India Ltd.'s case all the Supreme Court decisions, order of the I.T.A.T., 'B' Bench and other authorities the crux of the sections 254, 255 and 131 of the I.T. Act would be that, this Tribunal can exercise powers of Civil Court and could pass order in the nature of mandatory/directions to the Department to refund/return the amounts recovered forcibly during the pendency of the stay petitions and the income-tax appeals. Section 254 is very clear and gives wide power to this Tribunal to pass such orders thereon as it thinks fit, according to facts and circumstances of each case and only fetter put is to give both the parties an opportunity of being heard. 20. We are therefore of the considered view that this Tribun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here under:-- "220(1). Any amount, otherwise than by way of advance tax, specified as payable in a notice of demand under section 156 shall be paid within (thirty) days of the service of the notice at the place and to the person mentioned in the notice; Provided that, where the (Assessing) Officer has any reason to believe that it will be detrimental to revenue if the full period of (thirty) days aforesaid is allowed, he may, with the previous approval of the (Joint Commissioner), direct that the sum specified in the notice of demand shall be paid within such period being a period less than the period of (thirty) days aforesaid, as may be specified by him in the notice of demand. (2) If the amount specified in any notice of demand under section 156 is not paid within the period limited under sub-section (1), the assessee shall be liable to pay simple interest at (one and one-half per cent for every month or part of a month comprised in the period commencing from the day immediately following the end of the period mentioned in sub-section (1) and ending with the day on which the amount is paid.) ..................... (3) Without prejudice to the provisions contained in sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the income-tax for the last 30 years. No sufficient time was given as per section 220 to pay the tax and no reasons have been recorded by the Assessing Officer to reduce the period of 30 days and therefore, the Assessing Officer has acted arbitrarily and illegally. According to the ld. Departmental Representative, the Assessing Officer was within her powers to reduce the period of recovery of arrears as per proviso to section 220(1) of the Act. The ld. Departmental Representative also relied upon the decision in Pitambardas Dulichand's case and also relied upon the provisions of Taxation Law Act, 1969, from textbook by Chaturvedi Pithisaria and photocopy was placed before us. 25. After considering the submissions of the parties, we are of the considered opinion that section 220(1) is mandatory in nature and the Assessing Officer has to issue notice under section 220(1) and to give 30 days time to the assessee to pay the amount of tax payable. Further proviso attached to this section says that where the Assessing Officer has any reason to believe that it will be detrimental to revenue if full period of 30 days aforesaid is allowed, then he may, with the previous approval of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... king several additions and determined the tax at Rs. 33,04,450, i.e., more than several times the income returned. The petitioner's appeal was pending before the Commissioner of Income-tax. In such a situation, the petitioner could not be treated to be in default and recovery proceedings until the disposal of the appeal would have to be kept in abeyance. The Board's instruction had desired the Recovery Officers to keep such recoveries in abeyance until disposal of the appeal by the appellate authority. Moreover, it was opposed to principles of good conscience and fair play that the disputed amount of tax is sought to be recovered even though the appeal is pending". 27. The Hon'ble Rajasthan High Court in the case of Maharana Shri Bhagwat Singhji of Mewar v. ITAT [1997] 223 ITR 192 has held "Circulars issued by the Central Board of Direct Taxes are binding on the authorities exercising powers under taxing statutes and have sufficient force of law. In view of Instruction No. 96 [F.No. 1-6-69 (ITCC)], dated August 21, 1969, of the Board, it is clear that where the income determined on assessment was substantially higher than the returned income, twice the latter amount or more, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecided. Hence, the principle of merger could be applied only on the final decision of the appeal pending before us. Therefore, in our opinion, the judgment relied upon by the ld. Departmental Representative is not applicable to the facts and circumstances of this case. We have also considered the Taxation Law Act as relied upon by the Departmental Representative from same textbook and in our considered view this would also not help the Revenue. In this case, originally demand was issued by the CIT(A) and the order was issued by the Assessing Officer on 22-11-2000. If the Department was of the view that no notice was required under section 220(1) and demand was payable originally without an earlier notice under section 156 of the Act, in our view there was no need for the Assessing Officer to issue notice under section 220(1). This plea in our view has been taken in haste by the Assessing Officer. The time is given under section 220(1) of the Act so that the assessee may either deposit the amount with the Department or face the interest and penalty in case he has not taken any remedy before the higher authorities under the Income-tax Act. Therefore, we are of the considered view tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Maharana Shri Bhagwat Singhji of Mewa's case and Mrs. R. Mani Goyal's case, we are of the considered view that even the demanded tax in the present year is more than the income declared by the assessee and as such the assessee is able to prove prima facie case in its favour for allowing the stay petitions. 30. Point 3--Balance of convenience--Since the findings of prima facies case is there, in favour of the assessee, the Assessing Officer has already attached F.D.Rs. and also adjusted the refund of some other years and the income was assessed by the Assessing Officer entirely based on estimate of the G.P. rate. Therefore, keeping in view, the earlier years finding in favour of the assessee where 3% was applied as G.P. rate, we are of the considered opinion that balance of convenience also lies in favour of the assessee and against the Department. 31. Point 4--Financial status of the assessee--We have considered all the material on record. The Assessing Officer has already applied the refund of next year in the outstanding tax amount. All the F.D.Rs. of the assessee have been encashed by the Assessing Officer. The assessee has filed on record copy of acknowledgement of filing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sum that may be feasible to remit by next day itself. The ld. counsel during the course of argument offered to pay Rs. 5 lakhs per month during the pendency of the appeal proceedings if entire amount recovered is refunded to the assessee. On the other hand, the ld. Departmental Representative strongly objected and stated that the Government cannot run without taxes and offer of the assessee is not sufficient to meet out the tax liability though, earlier the ld. Departmental Representative strongly objected to the return of any amount to the assessee. 33. We have considered the rival submissions and we are of the considered view that offer of the ld. counsel for the assessee to pay Rs. 5 lakhs per month during the pendency of the appeal is not sufficient, in our view to protect the interest of the Revenue particularly when no security is offered in the stay petition or during the course of hearing before us. We have considered the entire facts and circumstances of the case and particularly the entire amount recovered by the Revenue which we have already held to be returned forthwith, however, in order to maintain judicial balance in this peculiar situation and also to protect the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 22. The same authorities have already been considered on all the above five points mentioned above which are mainly on the points for grant of stay. There is no dispute with regard to the ratio of the other authorities mentioned by the Assessing Officer in her written submission but in our humble view, remaining authorities would not in any way advance the case of the Revenue. 37. In view of the above discussion and various pronouncements of the Hon'ble Supreme Court and High Courts, we are inclined to allow the stay petitions filed by the assessee and we direct: (1) Revenue through the Assessing Officer to refund/return Rs. 1,25,99,062 to the assessee forthwith on receipt of this order. (2) The assessee, to deposit Rs. 1 lakh per month with Revenue starting from the month of February, 2001 during the pendency of the appeal. The Revenue shall not take unnecessary adjournment. (3) Further recovery of all remaining outstanding demand amounts and further proceedings are stayed in the matter till the disposal of the appeal. (4) Registry, to post this appeal on out of turn basis for hearing before the Bench on 12-3-2001. Parties shall file their paper books etc. before one mon ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
