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2019 (8) TMI 56 - HC - Income TaxStay of recovery - Tribunal directed the department to recover its dues from its debtors - HELD THAT:- The cardinal principle that should have been borne in mind by the Tribunal while granting an interim order is that the assessee should have made out a prima facie case; the balance of convenience should have been in his favour; and if stay is not granted in favour of the assessee, he will be put to irreparable hardship. Unfortunately, the Tribunal did not address any of these grounds, which are mandatorily required to be addressed, while granting an interim order. That apart, the Tribunal did not take note of its earlier orders wherein, the Tribunal has specifically recorded that the assessee has not shown any financial difficulty, nor the assessee has made out a prima facie case. Tribunal could not have directed recovery of tax from Mr.Darmendra Bafna, who was not a party to the proceedings before the Tribunal. If for any reason, the Tribunal was of the view that the debt has to be recovered from a third party, it should have issued a notice to the third party, heard the third party and then taken a decision. Thus, the procedure adopted by the Tribunal is wholly unknown to law and is clearly illegal. To say the least, the order is utterly perverse.Tribunal in the impugned order took a different stand and directed recovery of the disputed tax from a third party who was not heard in the matter. Though the present appeal has become infructuous, as the main appeal itself has been disposed of by the Tribunal, we thought fit to make the above observation so that the Tribunal in future, does not resort to passing such arbitrary and illegal orders. Can Tribunal issue direction which goes beyond the time limit prescribed under the first proviso in Section 254(2A) - As rightly contended by Mr.T.R.Senthil Kumar, this direction issued by the Tribunal goes beyond the time limit prescribed under the first proviso in Section 254(2A). This will also make the impugned order as illegal. As we have observed that the appeal has become infructuous, but nevertheless, the impugned order can never be treated as a precedent, nor such procedure can be resorted to by the Tribunal in any other matter.
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