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TMI Blog2010 (9) TMI 699X X X X Extracts X X X X X X X X Extracts X X X X ..... d under section 201(1A) and has asked the assessee to pay up within 3 days, that such action was also approved by the CIT and that the demand of the shortfall of the tax raised by the order passed under section 201(1) has already been stayed by the Tribunal and that the interest being consequential, the recovery thereof should also be stayed. The prayer was opposed by the revenue. The Tribunal, on a consideration of the matter, passed an order sheet entry on 26-2-2010 as follows :- "The department has filed an application for adjournment. While the learned counsel for the assessee had no objection, he points out that the Assessing Officer is taking steps to recover interest under section 201(1A) and has asked the assessee to pay up within three days. He has also drawn our attention to the CIT's order approving the Assessing Officer's action. Attention was also drawn to the assessee's application dated 22-2-2010 seeking stay and also points out that the Tribunal has stayed the recovery of the tax under section 201(1) and interest under section 201(1A) being consequential, recovery of the same may also be stayed. Prayer opposed by learned CIT (DR). After considering the matter, we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ose of the appeal and is thus, in our humble understanding, referable only to sub-section (1) of section 254. The proviso to sub-section (2A) does not confer any power on the Tribunal to grant stay. Such a power is embedded in sub-section (1) itself, having regard to the observations of the Supreme Court in ITO v. M.K. Mohammed Kunhi [1969] 71 ITR 815 @ 822 to the effect that the appellate jurisdiction under section 254 itself "carries with it the duty in proper cases to make such orders for staying proceeding as will prevent the appeal if successful from being rendered nugatory". The proviso inserted by the Finance Act, 2001 and modified by the Finance Act, 2007 with effect from 1-6-2007 merely regulates or restricts the duration of the period for which the stay would remain effective. The repository of the power to grant stay is not the proviso to sub-section (2A), but it is sub-section (1) itself which deals with the appellate jurisdiction of the Tribunal, as explained in the judgment cited above. 5. In the aforesaid view of the matter, we are unable to uphold the preliminary objection of Mr. Dastur, the learned counsel for the assessee. The application filed by the revenue is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Government after deduction, the person liable to deduct the tax shall be liable to pay interest. It appears to us that sub-section (1A) is an adjunct to sub-section (1) and is in that sense closely related. One cannot conceive of a situation where the assessee is deemed to be in default by an order under sub-section (1) but no interest is charged on him under sub-section (1A). Technically, it appears permissible even to pass a single order, holding the assessee to be in default and also charging interest for the default. We may refer to section 246 which provides for orders appealable to the CIT(A). Clause (i) of sub-section (1) makes "an order under section 201" appealable to him. This clause makes no distinction between an order passed under sub-section (1) of section 201 holding the assessee to be in default and an order under sub-section (1A) charging interest for the default. It is thus possible to take the view that an order charging interest under sub-section (1A) of section 201 is part of the order deeming the assessee to be in default passed under sub-section (1) thereof, though technically two separate orders are passed in a given case. 8. The proviso to sub-section ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ainst the assessment before the Tribunal. However, the Tribunal felt, on hearing the appeal against the order of the CIT under section 263, that in order to ensure that the success of the assessee in the appeal was not rendered nugatory it was necessary and in the interest of justice to stay the fresh assessment order to be passed by the ITO. This decision shows that the contours of the power to grant stay can be widened in a fit case, taking into account the consequences that may follow if the recovery action is allowed to be proceeded with. In the cited case, if the fresh assessment was allowed to be proceeded with as directed by the CIT, additions as suggested in the order of the CIT could have been made and the taxes thereon could have been sought to be recovered while the appeal against the order of the CIT, which authorised the Assessing Officer to make a fresh assessment, would itself be pending. If the appeal were to be allowed by the Tribunal eventually and the order of the CIT be set aside, then the very authority to make a fresh assessment would have been knocked down. However, in the meantime, the Assessing Officer could have collected the taxes, thus rendering the succ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of them. They were thus independent in the sense that the duty to deduct tax is on the person (deductor) who is vicariously liable to pay the same, the real liability being that of the deductee who is the person who is chargeable to tax. The person who is liable to deduct the tax is not the person on whom the tax is imposed. That he is thus not liable primarily for the payment of the tax shall not come in the way of making him liable for the default (of not deducting the tax) and also to pay interest for the default in deducting and paying the tax to the Government. Both the sub-sections are thus independent in the sense that despite being only vicariously liable to pay the tax, the deductor is liable to pay interest in case of default. However, the levy of interest is dependent on the liability to deduct the tax in the following manner, where three elements are required to be taken into consideration in charging the interest as per the judgment of the Supreme Court (supra): (a) the quantum of tax on which interest is to be charged; (b) the rate of interest and (c) the period for which interest is to be charged. All the three elements come into play once the assessee is held to be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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