TMI Blog2011 (3) TMI 688X X X X Extracts X X X X X X X X Extracts X X X X ..... Respondent by : Shri A.P. Singh (CIT-DR) ORDER PER P.M. JAGTAP, AM: This Special Bench has been constituted by the Hon ble President, Income-tax Appellate Tribunal, inter alia, to consider and decide the following question: Whether in the facts and circumstances of the case where the delay in the disposal of the relevant appeals is not attributable to the assessee, the Tribunal can extend the stay already granted beyond the period of 365 days even after 01.10.2008 or it has no power to grant/extend such stay as a result of amendment made by the Finance Act 2008 by substituting third proviso to Section 254(2A) w.e.f. 01.10.2008? 2. The assessee in this case is a company which moved its applications before the Tribunal being S.A. Nos. 196 to 198/Mum/2009 seeking extension of stay of outstanding demand already granted beyond the period of 365 days. The outstanding demand sought to be stayed was on account of penalties imposed by the Assessing Officer u/s 271(1)(c) and confirmed by the Learned Commissioner of Income-tax (Appeals) for the assessment years 2000-01, 2001-02 and 2002-03 aggregating to Rs.369.40 crores. During the course of hearing of the said st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arguments raised by the learned representatives of both the sides have been heard. 4. The learned counsel for the assessee, Shri Dinesh Vyas, Senior Advocate, submitted that the issue raised in this case for the consideration of Special Bench now stands squarely covered in favour of the assessee by the decision of the Hon ble Bombay High Court in the case of Ronak Industries Ltd. (supra). He submitted that the decision of the Tribunal in the case of Ronak Industries Ltd.(supra) granting the stay of outstanding demand beyond the period of 365 days was challenged by the Revenue in the appeal filed before the Hon ble Bombay High Court and the question raised in the said appeal was - Whether on the facts and in the circumstances of the case and in law, the I.T.A.T. was justified in holding that the case of the assessee is a fit case for stay of outstanding demand beyond the period of 365 days as per the provisions of section 254(2) by ignoring the mandatory amendment in the Third proviso to section 254(2A) made by the Finance Act, 2008 with effect from 01.10.2008, providing that the order of the stay granted shall vacate after the expiry of 365 days even if the delay in dispos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issue were fully and truly furnished by the assessee, no penalty u/s.271(1)(c) can be imposed in respect of addition made by way of disallowance of assessee s claim involving such a legal issue. Shri Dinesh Vyas submitted that the assessee thus has a good prima facie case on merit to succeed in its appeal filed before the Tribunal challenging the imposition of penalty u/s.271(1)(c) and it is, therefore, a fit case to grant the stay of the outstanding demand. He submitted that the Assessing Officer, however, has already recovered the entire outstanding demand by way of adjustment of the refund due to the assessee for other years as a result of relief given by the Tribunal in the said years. He submitted that the entire outstanding demand thus has been recovered by the Assessing Officer during the period when the stay applications filed by the assessee before the Tribunal were pending. He submitted that substantial amount has been borrowed by the assessee for the purpose of its business which shows that the assessee continuously requires funds for the purpose of its business and as a result of recovery made by the by Assessing Officer by way of adjustment of refunds for other years, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s thus no occasion for the Hon ble Bombay High Court to consider the 2008 amendment. He contended that the said amendment made in the year 2008 in the relevant provisions is very clear in this regard and keeping in view the legislative intention behind the said amendment to limit the maximum period of stay which can be granted by the Tribunal to 365 days, it cannot be said that after the said amendment, the Tribunal still has the power to grant stay beyond a period of 365 days. The learned Departmental Representative contended that the decision of the Hon ble Bombay High Court in the case of Ronak Industries Ltd. (supra) thus need not be followed by this Special Bench as a binding precedent. In support of this contention, he relied on the decision of the Full Bench of the Hon ble Andhra Pradesh High Court in the case CIT vs. B.R. Construction reported in 73 Taxman 473 and submitted that the binding precedent, as held therein, can be ignored inter alia in three situations viz. (i) when it is inconsistent with the earlier decision of the same rank, (ii) when it is sub-slientio and (iii) when it is rendered per incuriam. 7. The learned Departmental Representative submitted that in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecision of the Hon ble Madras High Court in the case of SCM Creations vs. ACIT although the same was on a similar issue holding that it was per incuriam. He invited our attention to the paragraph 11.5 and 11.6 of the order passed by the Tribunal in the said case and read out the relevant portion thereof. He submitted that even the Hon ble Bombay High Court in the similar situation did not follow the decision of the Hon ble Supreme Court in the case of Vinay Cement Ltd. 212 CTR 384 while deciding the case of CIT vs. Pamwi Tissues Ltd. 215 CTR 150. He also relied on the decision of the Andhra Pradesh High Court in the case of CIT vs. Gangappa Cables Ltd. 116 ITR 778 and the Third Member decision of the Ahmedabad Bench of the I.T.A.T in the case of Kanel Oil Export Inds. Ltd. 121 ITD 596 in support of his contention that in a situation like the one in hand, the decision of the higher judicial forum/Court need not be followed as a binding precedent. He contended that decision of the Hon ble Bombay High Court in the case of Ronak Industries Ltd. (supra) is also per incuriam as the same is inconsistent with its earlier decision and has been rendered without considering the amendment ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Highway Construction Co. (P) Ltd. 217 ITR 234(Gauhati). 10. Keeping in view the various submissions made by the learned Departmental Representative in the rejoinder and after taking leave of the Special Bench, the learned counsel for the assessee has prepared and furnished a written note explaining how the various judicial pronouncements cited by the learned Departmental Representative are distinguishable on facts and in law. He has also summarized in the said note the issues which are required to be considered and decided by the Special Bench and the various judicial pronouncements which the assessee has cited in support of its case on the said issues. 11. We have considered the rival submissions and also perused the relevant material on record. We have also carefully gone through the various judicial pronouncements cited by the leaned representatives of both the sides. The preliminary issue which is required to be considered and decided by this Special bench is whether the main issue referred to the Special Bench now stands squarely covered by the decision of the Hon ble Bombay High Court in the case of Ronak Industries Ltd. (supra) and whether the same has to be followed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hile deciding the case of Ronak Industries Ltd., on its earlier decision in the case of Narang Overseas Ltd(supra) which was rendered in the year 2007 when the 2008 amendment was not on the statute. However, a perusal of the judgment passed by the Hon ble Bombay High Court in the case Narang Overseas Ltd(supra) shows that a wider view on the issue was taken therein by holding as under : 1) The power to grant stay or interim relief has to be read as coextensive with the power to grant final relief, the object being that in the absence of the power to grant interim relief, the final relief itself may be difficult. 2) Once an appeal is provided, it cannot be rendered nugative in cases where the assessee was not at fault. 3) The object of amendment made in Section 254(2A) by the Finance Act (2007) was not to defeat the vested right of an appeal in an assessee whose appeal could not be disposed not on account of any omission or failure on his part, but either the failure of the Tribunal or acts of Revenue resulting in non-disposal of the appeal within the extended period as provided. 4) It would not be possible on one hand to hold that there is a vested right of appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amendment in the judgment of the Hon ble Bombay High court passed in the case of Ronbak Industries Ltd.(supra), the said decision cannot be taken as laying down any ratio decidendi. It is pertinent to note here that even though there is no such discussion made in the judgment of Hon ble Bombay High Court passed in the case of Ronak Industries Ltd. (supra), the decision of the Tribunal has been upheld by the Hon nle Bombay High Court dismissing the appeal filed by the revenue. In the case of Nirma Industries Ltd., 283 ITR 402, the Hon ble Gujarat High Court has held that the only jurisdiction that the High Court has while hearing the appeal filed under section 260A is the appellate jurisdiction and where an order of subordinate forum is reversed or modified exercising such appellate jurisdiction or the appeal filed is merely dismissed confirming the order under appeal without any modification, it is the appellate decision alone which subsists and is operative and capable of enforcement. It was held that in all such eventualities, what emerges is the operative part of the order under appeal after its confirmation, reversal or modification and there would be a merger even in a case wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a subsequent decision rendered by the Hon ble Madras High Court itself on 27.12.2008 in the case of General Optics (Asia) Ltd. whereby the controversy was put beyond any shadow of doubt after taking into consideration the statutory provision which was not considered while deciding the case of SCM Creation (supra). In the case of Gangappa Cables Ltd. (supra), the decision of the Hon ble Supreme Court in the case of Gurjargravures P. Ltd. 111 ITR 1 was found to be no bar to the entertaining of claim by the AAC or the Tribunal and the same, therefore, was not followed by the Hon ble Andhra Pradesh High Court being distinguishable on facts. In the case of Kanel Oil Export Inds. Ltd. (supra), the decision in the case of Snowcem India Ltd. which the Third Member did not follow was again of a non-jurisdictional High Court i.e. Hon ble Bombay High Court and the same was rendered without taking into consideration certain statutory provision which was relevant and material. In the case of CIT vs. Pamwi Tissues Ltd. (supra), the decision of Hon ble Supreme Court in the case of Vinay Cement Ltd. (supra) was not followed by the Hon ble Bombay High Court on the ground that only the Special Lea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 98/M/09 for A.Ys. 2000-01 to 2002-03 After considering facts and circumstances of the case, the notices of the Ld. Members of the Bench and of the Zonal Vice-President including Notes dated 14.10.2009, I constitute Special Bench in ITA No. 1106/M/08, ITA No.1107/M/08, 1108/M/08, 1387/M/08 and ITA No. 1835, 1836/M/08, ITA 4218, 4219/M/05, ITA 4220, 4221/M/05, ITA 6981/M/05, ITA 7071/M/05, 7205/M/04, 3062/M/03 and ITA No. 3438/M/03, comprising of Shri G.D. Agarwal, Vice-President, Shri P.M. Jagap, Accountant Member and Smt. P. Madhavi Devi, Judicial Member. The Special bench may hear entire appeal or only the referred question as deemed necessary on the facts and circumstances of the case. In case, an objection is raised by any party to the inclusion of any Hon ble Member in the Special Bench on the ground that he or she has already expressed view on the issue, the Vice-President is authorized to take necessary action on such objection. Let files of all quantum and penalty appeal be placed before the Special Bench for action in accordance with law. 17. As is clearly evident from the perusal of the above order passed while constituting this special Bench, the Hon ble President ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed aspect of the appeal. Keeping in view these two decisions of the special bench of this Tribunal, the provisions contained in section 255(3) and the order of the Hon ble President, ITAT referring, inter alia, the stay applications filed by the assessee to this Special Bench, we find no merit in the objection raised by the Ld. D.R. in this regard and overruling the same, we proceed to dispose of the stay applications filed by the assessee in the present case being S.A. Nos. 196 to 198/Mum/2009 on merits 18. As pointed out by the learned counsel for the assessee, the entire amount of outstanding demand on account of penalties imposed for the three years under consideration, i.e. A.Y. 2000-01, 2001-02 and 2002-03 has already been recovered by the AO by way of adjustment of refund due to the assessee for the other years as a result of relief given by the Tribunal in the said years. He has, therefore, urged that while granting the stay as sought by the assessee in the present applications, the AO may be directed to refund the amount of demand recovered especially during the pendency of these stay applications before the Tribunal. In support of this contention, he has relied on va ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o 28.2.2001. Before the expiry of the said period, the assessee moved an application for stay before the Tribunal which was fixed for hearing on 2.3.2001. The notice of the said hearing had been served on the office of the departmental representative on 27.2.2001. The Assessing Officer, however, issued garnishee orders to the bank on 1.3.2001 and recovered the entire outstanding demand. Even in the case of Mahindra Mahindra Ltd. (supra) cited by the learned counsel for the assessee, the recovery of outstanding demand was made by the Assistant Collector of Central Excise by encashing the bank guarantee on 3.2.1992 when the statutory period of three months available to the assessee to file the appeal to the Tribunal had not expired and when the assessee had specifically informed that the stay application filed by it was fixed for hearing before the Tribunal on February 17, 1992. In these facts and circumstances, Hon ble Bombay High Court held the action of the Assistant Collector of Central Excise to be improper and directed him to refund the amount recovered. Similarly, in other cases cited by the learned counsel for the assessee, coercive steps were found to be taken by the AO to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Hon ble Madras High Court in the case of Sabena Detergents Ltd. Vs. CIT 248 ITR 385 (Mad) wherein it was held that section 245 requires mere intimation in writing to the assessee and it does not require any show-cause notice being given nor does it contemplate any hearing to the assessee before adjustment of refund against tax arrears. Keeping in view these decisions of Hon ble Madras High Court in the cases of Ramanathan Chettiar (supra) and Sabena Detergents Ltd. (supra) and having regard to all the relevant facts of the case as discussed above, we are of the view that it is a not fit case to direct the refund of the amount already recovered by the Assessing officer. As a result of the said recovery made by the AO of the entire outstanding demand, which is being sought to be stayed by the assessee, the present applications filed by the assessee have become virtually infructuous. Accordingly, the same are dismissed. 21. Before parting, we may clarify that all the judicial pronouncements cited by the learned representatives of both the sides in support of their respective stands have been considered and deliberated upon by us while arriving at our conclusions. Some of them ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
