TMI Blog2011 (12) TMI 158X X X X Extracts X X X X X X X X Extracts X X X X ..... ates that where the income determined on assessment was substantially higher than the returned income viz. twice the later amount or more, the collection of the taxes in dispute to be held in abeyance till the decision of the appeals provided there was no fault on the part of the assessee. In present case , the main additions are trading additions on the basis of GP rates, the validity of which is subject matter of appeal before the C.I.T. (Appeals). Thus, this Court in view of Instruction No.95 dated 21.08.1969, would stay the recovery of entire balance amount from the assessee, while directing the C.I.T. (Appeals) to dispose of the pending appeal of the assessee within a period of six months from date of order. The attachment of bank accounts of the assessee already attached by the Assessing Authority are also be lifted. The assessee may also file stay application before the C.I.T. (Appeals), who may also consider such stay application on its own merits upon the relevant factors. Further, it is directed that first appellate authorities and assessing authorities would act in accordance with the said decision in the cases of other appellant assessees within the State of Rajasthan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under Section 271 (1) (c) of the Act for concealment of income were initiated separately. The nature of the additions in the declared income was briefly likely this: Income as declared in the return Rs. 3,48,140/- Add: Excess stock and cash found during the course of survey. Rs. 14,77,127/- Add: Trading addition. Rs. 1,21,17,057/- Add: Disallowed out of P L. Rs. 5,00,000/- Total Rs. 1,44,42,324/- Total Income round off- Rs. 1,44,42,320/- 4. The main addition of Rs. 1,21,17,057/- appears to be on account of trading additions on the ground that rejecting regular Books of Account of the assessee under Section 145(3) of the Act, the learned ITO applied the GP rate (Gross Profit Rate) of 20.20%, which the assessee declared in the Assessment Year 2006-07 and the same GP rate was applied for the present Assessment Year 2008-09 also; even though the assessee has declared GP rate of only 9.79% in the present assessment year. The comparative GP rates based on turnover of the assessee for three assessment years was noticed by the Assessing Authority in the impugned order itself and the same is also as un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ious grounds for seeking the stay of entire disputed demand in the said application relying upon several case laws. 8. The said application came to be rejected by the Assessing Authority vide order Annex 8 dated 28.01.2011 stating therein that "... As the AR of the assessee himself stated in the stay petition that the business of the assessee is already closed. As business of the assessee is already close and to protect the interest of revenue it is not possible to linger on recovery on demand. On examination of all the facts and circumstances of the case I am of the opinion that the stay of demand application deserves to be rejected and the same is hereby rejected. The demand outstanding is to be deposited forthwith. Any failure on the part of the assessee for payment of outstanding demand will be treated as the assessee in default and coercive majors will be taken as provided in the Income tax Act, 1961". 9. It appears that the I.T.O. thereafter initiated coercive process by undertaking garnishee proceedings under Section 226 (3) of the Act, and in this regard, a notice was sent to bankers of the petitioner-assessee vide Annex-9 dated 02.02.2011, addressed to Branch Manager, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of income as filed by the assessee could not have been brushed aside by the Assessing Authority and applying such high GP rate mechanically, the impugned demand of Rs. 58 lacs has been raised by the Assessing Authority, which could not be recovered from the petitioner-assessee and such recovery would frustrate the very purpose of filing appeal before the learned C.I.T. (Appeals), which is yet not decided. 14. Learned counsel for the petitioner further urged that even though the provisions of Sections 246, 246A, Section 250 and 251 of the Act do not confer any specific power on such first appellate authority to grant stay against the recovery of disputed demand, such a power should be read as 'inherent powers' and the stay applications filed before such appellate authorities should be decided on merits touching upon the relevant factors for grant of stay like prima facie case, irreparable injury, balance of convenience and nature of demand, so also, hardship likely to be caused to the assessee from such recovery etc. He relied upon the decision of Hon'ble Supreme Court in the case of Income Tax Officer v. M.K. Mohammed Kunhi reported in [1969] 71 ITR 815 (SC) : AIR 1969 SC 430, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eed in toto as the trading additions made by the learned Assessing Authority were not justified at all. He however, further submitted that till such appeal is decided and if no stay is granted against such recovery, the very purpose of filing of the appeal would be frustrated. 17. Explaining the scheme of Act in this regard contained in the relevant provision of Sections, 220, 246, 246A, 250, 253, 254 and 255 of the Act, he submitted that while the Income Tax Appellate Tribunal, the second appellate forum, and the highest fact finding body created under the Income-tax Act, now has such powers to grant stay against the recovery of the disputed demand itself though such power is limited as far as period of operation of such stay order, if any, granted by the ITAT is concerned; and that being of 180 days in the first instance, extendable to 365 days as an outer limit of period, even though the appeal filed before the ITAT can be decided within a period of four years from the end of the financial year in which such appeal is filed. He further submitted that no such similar powers are conferred upon the first appellate authority, namely, Deputy Commissioner (Appeals) or CIT (Appeals) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment proceedings or is likely to fly away from the scene etc. 19. Learned counsel for the petitioner was at pains to explain that if high pitched assessments are made by the Assessing Authority arbitrarily, the very purpose of filing of first appeal for redressal of grievance, can be rendered nugatory and infructuous, if upon a harmonious reading of various provisions in the scheme of the Act they are not construed to mean that during the pendency of first appeal normally demand at least under the high pitched assessment orders should be kept in abeyance especially in view of CBDT Instruction No. 95 dated 21.08.1969. He submitted that present case is an outstanding and glaring example of such circumstances, which is repeated in numerous cases and, therefore a fair, reasonable and harmonious interpretation of these provisions deserves to be made. 20. On the other hand, Mr. K.K. Bissa, learned counsel appearing for the Revenue vehemently submitted that in the absence of any specific provision conferring power to grant stay upon the first appellate authority, namely, Deputy Commissioner (Appeals) and Commissioner of Income Tax (Appeals), such powers cannot be inferred and in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with in the present case. Learned counsel for the Revenue also justified the impugned assessment order and raising of demand on the basis of trading additions on account of GP rate difference in the present case and tried to justify the recovery proceedings. 22. I have heard learned counsel for the parties at length, perused the record and judgments cited at bar and relevant provisions. 23. The relevant provisions, referred to above, are reproduced herein below for ready reference to the extent relevant. "Section 220-When tax payable and when assessee deemed in default. (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 afor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce the assessee shall be deemed to be in default. (5) If, in a case where payment by instalments is allowed under sub-section (3), the assessee commits default in paying any one of the instalments within the time fixed under that sub-section, the assessee shall be deemed to be in default as to the whole of the amount then outstanding, and the other instalment or instalments shall be deemed to have been due on the same date as the instalment actually in default. (6) Where an assessee has presented an appeal under section 246 or Section 246A, the Assessing Officer may, in this discretion, and subject to such conditions as he may think fit to impose in the circumstances of the case, treat the assessee as not being in default in respect of the amount in dispute in the appeal, even though the time for payment has expired, as long as such appeal remains undisposed of." (7) Where an assessee has been assessed in respect of income arising outside India in a country the laws of which prohibit or restrict the remittance of money to India, the [Assessing] Officer shall not treat the assessee as in default in respect of that part of the tax which is due in respect of that amount of his i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 201 on or after the 1st day of October, 1998 but before the 1st day of June, 2000 shall be deemed to have been filed under this section.] [(1B) Every appeal filed by an assessee in default against an order under sub-section (6A) of section 206C on or after the 1st day of April, 2007 but before the 1st day of June, 2007 shall be deemed to have been filed under this section.] (2) Notwithstanding anything contained in sub-section (1) of section 246 every appeal under this Act which is pending immediately before the appointed day, before the Deputy Commissioner (Appeals) and any matter arising out of or connected with such appeals and which is so pending shall stand transferred on that date to the Commissioner (Appeals) and the Commissioner (Appeals) may proceed with such appeal or matter from the stage at which it was on that day: Provided that the appellant may demand that before proceeding further with the appeal or matter, the previous proceeding or any part thereof be reopened or that he be reheard. Explanation: For the purposes of this section, "appointed day" means the day appointed by the Central Government by notification in the Official Gazette. Section 250 - Pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e appeal an opportunity of being heard, pass such orders thereon as it thinks fit. (2) The Appellate Tribunal may, at any time, within four years from the date of the order, with a view to rectifying any mistake apparent from the record, amend any order passed by it under sub-section (1), and shall make such amendment if the mistake is brought to its notice by the assessee or the Assessing Officer: Provided that an amendment which has the effect of enhancing an assessment or reducing a refund or otherwise increasing the liability of the assessee, shall not be made under this sub-section unless the Appellate Tribunal has given notice to the assessee of its intention to do so and has allowed the assessee a reasonable opportunity of being heard. Provided further that any application filed by the assessee in this sub-section on or after the 1st day of October, 1998, shall be accompanied by a fee of fifty rupees. (2A) In every appeal, the Appellate Tribunal, where it is possible, may hear and decide such appeal within a period of four years from the end of the financial year in which such appeal is filed under sub-section (1) or sub-section (2)] of section 253. Provides that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing stay of recovery in certain cases - Item 1 (vi) One of the points that came up for consideration in the 8th Meeting of the Informal Consultative Committee was that Income-tax assessments were often arbitrarily pitched at high figures and that the collection of disputed demand as a result thereof was also not stayed in spite of the specific provision in the matter in section 220(6) of the Income-tax Act, 1961. 2. The then Deputy Prime Minister had observed as under: - "where the income determined on assessment was substantially higher than the returned income, say twice the latter amount or more, the collection of the tax in dispute should be held in abeyance till the decision on the appeal provided there were no lapses on the part of the assessee." 3. The Board desire that the above observations may be brought to the notice of all the Income-tax Officers working under you and the powers of stay of recovery in such cases up to the stage of first appeal may be exercised by the Inspecting Assistant Commissioner/ Commissioner of Income-tax." Board's F. No. 1/6/69-ITCC, dated 21 August, 1969." 24.2. Undisputed tax-Recovery of- Instructions regarding Under section 220(6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nance Minister. It is hereby clarified that subsequent to Instruction No. 95 following Instructions/clarifications on the stay of demand were issued till 15th October 1980:- (i) Clarification to Instruction No. 95 was issued on 14/9/1970 stating that it relates to disputed demands only. (ii) Instruction No. 635 was issued on 12/11/1973 stating that stay should be granted only in those cases where demands are attributable to substantial points of dispute. (iii) Clarification to Instruction No. 95 dated 13/07/1976 held that the Instruction becomes operative only in cases where there are no lapses on the part of the assessee. (iv) Instruction No. 1067 dated 21/06/1977 held that the ITO can pass the necessary orders u/s 220 (6) in all cases except cases under section 144A or 144B where the approval of IAC is required. (v) Instruction No. 1158, dated 27th March, 1978 held that in suitable cases the assessee may be allowed to furnish security. (vi) Instruction No. 1282, dated 4th October, 1979 held that requests should be made to CIT(A) and ITAT for early disposal of appeals and constant watch should be kept on progress of appeals. (v) Instruction No. 1362 was issue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 45 of the IT Act, 1961, provides for the taxation of capital gains arising on the transfer of capital assets. Secs. 54,54B and 54D grant exemption in respect of capital gains arising on transfer of property used for self-residence, land used for agricultural purposes and compulsory acquisition of lands and buildings under any law, provided the conditions laid down in the three sections are satisfied. These sections, inter alia, provide investment of the capital gains in the house building and land, as the case may be, within the stipulated period, which is 2 to 3 years. If the assessee is able to do so between the date of the transfer and that of filing the return of income, there is no difficulty. But, if he is not able to do so but wishes to avail of the exemption in the subsequent years, he will have to disclose the capital gain, in the return of income of the relevant year. 2. The question of payment of the tax on self-assessment and regular assessment in cases where the capital gains have not been invested before filing the return although he proposes to do so later has been considered, and I am directed to convey the following instructions :- (a) in cases where the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... our of the assessee in an earlier order by an appellate authority or court in the assessee's own case. 3. It is clarified that in the situations mentioned in para 2 above, the assessee will be treated as not in default only in respect of the amount attributable to such disputed points. Further, where it is subsequently found that the assessee has not co-operated in the early disposal of appeal or where a subsequent pronouncement by a higher appellate authority or court alters the situation referred to in para 2 above, the Assessing Officer will no longer be bound by these instructions and will exercise his discretion independently. 4. In respect of other cases not covered by para 2 above, the Assessing Officer will take into account all the relevant factors and communicate his decision to the assessee in the form of a speaking order. While exercising discretion under this provision, the financial capacity of the assessee to pay the demand will not be relevant. 5. The Chief Commissioners and Directors-General of Income-tax may please bring these guidelines to the notice of all officers in their regions. The guidelines will apply, mutatis mutandis, to the demands created under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons to be made from the total income in Chapter-VI (A) comprises Section 80A to 80 VV of the Act which provide for various kinds of deductions from such income to various classes of assessees in different circumstances. Chapter XXIII of the Act, defines income tax authorities and their powers comprising of Sections 116 to 136 of the Act including the powers of search and seizure, survey, inspection etc. The procedure for assessment contained in Sections 139 to 158 of the Act. The Chapter XXIV of the Act deals with procedure of filing returns, enquiry before assessment, assessment under Section 143, best judgment assessment under Section 144, re-assessment under Section 147 etc. The special procedure for assessment of search cases are contained in Chapter comprise of Sections 158 to 158B(I) of the Act. Proceeding further, the scheme of the Act in Chapter XXVII deals with collection of recovery of tax, which is divided in six parts, viz. A to F. Chapter heading of Chapter XXVII is 'collection and recovery of tax' and we are presently concerned with Part D of the said Chapter and more particularly Section 220 and 220 (6), reproduced above. Skipping the provisions relating to settlemen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he thinks fit. These words harmoniously read, definitely mean that powers of appellate authorities under the Act are wide enough. Such powers could not be intended to be drained out or rendered meaningless, if the power to grant stay against the recovery of disputed demand is to be taken away from the first appellate authority. Such implied, necessary and inherent power must necessarily be read into these provisions conferring the powers upon the appellate authority to modify the impugned assessment order in any manner. In specific terms, the first appellate authority can even enhance the taxable income, while he has the power to reduce or completely set at naught the assessment. The words "as he thinks fit" in Section 251(1)(C) are not redundant, as no such redundancy can be attributed to the Parliament. Therefore, mere absence of words "power to grant stay" in Section 251 of the Act cannot mean that such powers are specifically excluded from the jurisdiction of the first appellate authority. 28. The Hon'ble Supreme Court in the case of Institute of Chartered Accountants of India v. L.K. Ratna reported in AIR 1987 SC 71 held as under: "16. It is next pointed out on behalf of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act states that where an assessee has presented an appeal under Section 246, the Assessing Officer may, in his discretion, and subject to such conditions as he may think fit to impose in the circumstances of the case, treat the assessee as not being in default in respect of the amount in dispute in the appeal, even though the time for payment has expired as long as such appeal remains undisposed of. The rationale of this provision is that an assessee should not be unnecessarily inconvenienced during the pendency of the appeal and, therefore, Sub-section (6) says that the assessee will not be treated as in default while the appeal is pending against the assessment orders. Law does not require that once the assessment is made, recovery of tax should be made immediately, notwithstanding the remedy of appeal having been provided in the Act. Rather, Sub-section (6) of Section 220 clearly provides that the assessee against whom an assessment is made should not be treated as in default so long as his appeal remains undisposed of. If such is the intention of law, then it can hardly be said that the Commissioner of Income Tax (Appeals) is not vested with the powers of granting stay orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... application is not disposed of, the Assessing Officer must be slow or reluctant in initiating the recovery process. The relevant extract of paras 4 and 5 quoted below: "4. ..... So far as the power of stay of CIT(A) is concerned, in our view, the law laid down by the Apex Court in the case of M.K. Mohammed Kunhi (supra) and a Division Bench of this Court in Prem Prakash Tripathi's case (supra), clinches the issue in favour of the proposition advanced by the petitioner. We have no manner of doubt that the stay application is maintainable and CIT(A) do possess power to pass an interim order which he has to consider judiciously in accordance with law. We, therefore, dispose of the writ petition with the direction to the Appellate Authority concerned to hear the stay application and dispose of the same within a period of 15 days from this date. However, it is expected that no coercive action will be taken against the petitioner meanwhile. 5. Before parting we may observe herein that of late, we have experienced a flood of such writ petitions, where the petitioner having filed appeal along with the stay application before the authority concerned have waited for sometime but the app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hammed Kunhi (supra), in unanimous opinion authored by Grover, J, dealing with words "as he may think fit", which were available to the ITAT also while deciding appeals before it and in the face of absence of clear provisions for grant of stay against the disputed demand of tax, the Apex Court held that such power is inherent in the appellate powers and the Tribunal should be deemed to have such power under Section 254 of the Act. Quoting from Domat's Civil Law Cushing's Edition, Vol. 1 at page 88, the Hon'ble Supreme Court noted the following quotation: "It is the duty of the judges to apply the laws, not only to what appears to be regulated by their express dispositions, but to all the cases where a just application of them may be made, and which appear to be comprehended either within the consequences that may be gathered from it." Further relying on the Maxim "Cui jurisdiction date est, ea quoque concessa essee videntur, sine quibus jurisdictio explicari non potuit", which means "where an inferior court is empowered to grant an injunction, the power of punishing disobedience to it by commitment is impliedly conveyed by the enactment, for the power would be useless if it could ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... power of stay by the Tribunal is not likely to be exercised in a routine way or as a matter of course in view of the special nature of taxation and revenue laws. It will only be when a strong prima facie case is made out that the Tribunal will consider whether to stay the recovery proceedings and on what conditions, and the stay will be granted in most deserving and appropriate cases where the Tribunal is satisfied that the entire purpose of the appeal will be frustrated or rendered nugatory by allowing the recovery proceedings to continue during the pendency of the appeal." 32. A reference of few more land mark precedents on the interpretation of statutes, specially taxing statutes is considered apposite here. 33. In Principles of Statutory Interpretation by Justice G.P. Singh (12 Edn. 2010), the learned Author has stated as under: "In selecting out of different interpretations 'the court will adopt that which is just, reasonable and sensible rather than that which is none of those things' ...A construction that results in hardship, serious inconvenience, injustice, absurdity or anomaly or which leads to inconsistency or uncertainty and friction in the system which the stat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice and unreasonability/ irrationality, as opposed to a literal one and which does not fit in with the scheme of the Act. In case the natural meaning leads to mischievous consequences, it must be avoided by accepting the alternative construction. (Vide: Bihar State Council of Ayurvedic and Unani Medicine v. State of Bihar - [2007] 12 SCC 728 and Mahmadhusen Abdulrahim Kalota Shaikh v. Union of India (2009) 2 SCC 1] 37. The Court has not only to take a pragmatic view while interpreting a statutory provision, but must also consider the practical aspect of it. (Vide: Union of India v. Ranbaxy Laboratories Ltd. [2008] 7 SCC 502) 38. In Narashimaha Murthy v. Susheelabai [1996] 3 SCC 644, the Court held as under:- "20. ... The purpose of the law is to prevent brooding sense of injustice. It is not the words of the law but the spirit and eternal sense of it that makes the law meaningful. 39. In Workmen of Dimakuchi Tea Estate v. Management of Dimakuchi Tea Estate AIR 1958 SC 353, it has been held thus: "9. ... the definition clause must be read in the context of the subject matter and scheme of the Act, and consistently with the objects and other provisions of the Act. 40. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 21.08.1969 the Division Bench of Delhi High Court directed the Addl. Commissioner to decide the stay application and granted absolute stay against the recovery, even though the Deputy Commissioner had directed payment of 15% of the disputed demand. In the case before the Delhi High Court, the income assessed was 8 times of the income declared by the assessee and relying upon the Instruction No. 95, the Court held as under: - "It may be recalled that the returned income of the assessee was Rs. 7.25 crores, but the assessed income is Rs. 58.68 crores, which is almost 8 times the returned income. In this regard, learned counsel has drawn our attention to Instruction No. 95 dated August, 21, 1969 issued by the Central Board of Direct Taxes, which deals with the framing of an assessment which is substantially higher than the returned income. The relevant portion of the Instruction reads as follows: "1222. Income determined on assessment was substantially higher than returned income. -Whether collection of tax in dispute is to be held in abeyance till decision on appeal. 1. One of the points that came up for consideration in the 8th meeting of the Informal Consultative Com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and. On a writ petition against rejection of the application: Held, that Central Board of Direct Taxes Instruction No. 95, dated August 21, 1969, would squarely apply to the case of the petitioner. The mere statement in the order without any factual foundation that "no valid reason has been stated for stay of demand" by the Assessing Officer was not sufficient. The order was not valid. The petitioner was entitled to stay of collection till orders were passed in the appeal, subject to making certain payment." 45. The learned Single Judge of Rajasthan High Court in the case of Maharana Shri Bhagwat Singhji of Mewar (Late His Highness) v. Income-Tax Appellate Tribunal, Jaipur Bench, Jaipur [1997] 223 ITR 192 (Raj.) also held in the matter relating to estate duty and applying the same Instruction No.95 dated 21.08.1969 granted absolute stay till the appeal is decided by ITAT and relying upon the decision of Kerala High Court and MP High Court, directed the Tribunal to decided the appeals and till then granting absolute stay, directed the Assessing Authority not to insist on payment of 25% of the impugned demand. The relevant extract from the said judgment is also quoted hereinbelow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emand on the basis of the above Instruction." Mr. Jolly, who appeared on behalf of the respondent, submits that Instruction No. 95 which formed the basis of the decision of this Court in Valvoline Cummins Ltd.'s case now stands superseded by Instruction No. 1914 of 1993 dated 2.12.1993. Mr. Jolly handed over a copy of the said instruction. The relevant portion of the said instruction reads as under: (Hon'ble Delhi High Court has quoted only relevant portion of Instruction 1914 dt: 2/12/1993, however, for ready reference, full text of the said Instruction 1914 is reproduced) A. Responsibility (i) It shall be the responsibility of the Assessing Officers and the TRO to collect every demand that has been raised, except the following: (a) Demand which has not fallen due; (b) Demand which has been stayed by a Court or ITAT or Settlement Commission; (c) Demand for which a proper proposal for write off has been submitted; (d) Demand stayed in accordance with paras B and C below: (ii) Where demand in respect of which a Recovery Certificate has been issued or a statement has been drawn, the primary responsibility for the collection of tax shall rest with the TRO. ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... est of revenue; b. require the assessee to pay towards the disputed taxes a reasonable amount in lump sum or in instalments; c. require an undertaking from the assessee that he will co-operate in the early disposal of appeal failing which the stay order will be cancelled; d. reserve the right to review the order passed after expiry of a reasonable period, say up to 6 months, or if the assessee has not co-operated in the early disposal of appeal, or where a subsequent pronouncement by a higher appellate authority or court alters the above situations; e. reserve a right to adjust refunds arising, if any, against the demand. (iii) Payment by instalments may be liberally allowed so as to collect the entire demand within a reasonable period not exceeding 18 months. (iv) Since the phrase "stay of demand" does not occur in section 220(6) of the Income-tax Act, the Assessing Officer should always use in any order passed under section 220(6) [or under section 220(3) or section 220(7)], the expression that occurs in the section viz., that he agrees to treat the assessee as not being default in respect of the amount specified, subject to such conditions as he deems fit to impose. (v) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecause paragraph No. 2(A) which speaks of responsibility specifically indicates that it shall be the responsibility of the Assessing Officer and the TRO to collect every demand that has been raised "except the following", which includes ("d) demand stayed in accordance with the paras B and C below". Para B relates to stay petitions. As extracted above, Sub-clause (iii) of para B clearly indicates that a higher/superior authority could interfere with the decision of the Assessing Officer/TRO only in exceptional circumstances. The exceptional circumstances have been indicated as-"where the assessment order appears to be unreasonably high pitched or where genuine hardship is likely to be caused to the assessee". The very question as to what would constitute the assessment order as being reasonably high pitched in consideration under the said Instruction No. 95 and, there, it has been noted by way of illustration that assessment at twice the amount of the returned income would amount to being substantially higher or high pitched. In the case before this Court in Valvoline Cummins Ltd. (supra) the assessee's income was about eight (8) times the returned income. This Court was of the vie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal/appellate power effective, and such implied power includes the power to grant stay pending decision. The proviso to sub-section (3) of Section 13 specifically provides that where a dealer or other person has applied for revision of an order made under the Act and has complied with the conditions of any order made by the revising authority in regard to payment of tax, no proceedings for recovery under section 13 (3) shall be taken or continued until the disposal of such revision petition. It follows that section 13 (3) impliedly recognizes the power of the High Court to grant stay or pass other interim orders in regard to the amount due, in proceedings under Section 23. Thus, the inherent or incidental power of the High Court with reference to the revisional jurisdiction under Section 23 or the appellate jurisdiction under section 24 will include the power to grant stay pending disposal of the revision or the appeal, as the case may be." 48. In the case of National Thermal Power Co. Ltd. v. Commissioner of Income Tax [1998] 229 ITR 383, the Hon'ble Supreme Court has held as under: "Under Section 254 of the Income-tax Act, 1961, the Appellate Tribunal may, after giving both ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der of remand necessarily annuls the decision which is under appeal before the appellate authority. The appellate authority is also invested with the power to pass such order as it deems fit. Both these portions of the aforesaid provision, read together, necessarily imply that the appellate authority has the power to set aside the decision which is under appeal before it and to remand the matter to the authority below for fresh decision." 51. In view of aforesaid legal position culled out from different judgments there being no contrary view available before this Court cited from the side of Revenue or otherwise, this Court is inclined to hold that first appellate authority, namely; Deputy Commission of Income Tax (Appeals) or Commissioner of Income Tax (Appeals) have inherent, implied and ancillary powers to grant stay against the recovery of disputed demand of tax while seized of the appeal filed before them in accordance with Section 246 or 246A of the Act. There is yet another reason for holding so, and such inherent powers have to be inferred even in the absence of any specific statutory provision conferring the power to grant stay upon such authorities under the Act. 52 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... twice or still higher than the declared tax liability, in the spirit of Instruction No.95 dated 21.08.1969 to grant such stay or to treat the assessee not in default in all such cases. The last words of sub-Section (6), "as long as such appeal remains undisposed of" are not without significance. The mandate of Parliament in sub-Section (6) seems to be that the lower Assessing Officer should abide by and being bound by the decision of the appellate authority, should normally wait for the fate of such appeal filed by the assessee. Therefore, his discretion of not treating the assessee in default, conferred under sub-Section (6) should ordinarily be exercised in favour of assessee, unless the overriding and overwhelming reasons are there to reject the application of the assessee under Section 220 (6) of the Act. The application under Section 220 (6) of the Act cannot normally be rejected merely describing it to be against the interest of Revenue if recovery is not made, if tax demanded is twice or more of the declared tax liability. The very purpose of filing of appeal, which provides an effective remedy to the assessee is likely to be frustrated, if such a discretion was always to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court in the case of Valvoline Cummins Ltd. (supra), would again urge the Central Board of Direct Taxes to issue appropriate guidelines for grant of stay in the spirit of Instruction No.95 dated 21.08.1969 to all the subordinate authorities and to clarify for uniform application all over the country at department level that first appellate authority shall have power to entertain and decide stay application during pendency of appeal before it upon relevant considerations for grant of stay against recovery of disputed demand of tax. 57. Turning back to the facts of the present case, as already narrated above, the income assessed by the Assessing Officer is almost 47 times of the income declared by the assessee viz. Rs. 1,44,42,320/- against the declared income of Rs. 3,48,140/-. The disputed demand of tax also would be almost the same multiples of the declared and admitted tax liability or may be more because of interest and penalties. The main additions are trading additions on the basis of GP rates, the validity of which is subject matter of appeal before the C.I.T. (Appeals). Therefore, applicability of Instruction No.95 dated 21.08.1969, in the present case, is beyond the pale ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
