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TMI Blog2016 (10) TMI 543X X X X Extracts X X X X X X X X Extracts X X X X ..... relate to international taxation, therefore, steps should be taken for transfer of appeal to designated bench, that is, "L" Bench. Thereafter, Hon'ble Members gave direction to the Registry that the matter be placed before the Hon'ble President for necessary action for transfer of appeal to the "L" Bench. Now, the appeal has been fixed for hearing on 5th October, 2016 before "L" Bench, therefore, the stay granted earlier should be extended for further period of 6 months or till the passing of the order. 3. As regards the first prayer for extension of stay, we find that there was no default on the part of the assessee to conduct the case on the scheduled date of hearing and, therefore, the facts and circumstances on which earlier stay was granted still continues and accordingly, we are extending the stay of outstanding demand for further stayed period of 6 months or till the passing of the order in the appeal, whichever is earlier. 4. So far as the second prayer is concerned with regard to the stay of initiation of penalty proceedings u/s 271(1)(c) before the AO or passing of the penalty order pending hearing of the appeal/passing of order by the Tribunal, Mr. Dinesh Vyas, submitt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) In this case, an Appeal against the Assessment Order was pending before the Tribunal. The Madras High Court held that in such a situation "the limitation period for the levy of penalty would be as provided for under section 275(1) (a) that is six months from the end of the month in which the order of the Tribunal is received by the Income-tax Officer". 5. On the other hand, Ld. DR submitted that, when penalty order has not been passed and no appeal is pending before the Tribunal in relation to the penalty proceedings, then Tribunal has no jurisdiction in this matter and cannot stay the initiation or the passing of the penalty order. 6. We have heard the rival submissions on the second prayer made before us in the stay application for the stay of penalty proceedings u/s 271(1)(c). First of all it needs to decided, whether the Tribunal has the power to grant stay of penalty proceedings when the quantum proceedings are pending before the Tribunal or not. Here in this case, admittedly quantum appeal is pending before the Tribunal for which we have already granted the stay after detail discussion in the earlier stay order for outstanding demand. The penalty proceedings though hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The argument advanced on behalf of the appellant before us that in the absence of any express provisions in Sections 254 and 255 of the Act relating to stay of recovery during the pendency of an appeal it must be held that no such power can be exercised by the tribunal, suffers from a fundamental infirmity inasmuch as it assumes and proceeds on the premise that the statute confers such a power on the Income-tax Officer who can give the necessary relief to an assessee. The right of appeal is a substantive right and the questions of fact and law are at large and are open to review by the appellate tribunal. Indeed the tribunal has been given very wide powers under Section 254 (1) for it may pass such orders as it thinks fit after giving full hearing to both the parties to the appeal. If the Income-tax Officer and the Appellate Assistant Commissioner have made assessments or imposed penalties raising very large demands and if the appellate tribunal is entirely helpless in the matter of stay of recovery the entire purpose of the appeal can be defeated if ultimately the orders of the departmental authorities are set aside. It is difficult to conceive that the legislature should have l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nue will be put to great loss because of the inordinate delay in the disposal of appeals by the Tribunal. It is needless to point out that the 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". (Emphasis added is ours) The aforesaid ratio clearly clinches the issue before hand as the Hon'ble Apex Court unequivocally lay down that the Tribunal has all the powers necessary to make the right of appeal effective during the pendency of the appeal. 7. The Hon'ble Gujarat High Court in the case dealing with precisely same issue in the case of G.E. Industrial Pvt. Ltd (supra) applied the aforesaid law laid down by the Supreme Court. The question for consideration be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ioner in exercise of administrative powers can give the necessary relief of staying recovery to the assessee but that can hardly be put at par with a statutory power as is contained in Section 220 (6) which is confined only to the stage of pendency of an appeal before the Appellate Assistant Commissioner. The argument advanced on behalf of the appellant before us that in the absence of any express provisions in Sections 254 and 255 of the Act relating to stay of recovery during the pendency of an appeal it must be held that no such power can be exercised by the tribunal, suffers from a fundamental infirmity inasmuch as it assumes and proceeds on the premise that the statute confers such a power on the Income-tax Officer who can give the necessary relief to an assessee. The right of appeal is a substantive right and the questions of fact and law are at large and are open to review by the appellate tribunal. Indeed the tribunal has been given very wide powers under Section 254 (1) for it may pass such orders as it thinks fit after giving full hearing to both the parties to the appeal. If the Income-tax Officer and the Appellate Assistant Commissioner have made assessments or imposed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entire purpose of the appeal will be frustrated or rendered nugatory by allowing the recovery proceedings to continue during the pendency of the appeal. Thus, as such in the aforesaid decision, the Hon'ble Supreme Court has specifically held that while exercising the powers under Section 254 of the IT Act, the Tribunal has the implied power of doing such acts, or employing such means, as are essentially necessary to its execution and that the statutory power 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". 8. The ratio laid down by the Hon'ble Gujarat which in turn has applied the law laid down by the Hon'ble Supreme Court in the case of ITO vs M.K. Mohammed Kunhi (supra), it can be ostensibly inferred that in fit cases the Tribunal has the power to grant the stay in the penalty proceedings pending quantum appeal before it which is incidental and ancillary to its appellate jurisdiction conferred under section 254. It cannot be disputed that, the outcome of the decision in the quantum proceedings in the appeal filed before the Tribunal will have a direct bearing in the penalt ..... X X X X Extracts X X X X X X X X Extracts X X X X
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