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TMI Blog2017 (12) TMI 1464X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Hon'ble DRP, final order of assessment u/s 143(3) dated 30th October, 2013 was passed by the AO assessing the total income of the assessee at Rs. 415,07,11,870/- as against a returned income of Rs. 159,40,87,233/-. Being aggrieved against the final assessment order dated 30th October, 2013, the assessee has filed an appeal captioned ITA No.6741/Del/13. Similarly, for A.Y. 2007-08, pursuant to directions dated 29th August, 2014 issued by the Hon'ble DRP, final order of assessment u/s 143(3) dated 30th October, 2014 was passed by the AO assessing the total income of the assessee at Rs. 674,28,07,738/- as against a returned total income of Rs. 238,09,26,505/-. Being aggrieved by the final assessment order dated 30th October, 2014, the assessee has filed an appeal captioned ITA No.6907/Del/2014. It is undisputed that the demands raised by the AO in the final assessment orders for AYs 2006-07 and 2007-08 have been recovered by the tax department. In the stay petitions, the petitioner prays that the penalty proceedings u/s 271(l)(c) of the Act be stayed till the disposal of the quantum appeals by the Tribunal. 2. During the course of hearing Mr. Syali, Ld. Senior Advocate addres ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uesting for keeping penalty proceedings in abeyance pending disposal of appeal by ITAT 28.11.2013 28.11.2014 Second Show Cause u/s 274 12.04.2017 12.04.2017 Limitation Period as per Section 275(l)(a) NA NA Limitation Period as per Section 275(l)(c) - End of financial year in which proceedings for initiation of penalty are initiated Or 31.03.2014 31.03.2015 - Six Months from end of month in which action for imposition of penalty is initiated Whichever period expires later 30.04.2014 30.04.2015 2.3 Mr. Syali also invited our attention towards provisions of section 275 of the Income-tax Act. In this regard, it was submitted by him that the statute gives discretion to the AO to either levy penalty immediately after the assessment or to levy the same after awaiting the outcome of the appellate proceedings. It was submitted that such discretion given to a quasi-judicial authority needs to be exercised reasonably, fairly, equitably and not in an unfair or unjust manner. In support, he cited the decision of UP State Road Transport Corpn. v. Mohd. Ismail [1991] 3 SCC 239. Legislature, according to him, has given an option to avoid multiplicity of proceedings ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y. This power was for the first time granted by insertion of sub-section (7) in section 253 of the Act by Finance (No.2) Act, 1998 w.e.f. 1st October, 1998. Thereafter, two provisos were inserted in sub-section (2A) of section 254 by the Finance Act, 2001 w.e.f., 1st June, 2001. These provisos have thereafter been amended/substituted by the Finance Act, 2007 and the Finance Act, 2008 and presently section 254(2A) stipulates as under: - "(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 : Provided that the Appellate Tribunal may, after considering the merits of the application made by the assessee, pass an order of stay in any proceedings relating to an appeal filed under sub-section (1) of section 253, for a period not exceeding one hundred and eighty days from the date of such order and the Appellate Tribunal shall dispose of the appeal within the said period of stay specified in that order. Provided further that where such appeal is not so disposed of within the said period of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he order of the Tribunal passed on 21.05.2010 is concerned, it is well settled by the judgment of the Supreme Court in ITO v. M.K. Mohammed Kunhi [1969] 71 ITR 815 that the Tribunal, while exercising its appellate powers under the Income Tax Act has also the power to ensure that the fruits of success are not rendered futile or nugatory and for this purpose it is empowered, to pass appropriate orders including orders of stay. In ITO v. Khalid Mehdi Khan [1977] 110 ITR 79 the Andhra Pradesh High Court, applying the rule laid down in M.K Mohammed Kunhi (supra), stayed the assessment proceedings pending before the Assessing Officer consequent to the directions of the CIT given in orders passed under Section 263 of the Act. The stay order passed by the Tribunal on 21.05.2010 is, therefore, supported by ample authority. It is part of the exercise of the appellate power of the Tribunal under Section 254(1). The object of the order is twofold: the first is to prevent multiplicity of proceedings and harassment to the assessee, with the possibility of the proceedings before the Assessing Officer becoming meaningless if ultimately the order passed by the CIT is found to be invalid on grounds ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issioner u/s 263, the Tribunal has the implied power to stay further proceedings before the AO. This decision has also been followed by the Jurisdictional High Court in case of ITAT (supra). (c) In CIT v. Bansi Dhar & Sons [1986] 157 ITR 665, the Hon'ble Supreme Court held that the power of the Tribunal to grant stay of recovery or other proceedings (including reassessment proceedings) can be exercised by it even after it has passed the order in appeal and while a reference against its order is pending in the High Court. (d) In the case of Karnataka Golf Association v. DIT [2004] 90 ITD 749 (Bang.), a coordinate bench of Tribunal, while sitting in appeal against order u/s 12A passed by DIT(E), granted a stay against the related assessment proceedings as the issue of exemptions was directly having relation thereto. 4.6 Moreover, the doctrine of implied and ancillary powers aptly answers the issues raised. If the right of appeal granted is to be given its full effect, then the power to do so cannot be read in a restricted manner. We are, therefore, of the opinion that the Tribunal has the power to stay related proceedings if it is in the interest of justice. 5. After having cro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the relevant assessing authority. In the instant case, the facts on record clearly establish that the AO deemed it fit not to levy penalty immediately after the culmination of the assessment proceedings. Show-cause notice dated 12th April, 2017 issued by the AO is also silent on the point as to why suddenly the case warrants levy of penalty without awaiting the outcome of the first appellate proceedings. The reason behind separate limitations as prescribed by the legislature need be understood in this context. There may be a case where the discretion to levy penalty will be in order where immediately after the assessment, the AO chooses to levy penalty, because in his view the material in assessment proceedings requires such an action. In another case, the correct exercise of discretion will only be to avail the order of the appellate authorities on the material mentioned in the assessment order. There is no power of review and having chosen to exercise the discretion once, the same or the successor AO cannot sit in judgment and review or reinitiate the penalty proceedings kept in abeyance. Moreover, taking a prima facie view in the matter, we also find that if at all the AO wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o dispose of the penalty proceedings from the end of the month in which the order of Tribunal is received by the Commissioner/Chief Commissioner, when the Tribunal has stayed the penalty proceedings during the pendency of the appeal before it, it cannot be said that the Tribunal has exceeded in its jurisdiction and/or the said order is illegal and/or perverse which calls for interference of this court in exercise of powers under article 226/227 of the Constitution of India." 6. Considering the above legal and factual positions, we grant a stay against penalty proceedings u/s 271(l)(c) of the Act initiated by the AO in the instant case, vide show cause notices dated 12th April, 2017, for a period of six months or till disposal of appeals in ITA Nos. 6741/Del/2013 and 6907/Del/2014 whichever is earlier. We have been informed that appeal in ITA No. 6741/Del/13 is fixed for hearing before "I-2" Bench on 23rd May, 2017. We direct the registry to fix appeal in ITA No. 6907/Del/14 also on that day before "I-2" Bench. Assessee is directed to cooperate in an early disposal of these appeals and not to seek unnecessary adjournments in the matter. 7. As a result, stay petitions filed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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