TMI Blog2002 (10) TMI 85X X X X Extracts X X X X X X X X Extracts X X X X ..... Since a very short point is involved and the matter brooks no delay, with the consent of counsel for the parties, we proceed to dispose of the matter at this stage itself. Challenge in this petition under article 226/227 of the Constitution of India is to the order, dated May 23, 2002, passed by the Income-tax Appellate Tribunal, New Delhi (for short "the Tribunal"), directing the petitioner to pay a sum of Rs. 1.15 crores in three instalments of Rs. 40 lakhs each, as a condition for stay of realisation of demand created against the petitioner and for disposal of its appeal on out of turn basis. The Tribunal has also directed the petitioner not to alienate or dispose of any of its immovable properties till the final disposal of the appeal. The background facts, giving rise to the present petition are as follows : The petitioner, a public limited company, is primarily engaged in the manufacturing and selling of textiles, cotton, nylon, synthetic filament yarn, etc. On January 11, 2000, a survey operation under section 133A of the Income-tax Act, 1961 (for short "the Act"), was conducted at the business premises of the petitioner at New Delhi. During the course of survey, it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... failed to get any relief from the Commissioner of Income-tax (Appeals) against the said order, the petitioner preferred second appeal to the Tribunal. Along with the appeal, the petitioner also filed an application for stay of realisation of the said demand till the disposal of its appeal by the Tribunal. The Tribunal, while directing the petitioner to pay the aforenoted amounts, passed the following order: "After considering the entire conspectus of the case we find that it is premature to discuss the merits of the case inasmuch as it may have impact on the hearing of the appeal on merits. Latest balance sheet available on record is that of March 31, 2001. A perusal of it reveals that despite the fact that the assessee has regularly suffered losses, it still has comfortable liquid position. As shown on page 16 of the annual report 2001, the assessee is having net current assets after deduction of current liabilities and provisions from current assets, loans and advances to the tune of Rs. 207.33 crores. It is not the case that the payment of disputed tax liability would paralyse its functioning. Keeping into consideration the entirety of the case, we grant the stay of demand til ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... record its finding as to whether the petitioner has made out a prima facie case for grant of stay or not, the discretionary power to grant stay has not been judiciously exercised. Inviting our attention to the balance-sheet of the petitioner for the period ending March 31, 2001; the details of losses incurred by it for the last five years and the details of the heavy amounts due from the petitioner to various banks, learned counsel has contended that the Tribunal has also failed to consider the financial position of the petitioner in its correct perspective. Mr. R. C. Pandey, learned senior standing counsel for the Revenue, on the other hand, while supporting the order passed by the Tribunal as just and fair, has urged that as per the balance-sheet of the petitioner-company, as on March 31, 2001, more than Rs. 14 crores was available to the petitioner as cash and bank balance and, therefore, the directions to pay the aforenoted amounts cannot be said to be onerous. He submitted that even in the absence of any statutory provision, laying down any guidelines for grant of stay, the order passed by the Tribunal is very reasonable and, therefore, it is not a fit case for interference ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the appeal, if successful, from being rendered nugatory. It is firmly established principle that an express grant of statutory power carries with it by necessary implication the authority to use all reasonable means to make such grant effective." It is pertinent to note that the power of the Tribunal to grant stay of recovery has now been recognised by the Legislature also by the insertion of sub-section (7) in section 253 of the Act by the Finance (No. 2) Act, 1998, with effect from October 1, 1998, and the two provisos to sub-section (2A) of section 254 of the Act, by the Finance Act, 2001, with effect from June 1, 2001, respectively, providing for levy of fees on the application for stay of demand and fixing the time limit for disposal of an appeal where an order of stay is made as also the consequence of its non- disposal within the said time. The principles by which an application for waiver of condition of pre-deposit for entertainment of an appeal under the aforenoted statutes are well settled by a catena of decisions of the Supreme Court and High Courts. These are: (a) whether there is a prima facie case in favour of the assessee; (b) the balance of convenience qua dep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thority is required to keep in mind the interests of the Revenue while making such an order. If any one of these vital aspects are ignored by the Tribunal, it may warrant interference by this court even under a limited scope of judicial review because such an order would have the attributes of arbitrariness and irrationality. In the present petition we are not concerned with the merits of the controversy as to whether the petitioner was required to deduct tax at source under section 195 of the Act. The only question requiring consideration is whether the Tribunal has exercised discretion in directing the petitioner to make the aforenoted deposit on sound legal principles, noticed above, by considering all the relevant facts. On a consideration of the matter in the light of the material placed on record by the petitioner, we are of the view that the impugned order lacks proper application of mind by the Tribunal on the facts of the case. The afore-extracted order shows that the Tribunal has not expressed a prima facie view on the merits of the petitioner's case, evidently under the belief that it is premature to do so and it may have impact on the hearing of the appeal. In the li ..... X X X X Extracts X X X X X X X X Extracts X X X X
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