1997 (4) TMI 69 - HC - Income Tax

Summary

Issues:
1. Application for stay of recovery proceedings dismissed by the Tribunal.
2. Tribunal's refusal to exercise independent power to consider stay application.
3. Contention of financial hardship not considered by the Tribunal.
4. Application for stay to be decided afresh by the Tribunal.

Analysis:
1. The petitioner had filed an application for stay of recovery proceedings before the Tribunal, which was dismissed by an order dated April 3, 1997. The main contention raised by the petitioner's counsel was that the Tribunal did not apply its independent mind in deciding the application, as it was dismissed solely on the ground of the Commissioner of Income-tax already granting stay of demand. The Tribunal's decision was based on the Commissioner's order, without considering the merits of the petitioner's case.

2. The High Court emphasized that the power to consider and grant or refuse an application for stay in the first appeal before the Tribunal is an independent power vested in the Tribunal. The Tribunal cannot decline to exercise this power based solely on the Commissioner's decision to grant stay. The Court noted that the Commissioner's stay was not a blanket stay but subject to the petitioner depositing ten per cent of the demand. The petitioner argued for a complete stay, asserting a strong prima facie case and balance of convenience in his favor.

3. The petitioner's counsel cited decisions from the Madras High Court and the Allahabad High Court to highlight the aspects required to be considered by the appellate authority when deciding a stay application. The Court agreed that financial hardship should be a relevant consideration in such cases. However, the Tribunal failed to independently decide the application and rejected the stay petition based on the Commissioner's order, disregarding the need to assess the application on its own merits.

4. Consequently, the High Court made the rule absolute, setting aside the Tribunal's order and directing the Tribunal to reconsider the stay application of the petitioner afresh. The Court instructed that the application should be decided within one month from the date of the order, and no coercive steps should be taken to recover the demand until the Tribunal's decision on the stay application. The judgment emphasized the importance of the Tribunal independently evaluating the stay application based on the merits presented by the petitioner.