2013 (4) TMI 899 - AT - Income Tax

AMP expenses addition - MAP application - TPA - bank guarantee furnished by the assessee - default in making the payment or on non-furnishing of the bank guarantee covering the amounts involved in MAP proceedings

Issues Involved:
1. Whether the stay order of the Tribunal was flouted by the assessee.
2. Whether the stay order of the Tribunal was flouted by the department.
3. If the department flouted the stay order, whether the action was bona fide or mala fide.
4. Whether the Tribunal has the power to direct a refund.
5. Ensuring safeguards to protect the interests of the Revenue.

Issue-wise Detailed Analysis:

1. Whether the stay order of the Tribunal was flouted by the assessee:
The Tribunal's order dated 13-12-2012 granted a stay of recovery subject to the assessee depositing Rs. 2.50 crores and furnishing a bank guarantee by 31-12-2012. Additionally, the assessee was required not to seek any adjournment and get the appeal finalized on 13-01-2013 or any subsequent date. The conditions regarding the deposit and bank guarantee were fully complied with by the assessee. On 16-01-2013, the appeal was adjourned due to the awaited Special Bench order on the AMP issue. The Tribunal held that the adjournment was in conformity with judicial propriety and not an act of seeking adjournment by the assessee. Thus, the stay order was not flouted by the assessee.

2. Whether the stay order of the Tribunal was flouted by the department:
The department issued notices under sections 221(1) and 226(3) to the assessee and its bank, respectively, leading to the collection of amounts stayed by the Tribunal. The Tribunal concluded that the stay order was indeed flouted by the department.

3. If the department flouted the stay order, whether the action was bona fide or mala fide:
The Tribunal considered arguments from both sides and determined that the department's action was bona fide. The officers acted on a bona fide belief that they were required to recover the amounts. Efforts were made to obtain information regarding the adjournment, and the confusion arose from a misunderstanding of the relevance of the wording in the order-sheet dated 16-01-2013. The Tribunal acknowledged the pressures and apprehensions faced by the officers, leading to the conclusion that the action was bona fide.

4. Whether the Tribunal has the power to direct a refund:
The Tribunal referred to several judgments, including CIT v. Bansi Dhar & Sons and M.K. Mohammed Kunhi, to affirm that it has the power to direct a refund. Section 254 of the Income-tax Act grants the Tribunal the power to pass orders necessary to maintain judicial balance, which includes directing a refund in appropriate cases. The Tribunal emphasized that it has the authority to remedy any wrong committed in proceedings before it and to pass orders for the ends of justice or to prevent abuse of process.

5. Ensuring safeguards to protect the interests of the Revenue:
The Tribunal noted that the bank guarantee furnished by the assessee amounting to Rs. 208 crore was in the possession of the department, ensuring the interest of the Revenue was secured. Therefore, the Tribunal directed the Revenue to refund the amounts collected in violation of the stay order by 18-04-2013.

Conclusion:
The Tribunal allowed the assessee's petition, directing the Revenue to refund the amounts collected in violation of the stay order dated 13-12-2012. The Tribunal emphasized the need for judicial propriety and the importance of creating a conducive atmosphere for officers to perform their statutory functions confidently and without undue pressure.

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