2016 (3) TMI 1302 - AT - Income Tax

Power conferred upon the Tribunal under Section 254(1) to grant interim stay - Held that - Omnibus power conferred upon the Tribunal under Section 254(1) to pass such orders as it thinks fit while deciding an Appeal is reinforced in respect of passing interim orders of stay in the first part of second proviso to sub-section (2A). This ancillary power of the Tribunal to pass an order of stay in any proceedings related to an appeal filed under sub-section (1) of Section 253, is subject to the twin requirement that the stay order could be passed for a period not exceeding 180 days and that the Tribunal should dispose of the appeal within that period. In the present case we are only concerned with the power of the Tribunal to grant interim stay as conferred by first part of the second proviso to subsection 2 (A) of section 254 of the Income Tax Act. The appeal of the assessee is pending before the ITAT and has been listed for hearing along with the stay petition and in fact the hearing has also commenced. There is also no doubt that the issues arising in the stay petition flow directly and substantially from the impugned order before the ITAT and the proceedings sought to be stayed relate to the present appeal filed under sub-section (1) of Section 253. During the course of hearing the Stay Petition which stood reinforced on hearing of the Appeal, we found that the assessee had a prima-facie case for grant of stay as prayed for and an order of status-quo was pronounced on the Bench As the assessee has made out a prima-facie case for grant of stay, the departmental objection that the ITAT does not have the power to grant stay is misplaced. See case of CIT, Central-II vs ITAT 2012 (8) TMI 166 - DELHI HIGH COURT

Summary

Issues Involved:
1. Maintainability of the Stay Petition
2. Prima-facie Case for the Assessee
3. Power of the Tribunal to Grant Stay
4. Balance of Convenience and Irreparable Loss
5. Status-quo and Directions to the Assessing Officer

Detailed Analysis:

1. Maintainability of the Stay Petition:
The Revenue argued that the stay petition was not maintainable as it was not signed by an authorized person as per Section 140 of the Income Tax Act, 1961. The Assessee countered by stating that the person was authorized as per a Board Resolution. The Tribunal directed the Assessee to cure this defect and allowed the Revenue to proceed with hearings under Section 143(3)/263, but barred them from passing any order on that day.

2. Prima-facie Case for the Assessee:
The Tribunal found that prima-facie, the Assessee had a good case. The Assessee argued that the impugned order dated 27.03.2015 was passed without affording a reasonable opportunity of being heard, violating principles of natural justice. The Tribunal noted that the Assessee's arguments necessitated looking into the merits of the order itself, thus granting an early hearing of the appeal.

3. Power of the Tribunal to Grant Stay:
The Tribunal examined its power to grant stay under Section 254 of the Income Tax Act, 1961. It cited various judgments, including the Delhi High Court's decision in Pepsi Foods P. Ltd v. Assistant Commissioner of Income Tax, which affirmed that the power to grant stay is incidental or ancillary to the appellate jurisdiction of the Tribunal. The Tribunal concluded that it has the power to grant stay to maintain judicial balance and prevent irreparable loss to the Assessee.

4. Balance of Convenience and Irreparable Loss:
The Tribunal considered the balance of convenience and irreparable loss to the Assessee. It found that the Assessee would face undue harassment and unnecessary expenditure due to multiplicity of proceedings. The Tribunal noted that the Assessee had a strong prima-facie case and that the continuation of proceedings would cause irreparable loss.

5. Status-quo and Directions to the Assessing Officer:
The Tribunal directed that the Assessing Officer could pass the consequential assessment order under Section 263/143(3) before 31st March 2016, but the order should not be given effect to until the appeal against the order under Section 263 is adjudicated by the Tribunal. This was done to protect both the Assessee's and the Revenue's interests.

Conclusion:
The Tribunal granted the stay petition, finding that the Assessee had a prima-facie case and that the Tribunal had the power to grant such a stay. The Tribunal directed the Assessing Officer to pass the consequential assessment order but not to give effect to it until the appeal is disposed of, thus maintaining a balance between the interests of the Assessee and the Revenue. The stay petition was ordered to remain tagged along with the appeal.