2020 (10) TMI 940 - HC - Income Tax

Stay petition - petitioner/assessee has paid a sum nearly 25% of demand - whether the petitioner/assessee has made out a prima facie case for grant of interim orders? - HELD THAT - When the assessee was unsuccessful before the lower forums for the second time, obviously this would be a factum, which would work against the assessee, while deciding a prima facie case. Infact, the Tribunal in the impugned order, has not foreclosed the assessee's / petitioner's case and it has made an observation that in the appeal, a detailed examination of the orders of the High Court of Delhi and other material has to be made and also, it is required to be examined, whether the interest payment was incurred for business purpose of the assessee or not. There is no perversity or erroneous approach on the part of the Tribunal in not granting an interim order sought for by the assessee. When the Tribunal has failed to exercise its discretion in granting an interim order, the High Court while testing the correctness of the said order, would consider as to whether there was any perversity in the approach of the Tribunal for the High Court to interfere by substituting its opinion. Present proceedings is not an appellate proceedings over and above the order passed by the Tribunal. Infact, the assessee has chosen to invoke the extraordinary jurisdiction of this Court under Article 226 of the Constitution of India. The limits to which this jurisdiction can be extended, especially in taxation matters, are well defined. Thus, in the absence of any perversity in the impugned order, we are not inclined to interfere with the impugned order. Since the petitioner/assessee appears to have been ready for the disposal of the appeal and the matter has been adjourned at the instance of the Revenue, We give liberty to the petitioner/assessee to move the Tribunal with a prayer for early hearing of the appeal and if such prayer is made, subject to the convenience of the Tribunal, the petitioner/assessee can be given a hearing at an earlier date.

Summary

Issues:
Challenge to order of Income Tax Appellate Tribunal rejecting Stay Petition under Income Tax Act, 1961.

Analysis:
The Writ Petition was filed by a limited company challenging the order of the Income Tax Appellate Tribunal rejecting the Stay Petition. The petitioner argued that the money in question belonged to Canara Bank and not to them, citing orders of the High Court of Delhi. They contended that no taxable income accrued to them as they had to pass on the entire interest amount to Canara Bank. The petitioner emphasized that the Tribunal should have considered the balance of convenience and granted an interim order, especially since they had paid a significant sum against the demand. However, the Tribunal did not grant the interim order.

Upon hearing the arguments, the Court noted the long-drawn litigation between the parties, including orders passed by the High Court of Delhi in previous rounds. The Assessing Officer had completed the assessment adverse to the petitioner, leading to appeals and subsequent dismissal by the Commissioner of Income Tax Appeals. The Court observed that since the petitioner was unsuccessful before lower forums for the second time, this fact worked against them in establishing a prima facie case for interim orders. The Tribunal's order did not foreclose the petitioner's case and highlighted the need for a detailed examination of the High Court orders and other material.

The Court found no perversity or erroneous approach by the Tribunal in denying the interim order. It clarified that the High Court's role was not appellate but to review the Tribunal's decision for any perversity. As the extraordinary jurisdiction under Article 226 of the Constitution was invoked, the Court's intervention was limited, especially in taxation matters. Since there was no perversity in the Tribunal's order, the Court declined to interfere.

The Court allowed the petitioner to move the Tribunal for early hearing of the appeal, considering their readiness for disposal and the adjournment at the Revenue's request. The final decision rested with the Tribunal based on its workload. Ultimately, the writ petition was dismissed with no costs, and the connected miscellaneous petition was closed.