1987 (10) TMI 80 - AT - Income Tax

Summary

Issues:
1. Whether the Appellate Tribunal has the power and jurisdiction to stay recovery proceedings during the pendency of a reference application to the High Court.
2. Whether recovery proceedings should be stayed in the specific case based on the circumstances presented by the assessee.

Analysis:
1. The issue of the Appellate Tribunal's power to stay recovery proceedings during the pendency of a reference application to the High Court was raised in this case. The assessee argued that the Tribunal, as the appellate authority, has the authority to grant stay of recovery proceedings based on provisions in the Income Tax Act. The assessee relied on the case law of ITO v. M. K. Mohammed Kunhi to support the contention that the Tribunal has the power to grant stay during the pendency of an appeal. On the other hand, the Departmental Representative cited section 265 of the Act, arguing that the tax shall be payable in accordance with the Tribunal's decision, which is the final fact-finding authority. The Tribunal, after considering the rival submissions, referred to the case law of CIT v. Bansi Dhar & Sons and held that during the pendency of a reference, the appeal remains pending before the Appellate Tribunal. Consequently, the Tribunal concluded that it has the power and jurisdiction to stay recovery proceedings during the pendency of a reference to the High Court.

2. The Tribunal then addressed whether recovery proceedings should be stayed in the specific case presented by the assessee. The assessee sought a stay of recovery proceedings citing adverse impacts on its business and employees due to the actions taken by the assessing officer. The Tribunal emphasized that the power of stay is not to be exercised routinely and must be based on a strong prima facie case. The Tribunal noted that the vague assertions made by the assessee regarding the business being at the verge of collapse and financial constraints were not substantiated with specific details. Additionally, the circumstances that led to the previous grant of stay by the Tribunal were no longer present. The Tribunal found that the assessee failed to establish a prima facie case for the grant of stay. Moreover, as the application for reference to the High Court was still pending and no reference had been made, the Tribunal concluded that without a pending appeal, no stay could be granted. Consequently, the Tribunal rejected the assessee's request to stay the recovery proceedings based on the lack of merit and the absence of a pending appeal before the Tribunal.