2004 (1) TMI 295 - AT - Income Tax

Summary

Issues Involved:
1. Defects in the stay petition as pointed out by the Assistant Registrar.
2. Compliance with Rule 35A of the Income-tax (Appellate Tribunal) Rules, 1963.
3. Requirement of filing correspondence with lower Revenue authorities.
4. Merits of the stay petition for the outstanding demand.

Detailed Analysis:

1. Defects in the Stay Petition:
The Assistant Registrar identified two defects in the stay petition filed by the assessee:
- The stay petition was not in the prescribed proforma under Appendix X(e).
- No correspondence with the lower Revenue authorities was filed.

The Assistant Registrar issued a defect memo to the assessee and noted that the defects were not rectified even after a final reminder. Consequently, the matter was placed before the Bench for the return of the stay petition.

2. Compliance with Rule 35A of the Income-tax (Appellate Tribunal) Rules, 1963:
The learned counsel for the assessee argued that the stay petition was submitted in the proforma prescribed in Rule 35A of the Income-tax (Appellate Tribunal) Rules, 1963. It was contended that the language used in Rule 35A includes "correspondence, if any," implying that it was not mandatory to file a stay application before lower authorities or attach any correspondence if none existed.

The Tribunal noted that the Office Manual, referred to by the Assistant Registrar, is meant for official use and is not mandatory. The Tribunal emphasized that the stay petition should conform to Rule 35A(2), which requires certain particulars to be mentioned, but does not mandate a specific form. The Tribunal found that the stay petition filed by the assessee contained the necessary particulars as prescribed in Rule 35A(2).

3. Requirement of Filing Correspondence with Lower Revenue Authorities:
The Tribunal addressed the defect related to the absence of correspondence with lower authorities. It was clarified that since no correspondence existed, the assessee was justified in not filing any such documents. The Tribunal noted that the language of Rule 35A does not make it mandatory to move for a stay before lower authorities or to file correspondence if none exists.

4. Merits of the Stay Petition for the Outstanding Demand:
The Tribunal considered the merits of the stay petition after hearing both parties. The learned counsel for the assessee pointed out that the appeal was dismissed by the CIT(A) without giving an opportunity of being heard due to an incorrect address. The Tribunal found that the assessee had a prima facie case for the grant of stay, as the balance of convenience lay in favor of the assessee, and irreparable loss would be suffered if the demand was not stayed.

The Tribunal granted the stay of the entire outstanding demand of Rs. 4,37,656, subject to the condition that the assessee deposits Rs. 20,000 per month during the pendency of the appeal. Additionally, the assessee was directed to file an affidavit undertaking not to transfer any immovable properties without the Bench's permission. The stay order was to remain in force for six months or until the decision of the appeal, whichever occurred earlier.

Conclusion:
The Tribunal concluded that the stay petition was in conformity with Rule 35A of the Income-tax (Appellate Tribunal) Rules, 1963, and there were no defects. The Tribunal directed the Registry to fix all pending stay petitions, misc. petitions, and early hearing petitions before the Bench at the earliest. The Tribunal also granted the stay of the outstanding demand with specific conditions and directed the Registry to fix the appeal for an out-of-turn hearing.