1989 (3) TMI 178 - AT - Income Tax

Summary

Issues Involved:
1. Jurisdiction of the Tribunal to grant stay of recovery of tax.
2. Merits of the Tribunal's order dated 30th January, 1989.
3. Conditions for granting stay, including payment of a portion of the demand.

Detailed Analysis:

1. Jurisdiction of the Tribunal to Grant Stay of Recovery of Tax:
The primary issue raised by the departmental representative was that the Tribunal lacked jurisdiction to stay the recovery of tax. The representative argued that Rule 86 of the Second Schedule to the Income-tax Act provided a separate appeal procedure against actions taken by the Tax Recovery Officer, thus ousting the Tribunal's jurisdiction. The argument was supported by several judicial pronouncements, including ITO v. Dandi Mohamad Hussain, Balkisandas v. Addl. Collector, M.R. Anthony Swamy v. CIT, Anshiram v. Tax Recovery Commissioner, and Vetcha Sreeramamurthy v. ITO.

The Tribunal, however, referred to the Supreme Court's rulings in ITO v. M.K. Mohammed Kunhi and CIT v. Bansi Dhar & Sons, which affirmed that the Tribunal had the power to grant stay as incidental or ancillary to its appellate jurisdiction. The Supreme Court had observed that the powers conferred by section 254 on the Appellate Tribunal must carry with them all powers and duties incidental and necessary to make the exercise of those powers fully effective. The Tribunal concluded that its jurisdiction to grant stay was not ousted by the existence of a separate provision for appeal against the Tax Recovery Officer's actions.

2. Merits of the Tribunal's Order Dated 30th January, 1989:
The departmental representative contended that the Tribunal's order staying the auction was passed without considering the merits. The Tribunal, however, referred to its previous order and the annexure thereto, stating that the order should be read as part of the current judgment. The Tribunal also noted that the assessee's premises had been subjected to a search, and jewellery worth approximately Rs. 7 lakhs had been seized. The assessee had been non-cooperative, and the first appellate authority had confirmed the orders of the Income-tax Officer.

The Tribunal reiterated that the stay was granted because the hearing of the appeals was being postponed due to the unavailability of the books of account, which were not in the custody of the assessee. The Tribunal emphasized that the sale of the jewellery would cause irreparable harm to the assessee if the appeals were ultimately successful.

3. Conditions for Granting Stay, Including Payment of a Portion of the Demand:
The departmental representative argued that the stay should be conditioned on the assessee paying at least 25% of the gross demand of Rs. 67,81,000. The Tribunal noted that the assessee was not known to have any other source of funds apart from the jewellery. The Tribunal also referenced its previous order, which clarified that no other action for recovery was being stayed.

The Tribunal concluded that there was no need to modify the order of 30th January, 1989, as the stay was limited to the sale of the jewellery, and other recovery proceedings could continue.

Conclusion:
The Tribunal dismissed the Miscellaneous Application, affirming its jurisdiction to grant stay and upholding its previous order dated 30th January, 1989, on the merits. The Tribunal found no reason to modify the conditions of the stay, given the specific circumstances of the case.