2009 (1) TMI 335 - AT - Income Tax

Summary

Issues Involved:
1. Jurisdiction of the Tribunal vis-`a-vis the High Court's order.
2. Assessee's compliance with High Court's conditional stay order.
3. Tribunal's authority to grant stay on penalty collection.
4. Legal implications of parallel proceedings.

Issue-wise Detailed Analysis:

1. Jurisdiction of the Tribunal vis-`a-vis the High Court's order:
The primary issue was whether the Tribunal had jurisdiction to entertain the stay petition when the High Court had already passed orders on the matter. The Tribunal held that the writ proceeding in the High Court did not oust its jurisdiction over the subject matter of the appeal against the levy of penalty. The Tribunal noted that the Commissioner of Income-tax, acting under section 273A, was discharging an administrative function, and the proceedings before the Commissioner and the appellate authorities were qualitatively different. Therefore, the Tribunal rejected the contention that it could not entertain the stay petition due to the High Court proceedings.

2. Assessee's compliance with High Court's conditional stay order:
The High Court had initially granted an interim stay on the condition that the assessee pays 25% of the penalty and interest in six equal monthly installments. This was later modified to twelve monthly installments. The assessee failed to comply fully with these conditions, resulting in the vacation of the interim stay. Despite partial payments totaling Rs. 26,20,929, the High Court's stay was no longer in force due to non-compliance with the payment schedule. The Tribunal noted this non-compliance but considered the partial payments made by the assessee.

3. Tribunal's authority to grant stay on penalty collection:
The Tribunal was divided on whether it had the authority to grant a stay on the collection of the outstanding penalty amount. The Accountant Member believed that the Tribunal could grant an interim stay and expedite the hearing of the appeal, given that the assessee had paid a substantial part of the penalty. Conversely, the Judicial Member argued that since the High Court had already addressed the stay issue and the assessee had defaulted, the Tribunal should not intervene. Ultimately, the Third Member sided with the Judicial Member, emphasizing judicial discipline and the impropriety of the Tribunal granting a stay when the High Court had already ruled on the matter.

4. Legal implications of parallel proceedings:
The Tribunal discussed the implications of the assessee pursuing parallel proceedings-one before the High Court for waiver of penalty under section 273A and another before the Tribunal challenging the penalty's validity. The Judicial Member highlighted that the Tribunal should not entertain the stay petition as it would amount to sitting in judgment over the High Court's order or stepping into its shoes, which was beyond the Tribunal's jurisdiction. The Third Member concurred, noting that the Tribunal should defer to the High Court's orders and not initiate parallel proceedings.

Conclusion:
The Tribunal, by majority view, dismissed the stay petition, emphasizing the need for judicial discipline and the impropriety of granting a stay when the High Court had already addressed the issue. The Tribunal's decision underscored the importance of compliance with court orders and the distinct roles of administrative and appellate proceedings in tax matters.