2013 (10) TMI 1178 - HC - Income Tax

Jurisdiction of the Tribunal to order refund of the amount appropriated by the revenue, during pendency of the appeal Held that - Jurisdiction of the Tribunal to order refund of the amount appropriated by the revenue, during pendency of the appeal. The learned Tribunal has held that it is empowered, in view of nature of its jurisdiction, as well Section 151 CPC to order refund, as the stay order has not been vacated. The power to ensure that its orders are not violated during pendency of a lis are inherent in any Court or Tribunal. In fact it is the bounden duty of the Tribunal to ensure where its order is violated that the violation is adequately redressed and money appropriated, is restituted. If such a power is held not to be available to the Tribunal, its interim orders would be flouted with impunity. If, the revenue was of the opinion that the stay order has been violated by the assessee or has been vacated, it should have approached the Tribunal for clarification by way of an appropriate application but instead proceeded in a ham-handed manner, to appropriate this amount. The order passed by the Tribunal, does not suffer from any error of jurisdiction or of law Decided against the Revenue. Whether adjournment is sought by assessee Held that - A perusal of the Tribunal s order reveals that counsel for the assessee brought it to the notice of the Tribunal that the appeal involves an issue relating to AMP, which is pending before a Special Bench, in the case of LG electronics. The Tribunal adjourned the case to 16.04.2013. The opinion recorded by the Tribunal that order dated 16.01.2013 does not record a request for an adjournment, at the behest of counsel for the assessee, cannot be faulted. The counsel for the assessee brought to the notice of the Tribunal that an appeal involving a similar issue is pending before a Special Bench. It was for the Tribunal to hear the appeal or adjourn the appeal. The Tribunal choose, instead, to adjourn the appeal as it could not be decided without decision of the reference. The order dated 16.01.2013 must, therefore, be read as the assessee bringing a fact to the notice of the Tribunal and the latter adjourning the case. The endeavour of the revenue to interpret this order as an adjournment claimed by the assessee, in our considered opinion is erroneous as even a prima facie perusal of the order does not indicate any request by counsel for the assessee for an adjournment Decided against the Revenue.

Summary

Issues Involved:
1. Whether the conditional stay order dated 13.12.2012 was vacated due to the adjournment on 16.01.2013.
2. Legality of the revenue's appropriation of Rs.208 crores from the assessee's account.
3. Jurisdiction of the Income Tax Appellate Tribunal (ITAT) to order a refund of the appropriated amount.
4. Whether the ITAT's order directing the refund was justified.

Issue-Wise Detailed Analysis:

1. Conditional Stay Order and Adjournment:
The core issue is whether the conditional stay order dated 13.12.2012, which enjoined the assessee not to seek any adjournment, was vacated due to the adjournment granted on 16.01.2013. The revenue argued that the stay order was vacated because the assessee sought an adjournment, thus allowing the revenue to recover the tax due. The Tribunal, however, noted that the adjournment was granted because the appeal involved an issue pending before a Special Bench in the case of LG Electronics, and not at the behest of the assessee. The Tribunal held that the adjournment did not violate the stay order, as it was granted to maintain judicial propriety and discipline.

2. Legality of Revenue's Appropriation:
The revenue's action of appropriating Rs.208 crores was challenged on the grounds of legality and bonafides. The Tribunal found that the revenue acted inappropriately by interpreting the adjournment as a vacation of the stay order. The show cause notice issued by the revenue did not mention the vacation of the stay order but instead questioned the admission of the MAP application. The Tribunal concluded that the revenue's actions were driven by the need to meet year-end revenue collection targets, indicating a lack of bona fides.

3. Jurisdiction of ITAT to Order Refund:
The Tribunal asserted its jurisdiction to order a refund based on its inherent powers and Section 151 of the CPC, which allows it to pass orders necessary to achieve the ends of justice. The Tribunal emphasized that it has the duty to ensure that its orders are not violated and that any injustice caused during the pendency of an appeal is rectified. The Tribunal held that it was within its rights to order the refund of the amount illegally appropriated by the revenue.

4. Justification of ITAT's Refund Order:
The Tribunal's decision to order the refund was based on its finding that the stay order was not vacated and that the revenue's appropriation of funds was unjustified. The Tribunal framed five questions for adjudication, including whether the stay order was flouted by the assessee or the department, and whether the Tribunal had the power to direct a refund. The Tribunal concluded that the stay order remained in force, the revenue's actions were not bona fide, and it had the authority to order the refund to rectify the situation.

Conclusion:
The High Court dismissed the writ petition, affirming the Tribunal's order directing the refund of Rs.208 crores to the assessee. The Court held that the Tribunal acted within its jurisdiction and that its order did not suffer from any error of law or jurisdiction. The refund, however, was to await the decision of the appeal, which the Tribunal was directed to decide within one month from the receipt of a certified copy of the order.