2015 (6) TMI 935 - AT - Income Tax

Non deduction of TDS on payments made on account of settlement on withdrawal accumulated balance under Rule 9, 10 of part A of Schedule IV of the I.T. Act, 1961 - maintainability of appeal for stay orders - Held that - Law is well settled that the first appellate authority i.e. Commissioner of Income Tax (Appeals) has power to grant stay. In exercise of this power, learned Commissioner of Income Tax (Appeals) has passed the impugned order obviously, under the provisions of Section 250 of the Act since there is no other provision of the Act under which Commissioner of Income Tax (Appeals) can pass the order. It is well settled that the order need not be an order of civil court alone, it can be of any other statutory authority C.G. Ghanshamdas v. Collector of Madras, 1986 (9) TMI 409 - Supreme Court Of India . The term order has not been defined under the provisions of Income-tax Act, 1961. It is judicially understood that the word order as a noun, has been held equivalent to or synonymous with decision . Therefore, having held that the Commissioner of Income Tax (Appeals) has passed the order under Section 250 of the Act, in our considered opinion, the appeal is clearly maintainable under clause (a) of sub-section (1) of Section 253 of the Act. The appellant organization is only acting as custodian of employees funds and on mere perusal of IVth Schedule of the Act, it seems that the provision of IVth Schedule may not be applicable to the Provident Fund Organization which are set up under the Provident Fund Act. Admittedly, the assessee organization is set up under the provisions of Provident Fund Act. Therefore, the order passed by Dy. Commissioner of Income Tax (TDS), Noide, is under serious challenge. Keeping in view the interest of the employees as well as the spirit of CBDT Circulars and Instructions, we deem it fit case to grant the stay of demand till the disposal of the appeals before CIT(Appeals).

Summary

Issues:
1. Maintainability of the appeal before the Appellate Tribunal.
2. Granting of stay of demand pending disposal of appeals before CIT(A).

Issue 1: Maintainability of the appeal before the Appellate Tribunal

The appeal was filed by the Employees' Provident Fund Organization against the order of the CIT(A) rejecting stay petitions related to default in deducting tax at source. The order passed by the Deputy Commissioner of Income Tax held the organization in default under Section 201(1) of the Income Tax Act, 1961, for non-deduction of tax on payments made. The total liability and interest were specified for different financial years. The appeal was filed before the CIT(A), who directed the organization to file a stay petition before the Assessing Officer. The appeal before the Appellate Tribunal raised the issue of maintainability, as per Section 253 of the Act, which specifies the kinds of orders appealable before the Tribunal. The Tribunal examined whether the impugned order was passed under Section 250 of the Act, which allows appeals before the Tribunal. The Tribunal referred to various decisions establishing that the Commissioner of Income Tax (Appeals) has the inherent power to grant stay when an appeal is pending before them. It was concluded that the appeal was maintainable under clause (a) of sub-section (1) of Section 253.

Issue 2: Granting of stay of demand pending disposal of appeals before CIT(A)

The Authorized Representative argued that the organization had a strong prima facie case as the provisions of certain rules were not applicable to the Provident Fund Organization set up under the Provident Fund Act. It was highlighted that the organization was established to serve the needs of employees of private organizations, and denying stay would adversely affect the employees. On the other hand, the Department Representation opposed the stay, suggesting the organization should seek stay from the Assessing Officer. After considering the arguments, the Tribunal found that the organization acted as a custodian of employees' funds and that the provisions of the IVth Schedule of the Act might not apply to Provident Fund Organizations set up under the Provident Fund Act. Given the serious challenge to the order passed by the Deputy Commissioner of Income Tax, the Tribunal granted the stay of demand until the appeals were disposed of before the CIT(A). Subsequently, all stay petitions were dismissed as infructuous since full stay of demand was granted.

In conclusion, the Appellate Tribunal found the appeal maintainable before it and granted the stay of demand pending the disposal of appeals before the CIT(A) in favor of the Employees' Provident Fund Organization.