2019 (8) TMI 457 - HC - Income Tax

Rejection of modification of order granting conditional stay u/s 254 - assessee claims to have paid the entire demand of tax, the interest amount still remains unpaid for which request of stay was made - HELD THAT - The powers, which have been conferred on the Tribunal u/s 254 should be interpreted in the widest possible amplitude and it has to be held that by necessary implication, all powers and duties incidental and necessary to make the exercise of those powers fully effective, are conferred on the Tribunal. Therefore, we do not agree with the finding of the Tribunal that it has no jurisdiction to consider the relief sought for by the assessee. As of now, the entire demand of tax namely ₹ 22,305.89 lakhs for all the seven assessment years has been paid. It is true that the demand for interest and the demand for payment of penalty cannot be placed on the same pedestal, as, in several Statutes, payment of interest would be automatic. However, considering the fact that the entire demand of tax has been paid by the assessee post November 2018, we are of the considered view that the balance of demand should remain stayed till the appeals are heard and disposed of by the Tribunal. Considering the fact that the demand of tax and interest is substantial and the fact that the assessee complied with the direction issued by the Tribunal, we are of the view that the balance amount as demanded for the seven assessment years shall remain stayed. For the above reasons, we are also of the view that the common order passed by the Tribunal calls for interference. In the result, the above tax case appeals are allowed, the common order passed by the Tribunal is set aside and there will be an order of stay of the remaining amount as demanded from the assessee in respect of all the seven assessment years. The substantial questions of law are answered in favour of the assessee

Summary

Issues:
1. Jurisdiction of Tribunal to consider relief sought by assessee under Section 254(2) of the Income Tax Act, 1961.
2. Whether the Tribunal was correct in holding that the stay order is not under Section 254(1) of the Act.
3. Whether the Tribunal should have granted stay of tax collection till appeal disposal based on balance of convenience.

Issue 1: Jurisdiction of Tribunal under Section 254(2):
The appeals were filed by the assessee challenging assessments for various years after being unsuccessful before the Commissioner of Income Tax (Appeals). The assessee sought stay of demand for all assessment years before the Tribunal, emphasizing a strong case on merits. The Tribunal initially granted a conditional stay order, but subsequent petitions for modification were dismissed. The High Court held that the Tribunal's powers under Section 254 of the Act should be interpreted broadly, allowing for consideration of relief sought by the assessee. The Court referred to a previous Supreme Court decision emphasizing the Tribunal's wide powers under Section 254(1) to pass suitable orders after giving a full hearing to both parties.

Issue 2: Stay Order under Section 254(1) of the Act:
The assessee raised questions challenging the Tribunal's decision that the stay order was not passed under Section 254(1) of the Income Tax Act. The Court disagreed with this finding, citing the Tribunal's inherent power to rectify or modify its own orders. The Court emphasized that the Tribunal's powers under Section 254 should be construed broadly to ensure effective exercise of those powers, allowing for necessary modifications or alterations to its orders.

Issue 3: Granting Stay of Tax Collection:
The assessee appealed the Tribunal's decision not to grant stay of tax collection till appeal disposal, arguing for balance of convenience in their favor. The High Court considered subsequent events post-April 2018, where the assessee paid the entire tax demand for all assessment years. Despite the interest amount remaining unpaid, the Court held that the balance of demand should remain stayed until the appeals are heard and disposed of by the Tribunal. The Court noted the substantial demand paid by the assessee and the compliance with the Tribunal's directions as reasons to set aside the Tribunal's common order and grant stay of the remaining amount demanded for all assessment years.

In conclusion, the High Court allowed the tax case appeals, set aside the Tribunal's order, and granted a stay of the remaining demanded amount for all assessment years in favor of the assessee. The Court emphasized the need for the Tribunal to consider and dispose of the main appeals promptly due to the substantial demand, compliance by the assessee, and the recurring nature of the issue raised by the Assessing Officer.