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TMI Blog2011 (3) TMI 688X X X X Extracts X X X X X X X X Extracts X X X X ..... ng extension of stay of outstanding demand already granted beyond the period of 365 days. The outstanding demand sought to be stayed was on account of penalties imposed by the Assessing Officer u/s 271(1)(c) and confirmed by the Learned Commissioner of Income-tax (Appeals) for the assessment years 2000-01, 2001-02 and 2002-03 aggregating to Rs.369.40 crores. During the course of hearing of the said stay applications initially before the Division Bench, reliance was placed on behalf of the assessee on the decision of the Co-ordinate Bench of this Tribunal in the case of Ronak Industries Limited (S.A. No. 137/M/09 dated 22.05.2009) wherein the stay was granted beyond the period of 365 days by an order dated 22.05.2009 i.e. after the amendment made by the Finance Act 2008 by substituting Third proviso to section 254(2A) with effect from 1.10.2008 ( '2008 amendment' in short ). In the said order, the Tribunal had mainly relied on the decision of the Hon'ble Bombay High Court in the case of Narang Overseas P. Ltd. Vs. ITAT and others 295 ITR 22( Bom) which was delivered prior to 01.10.2008. The Division Bench of the Tribunal which initially heard these stay applications filed by the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... justified in holding that the case of the assessee is a fit case for stay of outstanding demand beyond the period of 365 days as per the provisions of section 254(2) by ignoring the mandatory amendment in the Third proviso to section 254(2A) made by the Finance Act, 2008 with effect from 01.10.2008, providing that the order of the stay granted shall vacate after the expiry of 365 days even if the delay in disposing of the appeal is not attributable to the assessee?" Shri. Dinesh Vyas submitted that the Hon'ble Bombay High Court has upheld the order of the Tribunal passed in the case of Ronak Industries Ltd. (Ltd.) and dismissed the appeal filed by the assessee thereby answering the said question in the affirmative i.e. in favour of the assessee. He contended that since the issue referred to this Special Bench is identical to the issue involved before the Hon'ble Bombay High Court in the case of Ronak Industries Ltd. (supra), the same now stands squarely covered in favour of the assessee by the judgment of the Hon'ble Bombay High Court delivered in the said case. He contended that as held by the Hon'ble Bombay High Court in the case of Ronak Industries Ltd. (supra), the Tri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Assessing Officer during the period when the stay applications filed by the assessee before the Tribunal were pending. He submitted that substantial amount has been borrowed by the assessee for the purpose of its business which shows that the assessee continuously requires funds for the purpose of its business and as a result of recovery made by the by Assessing Officer by way of adjustment of refunds for other years, the assessee is deprived of an opportunity to utilize the amount of refund for the purpose of its business. He submitted that a specific objection was raised by the assessee before the Assessing Officer in writing to his proposal of making adjustment of the refund due for other years against the outstanding demand pending on account of penalty imposed under section 271(1)(c). He submitted that it was specifically brought to the notice of the Assessing officer that the stay applications fixed before the Tribunal are pending before the Special Bench, but still he proceeded to ignore the objection of the assessee and recovered the outstanding demand by adjusting the refund due for other years. He contended that the amount so recovered by the Assessing Officer ignoring ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of the Full Bench of the Hon'ble Andhra Pradesh High Court in the case CIT vs. B.R. Construction reported in 73 Taxman 473 and submitted that the binding precedent, as held therein, can be ignored inter alia in three situations viz. (i) when it is inconsistent with the earlier decision of the same rank, (ii) when it is sub-slientio and (iii) when it is rendered per incuriam. 7. The learned Departmental Representative submitted that in the case of Jethamal Faujimal Soni vs. ITAT reported in 231 CTR 332, the Hon'ble Bombay High Court had an occasion to consider the effects of 2008 amendment and on such consideration, it was clearly laid down by the Hon'ble Bombay High Court that after the 2008 amendment, the Tribunal cannot grant the stay of outstanding demand beyond the period of 365 days even if the delay in disposal of the appeal by the Tribunl is not attributable to the assessee. He contended that the decision of the Hon'ble Bombay High Court in the case of Ronak Industries Ltd.(supra) taking a different view thus is inconsistent with its own decision taken in the case of Jethamal Faujimal Soni (supra). The learned Departmental Representative then submitted that the eff ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Kanel Oil & Export Inds. Ltd. 121 ITD 596 in support of his contention that in a situation like the one in hand, the decision of the higher judicial forum/Court need not be followed as a binding precedent. He contended that decision of the Hon'ble Bombay High Court in the case of Ronak Industries Ltd. (supra) is also per incuriam as the same is inconsistent with its earlier decision and has been rendered without considering the amendment made in 2008 which was material and relevant. He also contended that the case of Ronuk Industries Ltd. (supra) has been decided by the Hon'ble Bombay High Court by upholding the order of the Tribunal and dismissing the appeal of the revenue without any discussion and the same, therefore, cannot be said to be laying down any ratio decidendi. 8. As regards the contention raised by the learned counsel for the assessee claiming refund of outstanding demand already recovered to by the Assessing Officer, the learned Departmental Representative submitted that the recovery of outstanding demand has been made by the Assessing Officer only after a period of three years from the date when it was raised and that too after the expiry of stay granted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant material on record. We have also carefully gone through the various judicial pronouncements cited by the leaned representatives of both the sides. The preliminary issue which is required to be considered and decided by this Special bench is whether the main issue referred to the Special Bench now stands squarely covered by the decision of the Hon'ble Bombay High Court in the case of Ronak Industries Ltd. (supra) and whether the same has to be followed being a binding precedent to decide the said issue. There is no dispute that the issue before the Hon'ble Bombay High Court in the case of Ronak Industries Ltd. (supra) was identical to the one referred to this Special Bench. The learned Departmental Representative, however, has contended relying on the decision of the Hon'ble Andhra Pradesh High Court in the case of B.R. Constructions (supra) that the same need not be followed by this special bench being per incuriam as it is inconsistent with its earlier decision rendered in the case of Jethamal Faujimal Soni (supra) and the amendment made in 2008 in the relevant provision has not been taken into consideration. A perusal of the judgment of the Hon'ble Bombay High Court passed in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fault. 3) The object of amendment made in Section 254(2A) by the Finance Act (2007) was not to defeat the vested right of an appeal in an assessee whose appeal could not be disposed not on account of any omission or failure on his part, but either the failure of the Tribunal or acts of Revenue resulting in non-disposal of the appeal within the extended period as provided. 4) It would not be possible on one hand to hold that there is a vested right of appeal and on the other hand to hold that there is no power to continue the grant of interim relief for no fault of assessee by divesting the incidental power of the Tribunal to continue the interim relief. Such a reading would result in such an exercise being rendered un-reasonable and violative of Article 14 of the Constitution." 13. It is also observed that the following question was raised before the Hon'ble Bombay High Court in the case of Ronak Industries Ltd.(supra) : "Whether on the facts and in the circumstances of the case and in law, the I.T.A.T. was justified in holding that the case of the assessee is a fit case for stay of outstanding demand beyond the period of 365 days as per the provisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re an order of subordinate forum is reversed or modified exercising such appellate jurisdiction or the appeal filed is merely dismissed confirming the order under appeal without any modification, it is the appellate decision alone which subsists and is operative and capable of enforcement. It was held that in all such eventualities, what emerges is the operative part of the order under appeal after its confirmation, reversal or modification and there would be a merger even in a case where the reasoning of the subordinate forum is not expressly approved. It was held that if the merger is issue specific, there is fusion of the order only to that limited extent but it cannot be successfully contended that where appellate court merely accords approval to the reasoning of the lower court or forum, there is no decision of the appellate court or forum. Keeping in view this proposition propounded by the Hon'ble Gujarat High Court in the case of Nirma Industries Ltd.(supra), we find it difficult to accept the contention of the learned Departmental Representative that in the absence of any discussion on the 2008 amendment, the decision of the Hon'ble High Court in the case of Ronak Industrie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ision in the case of Snowcem India Ltd. which the Third Member did not follow was again of a non-jurisdictional High Court i.e. Hon'ble Bombay High Court and the same was rendered without taking into consideration certain statutory provision which was relevant and material. In the case of CIT vs. Pamwi Tissues Ltd. (supra), the decision of Hon'ble Supreme Court in the case of Vinay Cement Ltd. (supra) was not followed by the Hon'ble Bombay High Court on the ground that only the Special Leave Petition filed in the said case having been dismissed by the Hon'ble Supreme Court, there was no law laid down therein on the issue involved. As already discussed, the position arising in the present case, however, is entirely different inasmuch as, a specific question as referred to the Hon'ble jurisdictional High Court incorporating the relevant provision as amended in 2008, was answered by Their Lordships in the affirmative dismissing the appeal filed by the revenue thereby holding that the Tribunal has the power to extend the stay beyond the period of 365 even after the insertion of Third proviso to section 254(2A) w.e.f. 1.10.2008 in the cases where the delay in disposing of the appeal is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se. In case, an objection is raised by any party to the inclusion of any Hon'ble Member in the Special Bench on the ground that he or she has already expressed view on the issue, the Vice-President is authorized to take necessary action on such objection. Let files of all quantum and penalty appeal be placed before the Special Bench for action in accordance with law." 17. As is clearly evident from the perusal of the above order passed while constituting this special Bench, the Hon'ble President, I.T.A.T has not only referred the stay applications filed by the assessee but even the corresponding appeals pending before the Tribunal to the Special Bench with a liberty to either consider and decide only the question referred or even to dispose of the stay applications and the appeals. While constituting this special bench, the Hon'ble President of I.T.A.T thus has passed a specific order whereby the stay applications bearing Nos.SA 196 to 198/M/2009 have also been referred to the special bench for hearing and disposal. Even the provisions of section 255(3) specifically provides that the President I.T.A.T may for the disposal of any particular case constitute a special bench consistin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 2000-01, 2001-02 and 2002-03 has already been recovered by the AO by way of adjustment of refund due to the assessee for the other years as a result of relief given by the Tribunal in the said years. He has, therefore, urged that while granting the stay as sought by the assessee in the present applications, the AO may be directed to refund the amount of demand recovered especially during the pendency of these stay applications before the Tribunal. In support of this contention, he has relied on various judicial pronouncements. We have carefully gone through these judicial pronouncements cited by the learned counsel for the assessee. There cannot be a dispute that the Tribunal, as held in the said cases after taking into consideration the proposition propounded on this issue in the various judicial pronouncements, can issue direction while exercising its power to grant the stay to refund the amount already recovered by the Revenue in appropriate cases where such direction is warranted in the facts and circumstances of the case. As a matter of fact, the Co-ordinate Benches of this Tribunal have directed the Department to grant the refund of outstanding amount recovered inter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to file the appeal to the Tribunal had not expired and when the assessee had specifically informed that the stay application filed by it was fixed for hearing before the Tribunal on February 17, 1992. In these facts and circumstances, Hon'ble Bombay High Court held the action of the Assistant Collector of Central Excise to be improper and directed him to refund the amount recovered. Similarly, in other cases cited by the learned counsel for the assessee, coercive steps were found to be taken by the AO to recover the outstanding demand in undue haste so as to render the process of stay proceedings before the Tribunal as nugatory and in these facts and circumstance involved in the said cases, the amount recovered was directed to be refunded by the Tribunal. 20. The facts and circumstances involved in the present case, however, are entirely different inasmuch as the stay granted by the Tribunal had already been expired and the application filed by the assessee seeking further extension of stay beyond the period of 365 days was referred to the Special Bench in view of the 2008 amendment. The Division Bench, which heard the said stay applications of the assessee initially, was of the o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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