9911796707
TMI Blog1993 (11) TMI 50X X X X Extracts X X X X X X X X Extracts X X X X ..... d up to the assessment year 1992-93 and the petitioner's return for the year 1993-94 is under preparation for being filed. So far as the assessment years 1987-88, 1988-89 and 1989-90 are concerned, the petitioner was said to have been assessed on the basis of its returns under section 143(1)(a) of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), as hereunder : "Assessment year Income/loss declared Rs. 1987-88 66,270 (income) 1988-89 43,980 (loss) 1989-90 Nil." Thereafter, it appears the Income-tax Officer issued notice under section 148 of the Act, proposing to revise the assessment already completed for the reason that the petitioner had not included in the income returned for assessment, a sum of Rs. 2,66,939, Rs. 2,74,553 and Rs. 2,88,546 for the assessment years 1987-88, 1988-89 and 1989-90, respectively. The said amounts were the collections said to have been made by the petitioner as contingency collections towards the possible liability to sales tax in respect of certain transactions relating to works contract. The stand of the petitioner appears to be that the transaction does not constitute taxable sale and consequently there was no liability ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ---- ---------------- ---------------------------------------------------------------------------------------------------------------------------------------------- It is also claimed that the entire undisputed liability in respect of the tax was discharged and what remains to be paid is the balance of disputed tax and interest levied. As against the aforesaid assessments, the petitioner filed appeals before the Commissioner of Income-tax (Appeals), the third respondent, challenging the addition of the amounts collected towards sales tax liability, which did not, according to the petitioner, constitute income or form part of the trading receipts. The disallowance of depreciation to the extent of the subsidy received from the Government was also challenged. Along with the appeals, the petitioner also filed petitions before the first respondent to stay the collection of the tax and to treat the petitioner as not in default. The first respondent, however, did not accede to the prayer and was said to have directed the petitioner to pay the entire tax and interest on or before December 31, 1993. Since the petitioner was not in a position to pay the amounts in terms of the said di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Revenue, the decision of the Supreme Court had relevance to the powers of the Tribunal and not to the appellate authority of the Income-tax Department, though exercising powers under the Act. Before undertaking the consideration of the merits and demerits of the contentions of the respective counsel appearing on either side, it would be useful to refer to various judicial pronouncements brought to my notice with the declaration of law and the principles laid down therein. The above decision in ITO v. M. K. Mohammed Kunhi [1969] 71 ITR 815 is that of the Supreme Court. That was a case where the court was concerned with the powers of the Tribunal under section 254 of the Act. The court specifically adverted to the fact that under the provisions of the Act or the Income-tax Appellate Tribunal Rules, 1963, powers have not been expressly conferred upon the Appellate Tribunal to stay proceedings relating to the recovery of penalty or tax due from an assessee. It also adverted to the position that under section 220(6) of the Act, power of stay by treating the assessee as not being in default during the pendency of the appeal, has been given to the Income-tax Officer only when the app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the earlier stage of appeal before the Appellate Assistant Commissioner that the statute provides for such a matter being dealt with by the Income-tax Officer. It is a firmly established rule that an express grant of statutory power carries with it by necessary implication the authority to use all reasonable means to make such grant effective (Sutherland's Statutory Construction, third edition, articles 5401 and 5402). The powers which have been conferred by section 254 on the Appellate Tribunal with widest possible amplitude must carry with them by necessary implication all powers and duties incidental and necessary to make the exercise of those powers fully effective. . . . It is well known that the Income-tax Appellate Tribunal is not a court, but it exercises judicial powers. The Tribunal's powers in dealing with appeals are of the widest amplitude and have in some cases been held similar to and identical with the powers of an appellate court under the Civil Procedure Code : See CIT v. Hazarimal Nagji and Co. [1962] 46 ITR 1168 (Bom) and New India Life Assurance Co. Ltd. v. CIT/CEPT [1957] 31 ITR 844 (Bom). . . . Section 255(5) of the Act does empower the Appellate Tribun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to whether the Appellate Assistant Commissioner exercising powers under the Kerala Agricultural Income-tax Act, 1950, had the power to grant stay. Under the provisions of the said enactment also, there was no specific conferment of such power on the Appellate Assistant Commissioner. But the proviso to section 40 only empowered the Agricultural Income-tax Officer at his discretion to treat an assessee, who has presented an appeal under section 31 of the said Act, as not being in default so long as such appeal remained undisposed of. While holding that the appellate authority had such power to order stay of the recovery of the tax pending appeal, the learned judge adverted to the earlier decisions on the subject of the Supreme Court as well that of the very High Court and also referred to the axiomatic principle that has come to stay as a maxim of law that to whomsoever the jurisdiction is given, those things also are supposed to be granted, without which the jurisdiction cannot be exercised. In State of Orissa v. Member, Sales Tax Tribunal [1971] 28 STC 652, a Division Bench of the Orissa High Court had occasion to deal with a similar issue arising under the Orissa Sales Tax Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 160, a Division Bench of the Madhya Pradesh High Court had occasion to consider a similar issue arising under the Madhya Pradesh Ceiling on Agricultural Holdings Act, 1960. The Division Bench was concerned with the validity of a provision contained under section 42A of the Act, inserted in 1989, that in any appeal or revision directed against the order passed by the competent authority, no stay shall be granted by the appellate or revisional authority. On a review of the relevant case-law and after adverting to the above decision in CIT v. M. K. Mohammed Kunhi [1969] 71 ITR 815 (SC), the Division Bench held that such a provision would be violative of the rule of law and liable to be struck down. The court further was of the view that for the effective exercise of appellate jurisdiction, an appellate authority is entitled to grant stay and any denial or deprivation of such a power in an appellate authority would constitute an encroachment by the Legislature on the judicial power exercised by the appellate or revisional authority. In CIT v. Bansi Dhar and Sons [1986] 157 ITR 665, the Supreme Court had occasion to consider the scope of the powers of the Appellate Tribunal to grant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there is no express provision. Ex debito justitiae is to do justice between the parties. Rendering advice on the question of law referred to the courts has nothing to do with the recovery of taxes or granting stay in respect of the same. Therefore, in our opinion, it cannot be said that the High Court has inherent power or incidental power in the matter of a reference pending before it to grant stay of realisation or to grant injunction. That must remain within the jurisdiction of the appellate authority and pendency of a reference does not detract from that jurisdiction of the appellate authority. In our opinion, therefore, the High Court was in error in exercising its jurisdiction by passing an order for stay of realisation under section 151 of the Code of Civil Procedure in a pending reference. The High Court could have exercised its power if the appellate authority had not properly exercised its jurisdiction, not in reference jurisdiction but by virtue of its jurisdiction under article 226 or article 227 in appropriate cases. But that was not the case here." In Jute Corporation of India Ltd. v. CIT [1991] 187 ITR 688, the Supreme Court had occasion to consider the scope ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y an appellate authority, in contradistinction to the powers exercised by the High Court on a reference, is a sufficient answer to the claim made by learned counsel for the Revenue. Likewise the attempt of learned counsel for the Revenue to confine the ratio of the decision in ITO v. M. K. Mohammed Kunhi [1969] 71 ITR 815 (SC) to only powers exercisable by the Appellate Tribunal is wholly unjustifiable. Placing such a restricted construction on the principles of law enunciated by the Supreme Court would amount to doing violence to the language as well as to the ratio of the said decision. The main and only objection of learned counsel for the respondents is that there is no specific conferment of power upon the appellate authority exercising powers under section 251 of the Act and during the pendency of such an appeal, it is only the Income-tax Officer and the Tax Recovery Officer who has been conferred with power either to treat the assessee as not in default or postpone the recovery by granting time from time to time and therefore the appellate authority cannot be considered to be in possession of powers to grant stay of collection pending disposal of the appeal filed. There is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mmed Kunhi [1969] 71 ITR 815 would squarely apply to the present case and situation too and I have no hesitation to hold that the appellate jurisdiction conferred under section 251 of the Act impliedly grants the power of doing all such acts or employing such means as are essentially necessary to its effective exercise and that the statutory conferment of the appellate power carries with it the duty and obligation as well, in proper cases to make or grant such orders for stay of the order under challenge in appeal or staying of any or all further proceedings pursuant to the said order, pending disposal of the appeal before the appellate authority. The fact that provisions have been made under the Act to confer power upon the Income-tax Officer under section 220(6) of the Act to treat the assessee concerned as not in default, during the pendency of an appeal under section 246 of the Act or upon the Tax Recovery Officer, under section 225(1) of the Act, to grant further time or postpone the payment of the tax to be recovered is no substitute to the power of stay, which was considered by the Supreme Court to be a necessary adjunct to the very powers of the appellate authority. The p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndia as well as this court and other High Courts. There is no justification or basis to assume that the appellate authorities would throw to winds those well-settled principles in disposing of the application for stay. It is high time also that the Legislature takes note of these aspects and makes suitable provision in this regard to place the matter beyond mere guess or allow the exercise of power at the whims and fancies of officers without any uniformity in approach or guiding principles for consideration. In the light of the above view expressed by me that the appellate authority under the Act, viz., the third respondent, has the necessary powers to deal with and pass orders on the application for stay filed by the appellant, the third respondent has a duty in law to take up the applications for stay said to have been filed and dispose of them in accordance with law on the merits, after hearing the appellants or their authorised representatives. For all the reasons stated above, these writ petitions shall stand partly allowed by the issue of a direction to the third respondent, Commissioner of Income-tax (Appeals), to take the applications for stay said to have been filed by ..... 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