Income Tax Appellate Tribunal - Delhi
Deeshe Appliances Pvt. Ltd. Through ... vs Acit on 24 February, 2004
Equivalent citations: (2004)84TTJ(DELHI)293
ORDER
V.K. Kapur, J.M.
1. This stay application has been filed by the assessee praying therein for the stay of recovery of demand of Rs. 2,42,78,678/- This stay application came up for hearing on 11th February, 2004 when the Ld. Counsel for the assessee submitted that there are other applications also filed by the same assessee pertaining to other years being Stay No. 60/Del/2004, 61/Del/2004 and 62/Del/2004 and it was in this background suggested that the applications No.68 & 69/Del/2004 which were posted for hearing be adjourned to some other date. It was the submission of assessee that the facts and the issues involved in all the stay applications are common and all the demands of the Revenue have emanated out of a common search. To the request of the assessee so made it was pointed out to the assessee to explain as to what prejudice would it cause if these applications, which were posted, were heard prior to the applications, which were not listed. To this, query of the bench the Ld. AR contended that he would argue the matter, if time is granted, Under these circumstances the matter was adjourned to 12th February, 2004, On 12th February, 2004 the same request for adjourning this matter on the ground that the other applications were pending, this time through the written communication was once again made. As the Ld. Counsel had agreed to argue the matter the previous day i.e., on 11.12.2002, we, in these circumstances rejected the application and proceeded to hear the matter.
2. Necessary facts available on record for the adjudication of the present controversy are that a search and seizure operation was conducted at the premises of the assessee on 1st September, 1994. Consequent to the search, the AO called upon the assessee to file the return. After various adjournments the return was filed. The AO felt that the return which was filed was not a complete return. Certain relevant documents had not been enclosed with the return. As the return was not complete, the AO called upon the assessee to remove the defects which was not complied with. As the defects which were pointed out by the AO to the assessee were not rectified, the AO declared the return to be invalid and issued notice u/s 147 read with Section 148. Thereafter some questionnaire was also sent. Notice u/s 142(1) was also sent to the assessee asking to file the details pertaining to the questionnaire sent. Despite time having been granted by the AO. there was according to the AO, no cooperation being extended by the assessee for completion of the assessment and, in this background the AO keeping in mind that the assessment was getting time barred proceeded u/s 144 and framed the assessment.
3. It is also on record that the assessee filed an appeal before the CIT(A) on 28th April, 1999 against the order of the AO which appeal was also disposed of on 23th February, 2001. The record reveals that during the period of pendency of the appeal the only representation which was made by the assessee before the CIT(A) was on 15th January, 2001 through the attorney and that appearance was only for the purpose of seeking adjournment, which was granted but despite the adjournment having been granted no one thereafter appeared before the CIT(A), and, in this background, the CIT(A) also decided the appeal ex-parte.
4. The assessee being not satisfied with the order of the CIT(A) has filed appeal before this Tribunal. During the pendency of the present appeal, it appears that the Revenue started insisting for the payment of the outstanding amounts on account of the arrears of tax, and this insistence by the Revenue has led the assessee to file the present application before us, for the stay of the recovery of demand.
5. In the application before us the case of the assessee is that on certain complaint of relatives a search and seizure was conducted u/s 132 of the IT Act on 1st September, 1994 on the premises of the appellant and certain documents and other material which were found during the search was seized along with the computers of the assessee. The assessee in the application has contended that the assessing authority made wrongful and illegal addition while framing the assessment and additions were wrongly confirmed by the CIT(A). The Ld. Counsel for the assessee after having drawn our attention to the submissions made in the application for stay contended that the Petitioner could not furnish necessary details before the Assessing Authority as well as before the CIT(A) as the photocopies of the seized documents and other records had not been supplied to the appellant and the seized computers were not released by the Income Tax Department despite several letters. According to the assessee, as the Revenue did not supply him the necessary documents which were in their possession and belonged to the assessee, the assessee was prevented by reasonable cause to submit his explanation and justification on the issues so raised by the assessing authority and the CIT(A). The assessee had contended that the proceedings conducted by the authorities below were contrary to the principles of natural justice. After having submitted so, the Ld. AR contended that this Tribunal has in the case of Shahenshah Talwar who is the Director of the company had filed an application for stay before this Tribunal in ITA No. 2482-2488/Del/2003 and in Stay application No.312-318/Del/2003 this Tribunal has granted the Stay of recovery of demand in those cases subject to the applicant making a deposit of Rs. 15,000 per month. Some other conditions were also imposed by this Tribunal in the order itself. The Id. AR contended that the same order be followed in this case. Apart from this, the Ld. AR contended that as the documents were not being supplied to him, he had to approach the chief of Commissioner. Income tax Delhi Range 9, who had directed vide communication dated. 31st October, 2003 for the stay of demand as the supply of documents were under process. The Ld counsel contended that the said demand so stayed by the chief Commissioner was ignored by the Deptt vide communication dated 24th November, 2003. The copies of the said letter of the chief Commissioner for granting stay dated 31st october, 2003 and the communication dated 24th November, 2003 have been placed on the record. After having drawn our attention to the aforesaid facts the Ld Counsel contended that the assessee has a prima facie good case as the Deptt, is guilty of non compliance of rules of natural justice as they have failed to supply the documents. Advancing his arguments further, the Ld. Counsel contended that even the balance of convenience is also in favour of the assessee and as the Deptt. cannot be permitted to take advantage of his own wrong.
6. To the arguments raised by the assessee, the Ld. DR Shri Salil Gupta contended that the allegations that the Department has not supplied the documents are contrary to the record. He contended that the process of supplying the documents started way back in 1995 and the assessee had been given ample opportunity to collect the documents which he did and if it has not collected any documents despite opportunity, as is apparent from the order of the Assessing Officer, it is the assessee who is to be blamed and not the Revenue. Reacting to the stay order granted by the Chief Commissioner on the basis of the documents not having been supplied, the Ld. DR contended that the assessee is a Company and is under the jurisdiction of another Commissioner and not the Commissioner who granted the stay. The Ld. Dr also contended that the Chief Commissioner before whom the application for stay was made by the assessee on the grounds of the documents having not been supplied had not checked up the record nor any report was obtained from the AO before passing this stay order. It was also contended by the Ld. DR that the concerned Commissioner, when this conduct of the assessee in obtaining the stay order from another Commissioner who had no jurisdiction, and who had passed the order without even cross checking the facts pertaining to supply of documents from the AO came to her notice, she immediately called upon the assessee to deposit the amount. The Ld. DR contended that such an order passed by an officer staying the demand, being without jurisdiction, had no binding effect on the offices who was seized of the matter.
The ld. DR also contended that the assessee was supplied with the documents wayback on 7th October, 1994, He made the statement by reference to the letter of 11th July, 2003 written by ACIT, Circle 27(1) to Shahenshah Talwar. The ld. DR also drew our attention to the noting so recorded by the concerned officer on the letter of the assessee to the Asstt. Commissioner for supply of documents wherein it has been so recorded that the documents were supplied on 7th October, 1994. It was, in this background, contended that not only the assessee was granted ample opportunity but he had obtained the necessary documents from the record. According to the Ld. DR, the plea that the documents have not been supplied is nothing but after thought.
Advancing his arguments on the stay order granted by the other Bench of this Tribunal in the case of Shahenshah Talwar who is Director of the assessee the Ld. DR contended that the aforesaid facts were not brought to the notice of the bench and, therefore, complete facts were not available before the Bench when the order was passed. According to the Ld. DR the said order does not bind this Bench and cannot restrict this Bench from taking an independent view. According to the Ld. DR, the case of Shehanshah Talwar and others were the cases of individual, the amounts were small, whereas this is a company and the amounts involved are exorbitant.
On the issue of prima facie case and balance of convenience the Ld. AR contended that there is neither a prima focie case nor balance of convenience in favour of the assessee. To strengthen his arguments on this issue the Ld. DR contended that the assessee has been given ample opportunity to collect documents and that the Department has given full cooperation for supplying the documents to the assessee but it is the assessee who has not availed of the same. The Ld. DR also contended that the returns were filed without reservation and without any note being appended to them saying that the return were being filed without prejudice to the right of the assessee to revise the return when the documents are supplied. The Ld. DR also contended that here is an assessee who was not traceable and when traced refused to file the return. The Ld. DR also contended that the assessee has despite the communication to the Commissioner through the letter of 26th March, 2003 in reply to show cause notice dated 14th March issued under Rule 73 of the IInd Schedule of the IT Act and despite having stated that he has not transferred/concealed or removed any of his properties have transferred their properties. The sale deed transferring the property was also placed on the record. It was in this background that the Ld. DR submitted that the assessee has no prima facie case.
On the balance of convenience the Ld. DR contended that the balance of convenience is in favour of the Revenue and not in favour of the assessee. The Ld. DR contended that the plea of the assessee that the documents have not been supplied to him till 2002 is false on the face of it for the reason that no grievance have been made by the assessee before the CIT(A) to the said action of the AO as no such ground has been raised by the assessee in the grounds of appeal before the CIT(A). The ld. DR in the alternative submitted that as the assessee had obtained the documents or that the assessee was in possession of necessary and relevant documents it was for this and for this reason alone the assessee had not raised any ground in Ground of appeal before CIT(A) because he had no grievance on this score and, therefore, there is no prima facie case in favour of the assessee and the plea of the non supply of documents is nothing but after thought. The ld. DR contended that how can the assessee claim to have balance of convenience in his favour especially when he after the letter of 26th March, 2003 written to Tax Recovery Officer is found to have transferred the properties belonging to him. Some legal precedents were also cited in support of the contentions raised. Advancing his arguments further, the Ld. DR contended that there is even no equity in favour of assessee. The basis on his saying so was with reference to the averments made in Para (vii) of the application where the assessee has stated on affidavit while replying against question:-
Whether the appellant is proposed to offer security and if so, in what form ?
Answer : No, the appellant is not propared to offer any security.
After having referred to the said statement, the Ld. DR contended that while granting stay the interest of not only the assessee but that of the Revenue has also to be kept in mind. He further contended that how can the interest of Revenue be protected when the assessee is not even prepared to offer a security.
The Ld. DR also contended that the assessee has failed to establish the necessary ingredients i.e. prima facie case, balance of convenience and the interest of assessee has to be given precedence to the interest of public at large, the pre-existence of which is a condition precedent to the grant of stay.
The Sr. Counsel Shri Sampath reiterated the arguments raised and submitted that as the assessee has been deprived of his right to make a proper representation the assessment could not sustain for second and if the assessment cannot sustain for a second, there cannot be any objection in granting the stay to the assessee of recovery of demand.
7. We have heard the parties and taken ourselves through the record. The first and foremost question which we need to adjudicate while deciding the present stay application is as to whether the assessee has a prima facie case keeping in mind the case of the assessee that he was prevented from making a proper representation as the documents seized by the Deptt. were not supplied to him which has led to denial of opportunity to represent his case. This illegality on the part of the Deptt. in not supplying the documents, according to the assessee has led to the miscarriage of justice and, therefore, according to the assessee he has a strong prima facie case.
To answer this as to whether the assessee has a prima facie case or not, we need to scan through the material on the record and filter the necessary facts. The necessity for filtering the facts and scanning through the record had arisen because there are no averments made in the application with regard to the facts which establish prima facie case. All that it was stated in the application for stay against Column No. (vi) was that the appellant company is not in a position to pay the created illegal and unlawful demand. How it is illegal demand, why it is disputed or illegal whether any amount of tax is payable or not, the application is totally silent. The whole thrust of the assessee's case was that documents were not supplied. When such serious allegations were made against Revenue with regard to non-compliance of rules of natural justice, we first of all took ourselves through the assessment order where the facts are very clearly recorded and from there we find that a search was conducted at the premises of the assessee on 1.9.94. Consequent to a search on 1st September, 1994 at the premises of the assessee notice u/s 142 (1) was issued on 30th November, 1995 calling upon the assessee to file its return which notice was served on 4th December, 1995. Pursuant to the service of notice u/s 142(1) on 4th December, 1999 the assessee on 12th December, 1995 informed the AO that he was in the process of taking photocopies and return shall be filed thereafter. The said facts were again brought to the notice of the AO vide its communication dated 19th February, 1996. On 20th February, 1996 the AO vide its communication of the said date wrote to the assessee that several opportunities have been given to take photo copies but the said opportunities have not been availed of. Vide the said communication the AO told the assessee to complete all the formalities and file its return by 1st March, 1996. The assessee instead of filing the return within the time so granted by the AO after a period of 1 months on 31st March, 1997 filed its return, but the return was not accompanied by the P&L account, balance sheet audit report and annexure to the balance sheet. As there were some inherent defects in the return filed, the AO vide its communication dated 13th September, 1997 called upon the assessee to remove the defects by 15th October, 1997, but the directions of the AO to rectify the defects in the return so pointed out were not complied with. As the directions to rectify the defects were not complied with, the AO on 17th February, 1998 declared the return to be invalid and issued notice u/s 147/148 requiring the assessee to file the return of income which notice was served on the assessee on 20th February, 1998. From 20th February, 1998 to 2nd November, 1999 for a period of 20 months plus the return was not filed. In between the AO gathered certain information from the banks of the assessee and on 3rd December, 1999 the AO sent a questionnaire to the assessee. Along with the questionnaire notice u/s 142(1) was also sent asking the assessee to file the details as per the questionnaire and the case was posted for hearing on 20th December. 1999. From the said communication of the AO it was made categorically clear to the assessee that no further time shall be given. Any how on 20th December. 1999 some one appeared for the assessee and asked for time which was granted and the matter was adjourned to 29th December, 1999. The ground for adjournment was that the person appearing was engaged recently and the power of attorney was filed on that date. On the request of the assessee the matter was adjourned to 29th December, 1999. On 29th December, 1999 nobody appeared nor directions given by the AO requiring various information were not complied with. On 4th January, 2000 another notice u/s 142(1) was issued along with the letter by the AO and simultaneously penalty proceedings u/s 271(1)(b) were also initiated for previous non-compliance. The said notice was served personally at the business premises of the assessee by he Inspector and the case was adjourned on 17th January, 2000. On 17th January, 2000 there was no compliance from the assessee despite service and the matter was adjourned to 15th December, 2002, but has gestured to give fair opportunity to the assessee the AO on 9th Febaury, 2000 issued another letter asking the assessee to explain the bank entries the details of which were directly obtained from the bank, but this was not done. As the assessment was getting time barred and the attitude of the assessee was not cooperative the AO Framed the assessment u/s 144.
8. The assessment so framed gave rise to the appeal before the CIT(A), but the attitude of the assessee did not improve as during the pendency of appeal which lasted for months, the assessee appeared only once and, in these circumstances, found the CIT(A) had no option but to dismiss the appeal on merits and that too ex parte.
9. From the aforesaid it prima facie appears that the assessee was granted sufficient opportunity to defend his case but the opportunity so granted were for the reasons best known to the assessee were not availed of. In view of the factum of the proceedings referred to above, we feel that it is not apparently a case of denial of an opportunity but it is definitely a case of not availing of an opportunity and once an opportunity is granted, but not availed of, we do not know as to how can the assessee have a grievance that he has been denied the right to make proper representation or that there has been a non-compliance of rules of natural justice.
10. Coming to the issue raised by the assessee with regard to the non supply of documents which, according to the assessee has led to miscarriage of justice as the assessee was prevented by sufficient cause from making a proper representation, we have to observe that this plea is apparently nothing, but an afterthought and raised just to confuse the issue. The order of the AO is categorical with regard to the fact that the assessee was time and again asked to complete the formalities with regard to the procurement of documents. The first three paragraphs of the order of the AO describe the manner in which the assessee was asked to collect the documents and the steps taken by the assessee pursuant thereto. We, therefore, feel that it does not lie in the mount of the assessee to now come out and say in the light of the observations of the AO that the documents have not been supplied. We must say that the observations of the AO in this regard were not disputed before CIT(A) as no grounds of appeal was raised. No affidavit in terms of rule 10 of the Income Tax Appellate Tribunal rules has been filed contradicting the observations of the AO before US. The observations of the AO on the supply of documents are, therefore, unrebutted and belies the stand of the assessee on this issue.
11. We have another reason to reject this argument that it is after lough and the reason is that if the documents were not supplied we expect the assessee to make some note in the return with regard to the difficulties being faced by him in completing the return because of non-supply of documents or the documents having not been supplied, this is not so. That apart, if the authorities were not supplying the documents and the assessee was requesting time and again for the supply of the same, the assessee has the remedy available to him in law which we must say have not been availed of by him. In this case, the assessee does not take any legal recourse if his grievance is not met on the non-supply of documents and to the contrary, the assessee files a return. On what basis the return is filed is obviously on the strength of the documents, otherwise the assessee could have been precluded from filing the return. Not only this, the ACIT Circle 27(I) New Delhi vide its letter dated 11th July, 2003 addressed to Shahenshah Talwar, Director of the assessee company had categorically stated in terms :-
"as regards copies of seized material is concerned, the same were handed over to your AR and your brother Shri Deepak Talwar on 7th October, 1994."
There is no denial to this.
There is another endorsement by the Officer concerned which endorsement is made on the letter of the assessee in reply to the letter of the AO dated 9th March, 1998 which are in these terms :
"Present Shri M.R. Sehgal, Advocate with this application for adjournment at this juncture when hardly any time left. Moreover, all the copies of seized material and copy of computerised books from their computer was given to Shri Deepak Talwar on 7th October, 1994 and Shri Pradeep Mittal, AR of the assessee from time to time. Application for adjournment rejected."
This endorsement has not been contradicted by any means before CIT(A) or before us in any manner either directly or indirectly.
12. These two letters amply demonstrate that the documents were supplied to the assessee way back on 7th October, 1994. There is no material placed on the record to contradict these assertions of the Revenue. No affidavit in terms of Rule 10 has been filed to demonstrate that the AO or the CIT(A) have given wrong observations with regard to the supply of documents. We, therefore, feel that the plea of documents being not available with the assessee and it was only a plea to raise a defence which, we are afraid cannot be accepted,
13. During the course of hearing another argument was raised that the letters which have been referred to by the Revenue and talk of documents having been supplied have been addressed to Shri Shahenshah Talwar and not the company. To this, the reply of the ld. DR was that whether it is in the case of a company or the individual there is only one seized record of which the copies were supplied. On this issue also we must observe that there is one search and one set of material has been seized. It is not the case of the assessee there was some other material than the one referred to by the AO and rightly so because there being one search on one group, there can only be one set of documents which have been referred to by the Revenue in its letter referred to above and the same stands supphed. Documents supplied to the Director or his authorized representative or to the company would not change the situation at all. This argument, therefore, has no force and is rejected.
14. Another argument that was raised by the Ld. AR during the course of hearing of stay application was that the merits of the case cannot be examined. We feel that we are not examining the merits of the merits but we are examining only those facts with reference to the material which held us determine and to come to a finding whether a prima facie case exists or not. This view of ours is supported by Judgement of jurisdictional High Court in the case of JCT Vs. Appellate Tribunal Delhi Benches reported in 2003-TAXINDIAONLINE-56-HC-DEL-IT ( 258 ITR 291) wherein the Tribunal is required to consider whether or not with reference to material placed before, it, a prima facie case for the grant of stay is made out or not.
After examining the material placed before us and after going through the orders of the authorities below and considering the arguments raised at the bar, we feel that the story of non-supply of documents is cooked up story, devoid of any merits.
The assessee, therefore, we must say, has failed to establish a prima facie case.
15. This brings us to the second issue of balance of convenience. On the assessee. We say so on the basis that the assessee company i.e., Deeshe Appliances Pvt. Ltd. was possessed of Plot No. 204 and 205 measuring 450 sq. ft. each falling in Phase IV, Udyog Vihar, Gurgaon. The said plot out of the two the Revenue has placed on record a sale deed dated 2nd day of August, 1999 executed by M/s Deeshe Fold Plast in favour of Deeshe Elica India Pvt. Ltd. Obviously, this plot initially belonged to the assessee. The assessee must have transferred this plot to Deeshe Fold Plast, Plot No. 205, Phase IV, Udyog Vihar which in turn has been sold to Deeshe Elica India Pvt. Ltd. The same sale deed is validly executed. This sale deed is executed despite the fact that the assessee has vide his letter dated 26th March, 2003 addressed to Tax Recovery Officer, Room No. 268, IT Range 27, Vikas Sadan, New Delhi in reply to show cause notice dated 14th March, 2003 issued under Rule 73 of IInd Schedule to the Income Tax Act had stated in following terms:-
"Para 4 of the letter"
I would also state that after the drawing up of the survey by you or at any time prior to that I have not transferred concealed or removed any of my properties."
16. On the one hand the assessee is making an assertion and a positive assertion in this regard that he has not sold their properties while on the other hand there is a positive evidence of the assets having been transferred during the pendency of the recovery proceedings. When confronted with this. the Ld. Counsel for the assessee though admitted that there is a transfer but transfer is between the group companies and is nothing but exchange of entries. We are afraid we cannot subscribe to such an argument and cannot close our eyes to the fact that the properties have been transferred during the pendency of the proceedings. The plea that there is a transfer between the group companies is of no consequences as company is a person designate and this is a transfer between the two persons for a consideration. Even this argument has, therefore, no force and is rejected. On this issue itself we must say that the assessee has no balance of convenience in his favour.
Apart from this, the Revenue has a certain demand. The assessee as stated above, is not prepared to even offer any security, in the event of stay being granted. On the one hand we have interest of assessee while on the other and we also cannot ignore the interest of Revenue. We have to strike a balance between the interest of two parties. In view of the categorical statement made by the assessee on affidavit that it is not prepared to offer any security in the event of Stay being granted and keeping in mind that the assessee has no prima facie case, on this reasoning as well, we have no reluctance that the balance of convenience is also on this score not in favour of the assessee.
17. Examining it from another angle and proceedings on the premise that it is incumbent on every assessee or ligtigant to prove the existence of three conditions in his favour at the time when he applies to the Court for the rant of stay. These three conditions are; prima facie case, balance of convenience and irreparable loss which must co-exist and absence of even one would disentitle the Petitioner or the assessee as the case may be for the grant of injunction. In this case the assessee has not placed the balance sheet of the company depicting the financial position. Assuming though not admitting that the company is not a good financial position and this may cause undue hardship to the assessee, but that by itself is not enough unless and until the assessee establishes a prima facie case and balance of convenience in his favour which we have already said the assessee had failed to establish. Then, on this ground the application filed by the assessee fails. We may here itself add that in Column No. 6 and 7 the assessee has not pleaded the existence of prima facie case or balance of convenience in his favour. All that the assessee in Col. No. 6 has stated is that the appellant company is not in a position to pay illegal demand. We feel that, that is not enough when the assessee himself has neither pleaded nor established the existence of prima facie case and balance of convenience in his favour the application cannot survive and is liable to be rejected.
18. This brings us to another argument of the assessee that this Tribunal in the case of group cases has granted such order under the identical facts. We have examined the order passed and placed before us to which one of us (Shri Keshaw Prasad, AM) was a party, but we must say that the facts demonstrated by the Revenue in these proceedings it appears have not been brought before that bench at the time of passing of the stay order. Moreover, the order placed before us pertains to the case of an individual. The demand in that case was not even fractional of the demand in the present case. The individual was a salaried employee. His salary is attached. Whereas in this case, the assessee during the pendency of the proceedings, before the tax authorities despite assurances has transferred the properties; through the process of registered sale deeds and, therefore, the facts in two cases one in the case of director and the present cannot be put on the same pedestal.
The grant of being a very serious, matter the party must, we must say, approach the courts with clean hands. This a well settled proposition of law. In this case, we must say that the correct facts must not had been brought before the Tribunal which led to the passing of the order relied upon. Be that as it may, in view of the observations above, we feel that in the present facts and circumstances of the case the assessee has no case even in equity. We may at this stage refer to the observations of the Apex Court in the case of Central Excise Vs. Dunlop India reported in 2002-TAXINDIAONLINE-156-SC-CX wherein the Apex Court has laid down that four factors must be kept in mind for grant of stay and the four factors are prima facie case which by itself is not enough, balance of convenience, possibility of irreparable injury and safeguarding the public interest. The relevant portion of judgement reads as under:-
"Normally four factors for grant of stay order should be kept in view i.e. prima facie case, which by itself is not enough; balance of convenience; possibility of irreparable injury and safeguarding the public interest.
Even assuming that the company had established prima facie case, about which we do not express any opinion, we do not think that it was sufficient justification for granting the interim orders as was done by the High Court. There was no question of any balance of convenience being in favour of the respondent company. The balance of convenience was certainly in favour of the Government of India. Governments are not run on mere bank guarantees. We notice that very often some courts act as if furnishing a bank guarantee would meet the ends of justice. No governmental business or for that matter no business of any kind can be run on mere bank guarantees. Liquid cash is necessary for the running of Government as indeed any other enterprise. We consider that where matters of public revenue are concerned, it is of the utmost importance to realize that interim orders ought not the be granted merely because a prima facie case had been shown. More is required. The balance of convenience must be clearly in favour of the making of an interim order ad there should not be the slightest indication of a likelihood of prejudice to the public interest. We are very sorry to remark that these considerations have not been borne in mind by Assistant Collector of Central Excise Vs. Dunlop India Ltd ( 2002-TAXINDIAONLINE-156-SC-CX) (1995) 154 ITR 172 (SC)."
As far as the prima facie case and balance of convenience are concerned, we have already given our findings in terms above. Regarding the possibility of irreparable injury and safeguarding public interest, we must say that in the peculiar facts and circumstances of the present case the interest of public is more important than the interest of the assessee. We must observe that this is a welfare state. The finances are generated by the welfare state through the process of taxation. Through the funds realized, the benefit is extended to the most needy and, therefore, we feel that the interest of the public shall suffer in this case if the stay is granted. We must say that Madras High Court in a case reported in 205 ITR 462 in the case of Khivraj Motors Ltd. Vs. DCIT has held that when the facts are prima facie are not in favour of the assessee, the Stay cannot be granted. The Ld. Counsel for the assessee during the course of hearing in support of various contentions raised relied upon the judgement of the Apex Court reported in 71 ITR 815 in the case of ITO Connanore Vs. M.K. Mohammed Kunji for the proposition that if the purpose of filing of appeal is to be frustrated the stay order should be granted. On this judgement, the Ld. DR also placed reliance for the proposition that the power of the stay is not likely to be exercised in a routine way or matter of course in the light of the special nature of taxation and revenue loss. Only when the ld. DR contended that a strong prima facie case is made out, the Tribunal should grant stay of recovery proceedings. We have examined this judgement from the point of view of both the parties, but in view of the facts and circumstances of the present case, we feel that the assessee by his own conduct part of which has been reflected in the foregoing paragraphs of this order including refusal to offer security and transferring the properties during recovery proceedings despite assurance has failed to establish a prima facie case or balance of convenience and the circumstances of the case did not warrant that the discretion should be exercised in favour of the assessee. We, therefore, feel that the judgement so relied upon by the Ld. DR in the present set of facts and circumstances of the cases advances the case of the Revenue and not that of the assessee.
19. To the same effect is the judgement of the Apex Court in the case of Empire Industries Ltd. And Another Vs. Union of India and Others. Union of India and Others Vs. Real Honest Textiles reported in 162 ITR 846.
20. In view of the discussion above, we must observe that the assessee had failed to satisfy all the three ingredients the existence of which is a precondition for the grant of injunction and we have, therefore, no hesitation in rejecting the application so filed by the assessee but at the same time we feel that this matter is already in the corridors of the tax department for last approximately ten years and prolonging it further would prejudice the interest of both the assessee as well as the Revenue. We, therefore, feel that let this appeal be listed for an out of turn bearing on 3-5-2004 on day-to-day basis till is concluded. We make it clear that if the assessee asks for a date on the said date on any ground whatsoever the out of turn hearing so granted shall automatically stand withdrawn without any further order. We expect both the parties to cooperate in early disposal of the appeal.
21. Before we part with, we must observe that it is a well settled proposition that the assessee before invoking the jurisdiction of this Tribunal for the grant of stay must establish that he has a prima facie case, balance of convenience and likelihood of suffering of irreparable loss if the stay is not granted. Not a single court has deviated ever from this settled proposition. If this is the settled proposition, then we must observe here itself that the assessee in an application for the grant of stay must plead all those facts through which the assessee can demonstrate the satisfaction of these three ingredients. Not only these facts be pleaded the necessary evidence in support of those facts must be placed on the record which will facilitate the court to appreciate the contention of the assessee and to arrive at the existence of prima facie and balance of convenience. When these facts are amply pleaded and demonstrated we fed that the adversary which is the Revenue in this case will have an ample opportunity to meet the case of the assessee and that the tribunal shall be in a much much better position to appreciate the respective contentions of the parties to arrive at a finding pertaining to the existence of the conditions which are sine qua non for the grant of stay. We are saying so for the reason that the party applying for the stay must tell his adversaries of the case he has, so that the other party is not taken by Snsprior out can effectively contest the application either through the process of affidavit or by the production of record as the adversary may like.
We are compelled to make these observations because day in and day out the applications are moved wherein against Column No. 6 in Sub Rule 35A(2) a statement is invariable made that the entire amount is in dispute or the demand is illegal, as is the case here. This kind of a statement in an application for stay is not enough. We make it clear that unless and until the assessee in black and while through the process of pleadings pleads the three ingredients and discloses the foundation for those averments supported by evidence which he may like to rely on at the time of hearing of stay application, the application cannot be said to be in conformity with the provisions of Form No.35A and cannot escape an order except that of the dismissal.
We say so because there is no procedure under the rules to cure the defects in the application though there is procedure under the rule to care the defects in the appeal.
22. We make it clear that any observation or opinion expressed in this order is confined to the issues pertaining to the applications only and shall not in any way affect or prejudice the merits of the case of the assessee at the fine of final hearing of the matter.