Income Tax Appellate Tribunal - Ahmedabad
Nalin Doshi vs Assistant Commissioner Of Income Tax on 7 May, 1997
ORDER
H.C. Srivastava, A.M.
1. In this case, a stay petition was filed on 19th December, 1996, on the basis of which an order was passed by the Tribunal on 9th January, 1997, directing the assessee to pay a sum of Rs. 50 lacs in two instalments of January, and February, 1997. On 5th February, 1997 the Department filed a petition under s. 254(2) which was fixed for hearing on 6th March, 1997. The petition of the Department reads as under :
"Facts of the case : A notice under s. 158BC, dt. 1st December, 1995, had been issued under Chapter XIV-B of the IT Act, 1961, to Shri Nalin C. Doshi, prop. VI Sec., Baroda. In response to this notice, the return was due on 23rd December, 1995. However, Shri Nalin C. Doshi furnished his return in Form No. 2B on 16th October, 1996, showing undisclosed income of Rs. 2 crores. As against self-assessment tax under s. 140A payable at Rs. 1.20 crores, the assessee paid only Rs. 9 lacs along with the return.
The block assessment order under s. 158BC(c) r/w s. 158BC of the Act was passed on 24th October, 1996, determining total undisclosed income of Rs. 7.41 crores and raising demand of Rs. 4.44 crores. As the assessee had already paid Rs. 9 lacs along with the return, net demand of Rs. 4.35 crores was raised against the assessee.
Ground on which rectification is sought under s. 254(2) of the Act. - The assessee was required to pay self-assessment tax in view of s. 158BH r/w s. 140A of the Act. As the tax due on the returned income had not been paid, the assessee's petition for stay is not maintainable under s. 249(4)(a) of the Act.
Further, as regards assessee's contention regarding attachment of assets raised during hearing of stay petition, it is pointed out that certain movable and immovable assets belonging to Doshi Group have been only provisionally attached under s. 281B of the IT Act. It is clarified that the attachment has not been made as per Second Schedule of the IT Act. As per s. 281B, provisional attachment can be extended only for the maximum period of two years. As the original order under s. 281B for immovable properties were passed on 15th December, 1995, provisional attachment cannot be extended beyond 15th December, 1997. At present, provisional attachment as per approval of Hon'ble CIT, subsists upto 14th June, 1997. The assessee's contention regarding attachment has, therefore, to be considered in the proper perspective."
On the request of the Departmental Representative on that date, the case was adjourned and was fixed for hearing on 28th April, 1997, i.e., to say today. The main thrust of the Departmental Representative before us was that as the tax due on the returned income had not been paid, the assessee's petition for stay is not maintainable under s. 249(4)(a) of the Act. It is notable that this particular ground was not raised by the Departmental Representative before us at the time of hearing of the stay petition. Therefore, there is no mistake apparent from record in our order dt. 9th January, 1997, and on the short ground itself, the Department's petition under s. 254(2) can be dismissed. However, we are proceeding to deal with the arguments raised by the Departmental Representative and the assessee's counsel on merits as well.
2. The other part of the petition of the Department submits that certain movable and immovable assets belonging to the assessee's group were only provisionally attached under s. 281B of the Act. It was clarified that the attachment was not made as per Second Schedule of the IT Act. As per s. 281B such provisional attachment can be extended only for the maximum period of two years. As the original orders under s. 281B for immovable properties were passed on 15th December, 1995, the provisional attachment cannot be extended beyond 15th December, 1997. At present, provisional attachment as per approval of the CIT subsists upto 14th June, 1997. It is obvious that at least till 14th June, 1997, the assessee is in no position to dispose of his assets and, therefore, the Department cannot have any grievance ignoring the stay upto 14th June, 1997. It is also notable that the provisional attachment can be extended upto 15th December, 1997, i.e., to say for a further period of six months. Therefore, no prejudice is caused to the Department till that date, particularly, in view of the fact we have directed payment of Rs. 50 lacs by the assessee by February, 1997. As the appeal is being fixed out of turn for early hearing, it is expected to be decided much before, if not 14th June, 1997, at least before 15th December, 1997. Therefore, the Department's petition in our opinion, is devoid of any substance.
3. The Departmental Representative however, invited out attention to the provisions of s. 249(4)(a). It was submitted that s. 249 falls under Chapter XX and though it forms part A of Chapter XX, it is applicable to every appeal filed under the said Chapter. It was, therefore, submitted that the provisions of s. 249(4) have to be applied for not admitting the appeal before us. According to him, no appeal under Chapter XX shall be admitted unless at the time of filing of the appeal - where a return has been filed by the assessee, the assessee has paid the tax due on the income returned by him, or where no return has been filed by the assessee, the assessee has paid an amount equal to the amount of advance tax which was payable by him, provided the Dy. CIT(A) or CIT(A) may, for any good and sufficient reason to be recorded in writing, exempt him from the operation of the said provision on an application made. In this case, however, there is no dispute by both the parties that the AO himself treated the return to be invalid return and, therefore, non-return. It is also notable that no notice under s. 139(9) indicating the defects in the return was sent to the assessee. The return itself was treated as invalid return by the AO and the AO proceeded to make the assessment in this case on the said basis. Therefore, according to the AO himself, no valid return subsists in this case. If there is no valid return in this case, then the provisions of s. 249(4)(a) directing the assessee to pay the tax due on the income returned by him will not apply. Therefore, it is obvious that the plea of the Department that the petition for stay is not maintainable under s. 249(4)(a) has no force. If there is no valid return of income on the record, it will have to be held that no return has been filed and, therefore, there is no question of paying any tax on the said basis. Therefore, this plea of the Department fails. The Departmental Representative invited our attention to the provisions of s. 249(4)(b) submitting that this case may be treated as a case where no return has been filed by the assessee and, therefore, the assessee should have paid an amount equal to the amount of advance-tax which was payable by him. The total payment made is only Rs. 9 lacs. Thus, though the petition filed by the Department does not talk about s. 249(4)(b), the Departmental Representative submitted that the same may be applied and that an application should have been made by the assessee as provided in that sub-clause. It is notable that s. 249(4)(b) talks about an application made before the Dy. CIT(A) or CIT(A), it does not say a word about any petition filed before the Tribunal. The powers of the Tribunal for disposing an appeal under s. 253(1)(b) r/w s. 254(1) have to be read together. Under s. 253(1)(b), which was introduced w.e.f. 1st July, 1995, an order passed by the AO under s. 158BC(c) has to be heard by the Tribunal. Once an appeal is filed before the Tribunal, then the only procedure is available for disposal of the same is prescribed under s. 254 of the Act. Under s. 254(1) of the Act, the Tribunal, may after giving both the parties, an opportunity of being heard, pass such orders thereon as it thinks fit. There is no separate provision like that of s. 249(1) in case an appeal filed before the Tribunal. Under s. 249(1) an appeal may be filed before the Tribunal (sic), Dy. CIT(A) and CIT(A) in Form No. 35. It is only under r. 47(1) that an appeal under sub-s. (1) or sub-s. (2) of s. 253 can be filed before the Tribunal in Form No. 36. Therefore, the r. 47 itself talks about s. 253(1) or 253(2). Sec. 253(1)/(2) falls in part B of Chapter XX and is not part of Chapter XX, part A. It is obvious that the provisions of s. 249(4) were not made for applying the same to the Tribunal for the simple reason that the Tribunal has an inherent power of staying the demand in a given case. This, inherent power of the Tribunal has not been barred by s. 249 of the Act. Rule 35A of the Appellate Tribunal Rules lays down the procedure for filing and disposal of the said petition. There is a detailed procedure prescribed for the same. Powers conferred by this enabling law includes not only such powers as are expressly granted but also, by implication, all powers which are reasonably necessary for the accomplishment of the object intended to be secured, where the Tribunal is authorised to pass an order it deems fit. It also impliedly grants power of doing all such acts as are essentially necessary to its execution. Sec. 254 which confers on the Tribunal powers of the widest amplitude in dealing with appeals before it, grants by implication the power of doing all such acts, or employing such means, as are necessary to its execution. The statutory power under s. 254 carries with it the duty in proper cases to make such orders for staying recovery proceedings pending an appeal before the Tribunal. [ITO vs. M. K. Mohammed Kunhi (1969) 71 ITR 815 (SC)]. Such implied power of granting stay is an adjunct of, and flows from, the substantive power to entertain and hear the appeal, conferred upon the Tribunal. As a matter of fact, the Hon'ble Karnataka High Court in Swathi Traders vs. CTO (1990) 76 STC 393 held that the inherent power of the Tribunal to grant stay cannot at all be taken away even by a legislative amendment. It was under such circumstances that the Hon'ble Madhya Pradesh High Court in Smt. Basant Kumari vs. State of Madhya Pradesh AIR 1990 MP 160 has struck down the provisions of the 1989 inserted (sic) s. 42A of the Madhya Pradesh Ceiling on Agricultural Holdings Act, 1960, which enacted prohibition on grant of stay, as violative of the rule of law.
4. The order of stay passed by us on 9th January, 1997, is an order after giving due consideration to the material on record. It was also passed on the basis of submissions made by the Departmental Representative. We are of the opinion that the provisions of s. 249(4) cannot be made applicable to the Tribunal by implication. The powers of the Tribunal are inherent powers and have been prescribed through various judicial decisions from time to time. It is also notable that in spite of an appeal being filed by an assessee under s. 158BC of the Act before the Tribunal and the Tribunal is the first appellate authority, the Tribunal still does not have any power of enhancement which the Dy. CIT(A) and CIT(A) have. Thus, we are of the opinion that the petition filed by the Department has no force both on the facts of this case and also in law. Various decisions were quoted before us by the assessee's counsel and the Departmental Representative with regard to the powers of the appellate authorities to entertain an appeal. We are, however, of the opinion that it is not required to quote all those cases as the law is clear on this subject.
4.1 It is notable that this peculiar problem is perhaps no more relevant as w.e.f. 1st July, 1996, the orders that are to be passed now in the block assessments, the first appeal will lie to the CIT(A). Therefore, the provisions of s. 249(4) may apply after such amendment in law. Till then, there was no authority to impose the provisions of s. 249(4) on the Tribunal. It may also be noted that while the CIT(A) may not entertain an appeal under s. 249(4), that itself may become a subject-matter of an appeal before the Tribunal. Denial to entertain an appeal before the lower appellate authority can always be made a subject-matter of appeal before the higher appellate authority. It is, however, notable that now onwards such problems may not arise before the Tribunal as the first appeal may now lie before the CIT(A). We are, therefore, of the opinion that the petition filed by the Department under s. 254(2) has no force and has to be dismissed.
4.2 The Asstt. Registrar is directed to fix the appeal out of turn, if the assessee has satisfied the condition of paying Rs. 50 lacs by February, 1997. The petition is disposed of as indicated above.