Income Tax Appellate Tribunal - Delhi
Bechtel India Private Limited vs Asstt. Commissioner Of Income Tax on 27 August, 2004
Equivalent citations: [2005]92ITD205(DELHI), (2005)93TTJ(DELHI)794
ORDER
P.M. Jagtap, A.M.
1. By this application, the assessee company is seeking the Tribunal to stay recovery of demand of Rs. 8,73,29,309/- including tax and interest outstanding against its name for assessment year 2000-01, appeal for which filed by it is pending with the Tribunal being ITA No. 3316/Del/2004.
2. At the time of hearing before us, the learned counsel for the assessee at the outset made an attempt to show that the assessee company has a good prima-facie case to succeed on merits in its aforesaid appeal pending before the Tribunal. In this; regard, he submitted that out of the three major additions made by the Assessing Officer in an assessment completed Under Section 143(3), the addition of Rs. 89,15,188/- was made on account of advances received from customers treating the same as income of the assessee for the year under consideration ignoring totally that the said income was not accrued to the assessee in the year, under consideration and the; same was duly declared by it in the subsequent year on accrual basis. As regards the second major additions of Rs. 7,53,11,985/- made by the Assessing Officer on account of alleged suppression of actual receipts for services rendered to the other group concerns, he submitted that this addition on, account of notional income made by the Assessing Officer was arbitrary and the same being made on surmises and presumption, is not sustainable in law or on facts of the case. As regards the third addition of Rs. 2,29,35,808/- made by the Assessing Officer on account of alleged non-genuine provision for expenses, he submitted that this addition was made by the Assessing Officer without considering the fact that no deduction in respect of corresponding expenses was actually claimed by the assessee company in its return of income. He submitted, that when the assessee company preferred an appeal before the learned CIT(A) disputing the aforesaid additions made by the Assessing Officer, he not only confirmed the said additions but also enhanced the income assessed by the Assessing Officer at Rs. 12,1,4,60,320/- to Rs. 19,89,26,439/- by disallowing, the claim of the assessee for deduction Under Section 80HHE to the tune of Rs. 8,74,97,189/- ignoring that there being no distinction between export of customized electronic data and export of computer software, the assessee company was entitled for deduction Under Section 80HHE. He contended that the additions made by the Assessing Officer and further enhancement made by the learned CIT(A) thus has resulted in high pitched assessment on a total income of Rs. 19,89,26,439/- as against Rs. 55,55,280/- returned by the assessee resulting in the total demand of more than Rs. 11.50 crores on account of tax as well as interest. He, therefore, urged that the said demand, which is now outstanding at Rs. 8,73,29,309/- after a total payment of Rs. 2,88,12,039/- by the assessee, be stayed and the appeal of the assessee be fixed for hearing out of turn to avoid any further hardship to the assessee. He also submitted that the assessee company is ready to pay a further sum of Rs. 1 crore against the outstanding demand if the balance dues are stayed by the Tribunal.
3. The learned DR, on the other hand, strongly objected to the stay of recovery of outstanding demand being granted in the assessee's-case by the Tribunal as sought in the present; application on various grounds. Firstly, she submitted that it is neither desirable nor proper for the Tribunal to give any opinion on merits at this juncture as held by the Hon'ble Delhi High Court in the case of JCT Ltd. v. Income Tax Appellate Tribunal and Ors. -258 ITR 291. She also relied on the decision of Hon'ble Supreme Court in the case, of Assistant Collector of Central Excise v. Dunlop India Ltd. and Ors. - 154 ITR 172 wherein their Lordships deprecated the practice of granting interim orders which practically give the principal relief sought in the petition for no better reason than that a prima-facie case has been made out, without being concerned about the balance of convenience, the public interest and a host of other relevant considerations. She submitted that the financial position of the assessee company, as accepted by the learned counsel for the assessee himself is sound and since no case has been made out to show that any hardship is going to be caused to it by recovery of outstanding demand, it is not a fit case to allow any interim relief to the assessee company by staying the recovery of outstanding demand. She also pointed out that the assessee company has not approached the Assessing Officer for stay of outstanding demand and since such request has been made to the learned CIT as recently as on 30th July, 2004, the assessee clearly has not availed the alternative remedies for getting the recovery proceedings stayed before approaching the Tribunal by means of the present application. In this regard, she relied on the decision of Mumbai Bench of ITAT in the case of RPG Enterprises Limited v. Dy.Commissioner of Income Tax - 251 ITR 20(A.T.) wherein the dual purpose of approaching the Commissioner for grant of stay of recovery of the disputed demand before approaching the Tribunal was explained by the Tribunal saying that on the one hand, the Department gets an opportunity to study the situation and gather the necessary data for evaluating the application for stay and on the other, there is always a possibility that Commissioner may grant stay of recovery by imposing conditions; suitable to the Department which may be agreed upon even by the assesses She also strongly opposed the request of the assessee for grant of out of turn hearing in his appeal placing reliance on the decision of Madras Bench of ITAT in the case of Olympia Paper & Stationery Stores v. Asstt. Commissioner of Income Tax - 63 ITD 148 wherein it was hold that it is one of the most time-honoured and cardinal rule of administration of justice that a party (adversary) should, be heard by any Court or Tribunal in the manner he has approached the Court Tribuhal.
4. We have considered the rival submissions and also perused relevant material on record. We shall first deal with the objections raised by the learned DR which are, related to the basic propositions in the, matter of granting interim relief by any authority in terms of stay of recovery of outstanding demand as well as grant of priority hearing. It is true that the Hou'ble Delhi High Court in the case of JCT Ltd. v. ITAT (supra) relied upon by the learned DR has held that while dealing with an application for stay, it is neither desirable nor proper for the Tribunal or any other authority to embark upon detailed enquiry to find out whether the stand of, the assessee is on terra-firma because expression of final opinion on merits at that juncture without full-fledged hearing and consideration of entire material, is likely to cause prejudice to either side. However, at the same time, their Lordships of Hon'ble Jurisdictional High Court, have hastened to instantly add mat the authority concerned is required to consider whether, with reference to the material placed before it, a prima-facie case for grant of stay is made out or not. It is worthwhile to note here that the Hon'ble Delhi High Court in the said decision has laid down four factors to be kept in view by the authority for grant of stay and one of these four factors incidentally is 'prima-facie case on merits'. As a matter of fact, in the said case before the Hon'ble Delhi High Court in the case of JCT Ltd. (supra), no prima-facie view on the merits of the petitioner's case was expressed by the Tribunal evidently under the belief that it was premature to do so at that juncture and this approach of the Tribunal was held to be incorrect by their Lordships of Hon'ble Delhi High Court. Even in; the case of Asstt. Collector of Central Excise v. Dunlop India Ltd. (supra) relied upon by the learned DR, it was held by the Hon'ble Supreme Court that a good prima-facie case on merits in favour of the assessee cannot be the only, reason for granting interim orders if the other relevant considerations like balance of convenience, public interest etc. are not duly taken into consideration. It is pertinent to note here that the said decision was rendered by the Hon'ble Apex Court in the context of stay of recovery of central excise duty and taking into consideration that in the case of excise duty representing indirect taxation the burden has already been passed on to the customer, their Lordships took a strict view wondering as to whether any interim relief in such case at all be given to the manufacturer, dealer and the like, appreciating the aspect of public interest.
5. As regards the other objection raised by the learned DR about the alternative remedies having not been availed by the assessee before approaching the Tribunal for stay relying on the decision of Mumbai Bench of ITAT in the case of RPG Enterprises (supra) it is observed that the Tribunal itself, after explaining the dual purpose for insisting as to why the assessee should approach the Commissioner for grant of stay of recovery of disputed demand, found it expedient to grant the stay to the assessee in the said case despite the fact that stay was refused by the Commissioner to the assessee without speaking order and without affording an opportunity of being heard. In the case of M.K. Mohammed Kunhi v. ITO reported in 71 ITR 815, Hon'ble Supreme Court has held that the Tribunal has got ample power to stay recovery of tax during the pendency of the appeal before it which is incidental or ancillary to the appellate power. Explaining further, the Hon'ble Apex Court observed that when Section 254 confers appellate jurisdiction upon the Tribunal, it impliedly grants the power of doing all such acts, or employing such means, as are essentially necessary to its execution. Further, as held by Hon'ble Calcutta High Court in the case of Susanta Kumar Nayak; v. Union of India and Ors. - 185 ITR 627, the authority which is vested with the power to exercise discretion must do so either in favour of the assessee or against him and cannot refuse to exercise such discretion on the ground that the assessee has alternative remedies available. In the said case before the Hon'ble Calcutta High Court, the ITAT, while in seisin of the appeal had disposed of a petition filed by the assessee for stay of dues on the ground that the discretionary power vested in the Tribunal should not be exercised unless all the remedies available to the assessee are exhausted and the order passed by the ITAT refraining from exercising its discretion was held to be resulting in miscarriage of justice by their Lordships of Hon'ble Calcutta High Court and the matter was remanded to the Tribunal again for reconsideration of the application for stay upon its merits in accordance with law.
6. Before us, the learned DR has also raised a strong objection for granting out of turn hearing in the assessee's appeal relying on the decision of Madras Bench of ITAT in the case of Olympia Paper & Stationery Stores (supra). It is, however, observed that in the said case before the Tribunal, the appeal was fixed for hearing out of turn by the Registry without there being any judicial order passed by the concerned Bench of the Tribunal for expeditious and out of turn hearing. Moreover, no special featurp requiring preferential or selective treatment over other appeals was found to be in existence by the Tribunal and as specifically noted by the Tribunal in its order even the revenue demand was not huge or exorbitant so, as to cause any distress or hardship to the assessee warranting out of turn hearing. In any case, with the insertion of two provisos in Sub-section (2A) of Section 254 by the Finance Act, 2001 w.e.f 1st June, 2001 fixing the time limit for disposal of an appeal where an order of stay is made as also the consequence of its non-disposal within the said time, it has become imperative for the Tribunal to fix the appeal of the assessee for hearing out of turn whenever stay is granted. There is also a concern persistently expressed by none other than the Revenue department about the huge amount of tax arrears being locked up due to pending litigation followed by the requests being frequently and regularly made at administrative level for taking up the high demand cases for hearing and disposal by the Tribunal on priority which again need to be kept in view to decide the issue of granting priority hearing. In any case, there cannot be any prejudice being caused to the interest of the Revenue by grant of out of turn hearing of the assessee's appeal and it is entirely at the discretion of the Tribunal to deal with this matter as it may think fit and proper in the facts and circumstances of each case.
7. To summarise, the settled legal position is that the Tribunal, while granting interim relief in the form stay of recovery of outstanding demand, is required to keep in mind all the four relevant factors like prima facie case, balance of convenience, possibility of irreparable injury and safeguarding of public interest and proper weightage to each of the said factors needs to be given/assigned depending on facts and circumstances of each case on hand.
8. In the present case, the additions made by the Assessing Officer and further enhancement of assessed income by the learned CIT(A) has resulted in the high pitched assessment of assessee's income at Rs. Rs. 19,89,26,439/-as against Rs. 55,55,280/- returned by the assessee giving rise to a demand of more that Rs. 11.50 crores and as demonstrated by the learned counsel for the assessee before us, there is a good prima facie arguable case for the assessee to succeed on merits. In these circumstances, it would hot be just and proper to make the assessee company pay the entire outstanding demand which is apparently huge/exorbitant and wait for disposal of its appeal in the normal course simply because its financial position happens to be sound especially when it has already paid about 25% of the total outstanding demand which is equivalent to about 40% of the amount payable against tax. At the same time, the interest of the Revenue also can be safeguarded-reasonably by directing the assessee, to make a further part payment against the outstanding dues. As such, considering all the facts of the case and for the reasons given above, we find fit expedient to stay the recovery of outstanding demand as sought in the present application for a period of six months or till the disposal of its appeal by the Tribunal whichever is earlier subject to the condition that the assessee shall pay a sum of Rs. 50 lakhs per month starting from September, 2004 till this stay order is in operation. We order accordingly. We also direct the Registry to fix the appeal of the assessee for hearing out of turn on 12th October, 2004 which is a date agreed by the learned representatives of both the sides as convenient to them.
9. Before we part with this order, we may observe, for the sake of clarity, that the observations recorded by us hereinabove in the, matter of 'prima-facie case for the assessee on merits' are for the limited purpose of considering a fit and proper case to grant the stay and the same, therefore, cannot be read as expression of final opinion on merits which is neither desirable nor proper at this juncture.
10. In the result, the stay application of the assessee is allowed.