Income Tax Appellate Tribunal - Delhi
Motorola Solutions India Pvt. Ltd., ... vs Assessee on 13 December, 2012
1
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH: "I" NEW DELHI
BEFORE SHRI S.V.MEHROTRA, ACCOUNTANT MEMBER
AND
SMT. DIVA SINGH, JUDICIAL MEMBER
INTERIM ORDER IN I.T.A .No.-5797/Del/2012
(ASSESSMENT YEAR-2008-09)
Motorola Solutions India Pvt. Ltd., vs DCIT,
415/2, Mehrauli Gurgaon Road, Circle-2, 4th Floor,
Gurgaon-122001 Vanijya Kunj, HSIIDC Building,
Udyog Vihar Phase-V,
Nr. Shankar Chowk, N.H.-8,
Gurgaon.
PAN-AAACM9343D
(APPELLANT) (RESPONDENT)
Appellant by: Sh.C.S.Aggarwal, Sr. Adv,
Sh. Himanshu Shekhar Sinha, Adv.
Sh.Rajiv Anand, CA
Sh.Sujit Parakha, CA
Sh.Vipin Sharma, CA
Sh.Santdas Wadhwani, CA
Respondent by: Sh.Peeyush Jain, CIT DR
INTERIM ORDER
PER DIVA SINGH, JM
This application has been moved by the assessee in ITA No.-5797/Del/2013 in peculiar circumstances invoking the provisions of section 151 CPC in terms of judgement of Supreme Court in ITO vs Mohd.Kunhi (1968) 71 ITR 815 (SC) at 819, praying for a refund of the amount recovered by the revenue in alleged violation of a Stay order dated 13.12.2012 passed by this Tribunal in Stay Petition No.273/Del/2012 in the said Appeal. While avoiding the danger of over elaboration at the expense of clarity, in contrast to the opposite extreme of paucity 2 and ambiguity of information on why and under what circumstances this application has been moved, it would be true and fair that the essential facts are first set out in a form it can be properly and readily appreciated.
2. In the case of the assessee, order was passed in the stay petition no- 273/Del/2012 in ITA No.-5797/Del/2013 which was disposed in the following manner :-
"4. In consideration of the application of the assessee in the light of rival submissions and material on record, we grant of stay recovery, subject to condition that assessee shall deposit Rs.2.50 crores on or before 21.12.2012 and shall furnish bank guarantee in the amount involved for which MAP application has been filed, on or before 31.12.2012, for a period of 180 days or disposal of the appeal/MAP application, whichever is earlier. However, assessee shall not seek any adjournment and get finalized the appeal fixed for hearing on 13.01.2013 or any subsequent date. In case assessee seeks adjournment or commit default in making payment or furnish bank guarantee within the stipulated time, the accommodation herein granted shall stand automatically cancelled and entire outstanding demand would be recoverable as per law."
3. Consequent thereto, the appeal of the assessee came up for hearing on 16.01.2013 (in the order passed in the stay petition the date noted is 13.01.2013). On the said date, the record shows that the appeal was adjourned by the Co- ordinate Bench with the following noting :-
"Ld. Counsel for the assessee contends that the appeal involved AMP issue on which the Special Bench order in the case of the LG Electronics is awaited. Adjourned to 16.4.2013".
3.1. However on the receipt of notices u/s 221(1) dated 22.03.2013 to the assessee and notice u/s 226(3) received by the assessee's bank, the assessee approached the Tribunal seeking an order barring the department from collection 3 of amounts stayed by the Tribunal. On the said request the following administrative order was passed by the Senior Member:
"Put up before "I" Bench for 14.4.2013 S/d U.B.S.Bedi 28/03/2013"
3.2. As a result of this, the Stay petition No-273/Del/2012 came to be listed for hearing on 01.04.2013. Since it was considered appropriate to have an effective response of the department , the hearing was adjourned to 02.04.2013. 3.3. On the said date on noting that the cause list showed that what was listed was an already disposed Stay petition No-273/Del/2012 it was indicated that it is non-maintainable, Ld. AR was put to notice of the said fact and heard on the aspect. However on considering the orders and judgements relied on behalf of the assessee, an opinion was formed that they are operating in different facts as therein the appeal was pending and listed for hearing which was not the position before the Division Bench on 02.04.2013. In support of the view formed we may mention that Jurisdiction is not acquired either by the consent of the parties or on a mistake or error on the part of the Court or Tribunal who proceeds to hear because and if it was wanting ab-initio, no amount of hearings will confer jurisdiction thereafter.
3.4. Since the department on the said dated was represented by CIT(Adm.), Faridabad, Smt. Neena Kumar; Sh. Sampoorna Anand, JCIT; Smt. Shashi Kajle, DCIT, Circle-II, Gurgaon, the concerned officers were heard. The sum total of their submissions were that the action was taken on a strong bona fide belief that the amounts were recoverable as the order in the stay petition in clear terms mandated that in the event the assessee seeks adjournment , the stay will be automatically cancelled and the efforts of the department showed that on 16.01.2013 adjournment was "prompted by" the assessee.
43.5. Time was given to the parties on the said to arrive at a mutually acceptable solution since bona fide belief was pleaded by the Revenue. However it did not yield any result. The petition 273/Del/2013 was declared non-maintainable. 3.6. In the above-mentioned background the appeal which was listed for hearing on 16.04.2013 came to be listed for hearing before the Bench on 08.04.2013 as the assessee moved a petition dated 02.04.2013 before the Hon'ble Vice President, ITAT, Delhi Benches requesting for pre-ponement of the appeal so that the assessee may be able to address the petition for refund of the outstanding demand collected in violation of the stay order.
3.6. The Hon'ble Vice President, Delhi Benches passes the following administrative order:-
"Hearing of appeal is preponed to 08.04.2013. This letter of 'a' would also be placed before the Bench on 08.04.2013."
Sd/ (G.D.Agarwal) 03.04.2013
4. Accordingly the appeal stood preponed and duly listed in the cause list of 08.04.2013.
5. Ld. AR reiterated the position qua the collection of outstanding demand in violation of the order of the Tribunal wherein for no fault on the part of the assessee, it was put at a disadvantage despite having an order of stay in its favour as the amounts stood withdrawn on 28.03.2003 and 30.03.2013. It was his submission that the interest of the revenue was well protected as the assessee in compliance of the direction of the Tribunal given in the stay order had furnished bank guarantee amounting to Rs.208 crore odd. which was in the possession of the department.
6. Before we proceed to discuss the merits of the petition wherein petition dated 28.03.2013 was declared non-maintainability as the jurisdiction of the 5 Tribunal had been invoked wrongly by way of filing stay petition No- 273/Del/2012 which already stood "killed" on the records of the ITAT. We propose to briefly refer to some arguments advanced by the parties concerned which though not relevant arguments for deciding the issue need a mention. The need and necessity to mention the same arises on account of the fact that both the sides had made anguished pleas in support of their respective stands which as observed though judicially do not have any relevance in the present proceedings however the anguish behind the ground realities expressed by the parties moves us to make a reference to them.
7. Whereas the Ld. CIT(Admn.) Smt. Neena Kumar in support of the action taken submitted that the action has been taken by the Revenue Officers in "a bona fide belief" to "watch out for the interests of the Revenue" as such there can be no occasion to even consider that there was any element of a personal interest, as such, it was urged there can be no mala fide in the action taken; it was also her vehement plea that the monies have been collected for the country and it was also urged that apart from that the plight of the concerned officer may be given due consideration when the order of the Tribunal passed in the stay petition categorically mentioned that on mere seeking of an adjournment by the assessee, the stay granted would be automatically cancelled; and the event occurred; in the circumstances the concerned officers would have had no defence from the audit objections etc. which would have been raised and comments from the CAG etc. on the functioning of the said officers wherein loss has been caused to the Government on account of non-action on the part of the Field Officers.
7.1. These laudable arguments and pleas seeking to perhaps ignite the spirit of patriotism we humbly observe cannot be taken judicial notice for deciding the issue in the present proceedings.
67.2. Similarly, the arguments and pleas that an officer exercising its powers is presumed to have always acted in a bona fide manner is a presumption available to the officers in the discharge of their official duties however this is a rebuttable presumption which an officer in facts and circumstances if so warranted can be asked to explain.
7.3. However what has left a heavy impact on our judicial minds is the prevalent ground reality wherein it seems to appear that the officers are working under extremely trying circumstances and pressures where the decisive factor for decision making may not necessarily only be the facts and circumstances of the case vis-à-vis the position of law but the apprehensions and fears of being found to be derelict in the discharge of their duties where comments, observations, criticisms and may be strictures from the CAG/Audit would have a seriously damaging effect on their carriers. These are grave concerns and even though not relevant consideration for deciding the issue but move our conscience to request the Competent Authority in the CBDT to make endeavours and create if so found necessary an atmosphere of faith, trust and confidence in the officers through which the aims and objects of the Income Tax Act are achieved. It may not be out of place to make a mention that the government policies are sought to be implemented through the vast arena of provisions of the Income Tax Act to give a fillip/boost to the economy as such in our humble opinion, it is imperative to ensure that the morale of the officers who perform the statutory functions undue the Income Tax Act perform them fearless and confidently. The creation of a conducive atmosphere can not be over-emphasized.
8. On behalf of the assessee the Ld. AR Sh.C.S.Aggarrwal, Sr. Adv. also apart from arguing for a refund of the outstanding demand collected by the department despite the operation of the stay order in its favour had also advanced various 7 submissions which also were not relevant for deciding the allowability of assessee's claim however in our humble opinion they may merit a reference.
8.1. The Ld. AR made an impassioned plea that the officers should not act in such manner where despite knowing that the Stay order was in existence in assessee's favour for reasons best known to themselves chose not to act immediately after 16.01.2013 i.e the day on which the appeal was adjourned or immediately thereafter and instead "suddenly woke-up" after a few months "close to the end of the financial year" during the holiday week of "Holi" and "Good Friday" putting the assessee to a disadvantage for no fault of it to such an extent that the opportunity to seek legal remedy was also compromised.
8.2. It was his vehement argument that if the officers act in complete disregard of orders of higher forums then faith in the fair functioning of the officers would be eroded and all the efforts of the government to attract FDI and invite businesses would be negated as the business climate of the country would be considered not conducive to business and the "businesses" would flee the country.
9. As observed the concerns through grave have no relevance to deciding the issue as the limited prayer in writing is refund of the dues collected in violation of the stay order. However mention of the same is made as in our opinion it may call for some contemplation on the administrative side of the department.
10. Addressing the issue before us in the present proceedings, we propose to consider them in the following manner:-
"a) Has the stay order of the Tribunal been flouted by the assessee;
b) Has the stay order of the Tribunal been flouted by the department;
c) if the answer to b) is yes then is the action of the department 8 bona fide or mala fide on facts;
d) if the answer to b) is yes then does the Tribunal have the power to direct a refund;
e) in case the answer to d) is yes, then what are the safeguards which can be ensured to protect the interests of the Revenue."
11. Addressing the issues posed in a) we have taken into consideration the order of the Tribunal dated 13.12.2012. On a perusal of the same, it is seen that in the light of the rival submissions and material on record, the Co-ordinate Bench granted stay of recovery subject to the conditions (i) that the assessee shall deposit Rs.2.50 crores; and ii) shall furnish bank guarantee of the amount involved for which MAP application had been filed. Both the conditions were to be fulfilled on or before 31.12.2012. Apart from the said conditions, it is seen that the assessee was further saddled with the condition that it shall not seek any adjournment and get the appeal finalized fixed for hearing on 13.01.2013 (as noted by the Co- ordinate Bench which on facts it is seen was infact listed for hearing on 16.01.2013) or any subsequent date. On the above terms and conditions stay was granted for a period of 180 days or disposal of the appeal/MAP application whichever was earlier. The assessee it is seen was put to the rigorous of automatic cancellation of the accommodation granted by the Bench in the eventuality the assessee either seeks an adjournment or commits a default in making the payment or on non-furnishing of the bank guarantee covering the amounts involved in MAP proceedings within the stipulated time.
11.1. It is not disputed that the conditions in regard to the deposit of Rs.2.50 crores and furnishing of bank guarantee were fully complied with by the assessee.
911.2. The record shows that on 16.01.2013 the appeal was adjourned. The adjournment was made in conformity with judicial discipline and judicial propriety wherein the issues in the appeal could not be decided as the order of the Special Bench on the same issued namely AMP (Advertising Marketing Promotion) expenses was awaited as Special Bench (larger Bench consisting of 3 Members) was constituted specifically for the said purpose and order was awaited.
11.3. It is a matter of record that the factum of the issue being a subject matter of consideration by the Special Bench was pointed out on behalf of the assessee. However, mere mention of the fact cannot be said to be an act of seeking adjournment as the said fact in all fairness could have been pointed by either side. The Advocates/CIT DR representing the respective sides before the Court/Tribunal are expected to "act as officers of the Court" and they do so. As such they are duty bound to assist the Court in the discharge of its duties and obligations. Infact if none of the sides had pointed out to the Bench, the Division Bench on its own motion on a bare perusal of the grounds raised namely Ground No-4 to 4.9 before the Bench would have had no alternative but to itself suo motto adjourn the appeal as judicial propriety, judicial decorum and judicial discipline mandates that when the Bench is having knowledge of the fact that the specific issue is not being proceeded with by different Benches of the ITAT and are awaiting the order of the Special Bench constituted of three Members, it is appropriate for the Division Bench to await the order. As such this could not have been considered that adjournment was sought by the assessee.
11.4. Accordingly we hold that since no adjournment was sought by the assessee, the order dated 13.12.2012 of the ITAT passed in the stay petition has not been flouted by the assessee.
1012. Coming to the next question which we have posed to ourselves in b) and c) namely to consider whether the stay order was flouted by the department and if yes, was the action bona fide or mala fide on facts.
12.1. Giving our due consideration to the arguments advanced on behalf of the assessee as well as by the CIT DR, we are of the view that the stay order passed by the Tribunal was flouted by the Department.
12.2. Having come to the said conclusion on examination and considering the arguments advanced we are of the view that the action was bona-fide. We have come to the said conclusion after considering the submissions advanced by the Field Officers which were reiterated by the Ld. CIT DR that the officers have acted on a bona fide belief that they were required to do so. The Field Officers have been able to show that efforts were made on their part through some Inspector to obtain information in regard to the adjournment on 16.01.2013. Letter it was shown was addressed to the Registry by the JCIT, Gurgaon seeking the requisite information; whether any order was passed thereon could not be ascertained however hand-written noting of the exact wording of the order-sheet dated 16.01.2013 was shown from the file by the AO who was unable to say whether it was formally or informally obtained. We have also seen that the confusion has occurred on a non-understanding of the relevance of the wordings that "the appeal involves AMP issue on which the Special Bench order in the case of the L.G. Electronics" and more attention was given to the wording "Ld. Counsel for the assessee contends". Had the propriety of Division Bench awaiting the Special Bench on the very same issue had been given due care and consideration we are confident the situation may not have occurred. Having thus observed we hold that the action of the departmental officers was bona fide.
13. Considering the next question which arises for our consideration namely if the assessee to (b) is yes then does the Tribunal have the powers to direct a refund.
1113.1. On a consideration of a catena of orders of the Tribunal and judgements rendered by the Apex Court and various High Courts, we find that the Tribunal has the power to direct refund.
13.2. For the said purpose, we may refer to CIT vs Bansi Dhar and Sons (1986) 157 ITR 665 wherein the Hon'ble Apex Court has held that the power of the Tribunal is of widest amplitude in dealing with the appeals before it and that it has the power of doing all such acts or employing such means as are essentially necessary to its execution. Ordinarily when the demands gets collected, the Tribunal does not interfere. Unfortunately in the facts of the present case, we regret to note that the action of the AO to effect recoveries was clearly misplaced and apparently on a misunderstanding of the actual position in regard to the functioning of the ITAT namely that judicial propriety required the Division Bench to await the order of a larger Bench on the very same issue. Considering Section 254 of the Income Tax Act, it is seen that under sub-section (1) of the same, the Tribunal is empowered after hearing the parties to pass such orders "thereon" as it thinks fit. "Thereon" refers to subject matter of appeal pending before the Tribunal and has been expanded to include pass any orders in rendering justice "thereon". It has been variously addressed by the Courts and Tribunals that the Tribunal has the power to remedy any wrong committed in proceedings before it. We may refer to the celebrated judgement of the Apex Court in the case of ITO vs M.K.Mohammed Kunhi (1969) 71 ITR 815 (SC) which has held that section 254 of the Income Tax Act, 1961 confers on the Appellate Tribunal powers of the widest amplitude in dealing with appeals before it which thus grants by implication the power of granting stay of recovery of the disputed tax. At the relevant point of time the power to grant stay was not available to the Tribunal on the Statute. The position being different now however the power to grant stay of recovery of the disputed demand can be exercised only when an appeal is filed by the assessee against the decision of the First Appellate Authority. Coming to the 12 powers to direct a refund, reference may be made to the judgement of the Mumbai High Court in Mahindra and Mahindra Ltd. (1992) 59 ELT 505 wherein the customs authority had recovered the disputed demand by encashment of bank guarantee during the pendency of the stay application and before the expiry of the statutory period of three months for filing the appeal. Their Lordships held that the customs authority was not justified to recover the disputed demand by encashment of the bank guarantee during the pendency of the stay application and before the expiry of the statutory period for filing the appeal. In the circumstances, the department was directed to pay back the entire amount recovered by encashing the bank guarantee.
13.2. Thus, on a consideration of the Section 254 & 255 of the Income Tax Act and Section 131 of the Act, we are of the considered view that the Tribunal has the power to pass such appropriate orders in the facts and circumstances of each case to maintain judicial balance between the parties. As such Section 254 of the Act would include the power to grant stay which is incidental and ancillary and while exercising the powers to grant stay, the Tribunal would be having all the powers to grant stay in the nature of prohibitory, mandatory or directory to order for refund of the amount recovered by the revenue in appropriate cases where such directions are warranted.
13.3. Section 151 of Code of Civil Procedure reads as under :-
"Nothing contained in this code shall be deemed to limit or otherwise affect the inherent power of the court to make such orders as may be deemed necessary for the ends of justice or to prevent abuse of process of court."
13.4. It may not be out of place to quote from ITO vs. Md Kunhi's case (cited supra) :-
13"it is 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."
In view of the above facts and circumstances and position of law, we are of the view that the Tribunal u/s 151 CPC can pass orders which includes all types of orders which ought to be passed according to peculiar facts and circumstances in appropriate cases to do justice between the parties.
13.4. We may also refer again to the judgement rendered in M.K.Md. Kunhi (cited supra) wherein their Lordships quote from Domat's Civil Law as under :
"It is the duty of the judges to apply the laws, not only to what appears to be regulated by their express dispositions, but to all the cases where a just application of them may be made and which appears to be comprehended either within the consequences that may be gathered from it."
13.5. Similarly Maxwell on Interpretation quoted by their Lordships may also be referred to "where an Act confers a jurisdiction, it impliedly also grants the power of doing all such acts or employing such means, as are essentially necessary to its execution"
13.6 Accordingly, on a consideration of facts circumstances and position of law we are of the view that "ex debito justitiae" mandates that we set right the wrong done. We refer to another well recognized legal principle namely doctrine of legitimate expectation which operates in assessee's favour, as having fulfilled and duly complied with the directions contained in the stay order the legitimate expectation of the person is that he/it shall not be subjected to any act detrimental to it during the existence of stay and it is this expectation which has not been fulfilled in the present facts of the case. Justice demands that the wrong be set right.14
14. Coming to the last question which we have posed to ourselves namely is the interest of the Revenue protected? We have been informed on behalf of the assessee that the bank guarantee furnished by the assessee amounting to Rs.208 crore odd is in the possession of the department as such the interest of the Revenue is secured. This fact has not been disputed by the department.
15. Accordingly for the detailed reasons given hereinabove the petition of the assessee is allowed. The Revenue is directed to refund the amounts collected in violation of the stay order dated 13.12.2012 on or before 18.04.2013. During the dictation given in the open Court on 08.04.2013 in the presence of the parties the date announced for compliance was 15.04.2013, however due to infrastructural/technical problems, the dictation could not be transcribed as such on 09.04.2013 the parties were informed in the open Court that the date for compliance would be on or before 18.04.2013.
16. Before parting we may refer to Susanta Kumar Nayak vs. UOI (1990) 185 ITR 627 (Cal.) for making a mention of the legal position qua the interim orders of Courts/ Tribunals namely every Bench hearing a matter on the facts and circumstances of each case should have the right to grant interim orders on such terms as it considers fit and proper and if it had granted the interim order at one stage, it should have the right to vary or alter such interim orders if so warranted on facts on law.
Order pronounced in the open Court on 10th April, 2013.
Sd/- Sd/- (S.V.MEHROTRA) (DIVA SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER
I agree with the complete order except para 7.3 to which I do not subscribe. As such as conclusion there is full agreement.
Sd/-
(S.V.MEHROTRA) ACCOUNTANT MEMBER Dated: 10/04/2013* Amit Kumar* 15 Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT(Appeals)
5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI