It was improper for Commissioner of Income-tax (Appeals) to comment on the judgment of the Division Bench while disposing of the application expressing reservation about his powers to grant the interim order. Therefore, it has to be stated that the Appellate Authority has not proceeded to appreciate the points raised by the petitioners in support of his prayer for grant of interim order based on materials available before him, Instead, he has ventured into discussions which are irrelevant and impermissible having regard to the binding precedent in the form of a direction issued by the Division Bench. The Commissioner is well advised to confine himself to the facts of the case and the law applicable to the controversy raised while deciding the applications filed. Suffice to observe that the impugned order passed cannot be sustained having regard to the infirmities pointed out herein above.
HIGH COURT OF KARNATAKA
Jagdish N. Hinduja
Commissioner of Income-tax
W.P. NOS. 40606, 40607 & 41030 of 2011
APRIL 18, 2012
1. Since common questions of law and facts arise for consideration in these writ petitions, they are clubbed together, heard and disposed of by this common order,
2. In these writ petitions, petitioners are calling in question the order dated 12.10.2011 passed by respondent No.1 in ITA Nos.166 & 167/DC-11 (3)/A-I/10-11, thereby rejecting the application filed for interim stay of the order impugned in the appeal, during the pendency of the appeal.
3. Petitioners herein have challenged the assessment order passed by respondent No. 2 in exercise of the powers under section 143(3) read with section 147 of the Income-tax Act. Along with the appeal, petitioners had filed applications seeking interim stay of the demand made pursuant to the order passed by the Assessing Officer. The Appellate Authority has rejected the said application holding that from the materials on record, he was of the view that no prima facie case was made out. In the body of the impugned order, respondent No. 1 while referring to the Division Bench decision of this Court in W.A.No.3397/2011 disposed of on 21.04.2011 produced along with this writ petition at Annexure-D, has held that the said order, insofar as it contained observations and directions that the Appellate Authority considering the appeal filed under section 246A has got inherent powers to grant an interim order although no such power to grant interim orders is specifically conferred under the statute are per incuriam but, in view of the direction contained in the said order, he was required to examine the matter. The Appellate Authority has further proceeded to observe in paragraph 6 of his order that though the appellants were called upon to provide copy of the order passed by the Assessing Officer on the stay petition filed by the appellants and also other documents, the same were not produced
4. However, it transpires that as on the date the impugned order came to be passed by the Appellate Authority, the stay petition filed by the petitioners herein before the Assessing Officer had not been disposed of and the same came to be rejected only on 20.10.2011 as is evident from Annexure-F, whereas, the impugned order has been passed on 12.10.2011.
5. Learned Senior Counsel appearing for the petitioners very rightly contends that the entire approach adopted by the Appellate Authority in proceeding on the basis that it had no power to grant the interim order and that the direction rendered by the Division Bench of this Court in W.A.No.3397/2011 directing the Appellate Authority to consider the applications filed seeking interim relief holding that the Appellate Authority had the inherent power to grant such an interim order was the result of the relevant case laws not being brought to the knowledge of the court which led to such a decision, suffers from gross illegality and impropriety. Counsel also points out that the Appellate Authority has not examined the merits of the case and has simply jumped to the conclusion that there was no prima facie case made out, without assigning any legally valid reasons.
6. It is also apparent from the order passed by the Appellate Authority that it has been carried away by the fact that the appellants had failed to produce the copy of the order passed by the Assessing Officer on the stay petition filed by them. In fact, it transpires that as on the date the Appellate Authority passed the impugned order, the Assessing Officer had not passed any order on the stay petition rejecting the request. Therefore, the approach adopted by the Appellate Authority in considering the request made by the petitioners herein for grant of interim order cannot but be characterized as illegal.
7. There is absolutely no justification for the respondent No. 1 herein to express any opinion regarding the power of the Appellate Authority to grant interim stay having regard to the clear pronouncement of law made by the Apex Court which is followed by this Court while issuing such a direction to the Commissioner to consider the application. The judgment rendered in W.A.No.3397/2011 is based on the judgment of the Apex Court in the case of ITO v. M.K. Mohammed Kunhi  71 ITR 815. The direction issued by the Division Bench in paragraph 9 is also very clear. The same is extracted hereunder:
“9. Hence, we pass the following order:
Appeal is allowed and the impugned order passed by the learned Single Judge as well as the Appellate Authority rejecting the request for stay are hereby set aside. The appellate authority shall consider the application for stay filed by the assessee on merits and in accordance with law. It is made clear that he has inherent power to grant or not to grant stay though such power is not expressly conferred on him under section 246A of the I.T. Act. Until the application of the applicant for stay is considered on merits and order is passed, the revenue shall not precipitate the recovery proceedings.”
8. In this background and in the wake of such specific direction, there was no need at all for respondent No. 1 to entertain any doubt in his mind regarding his power to grant interim order. It was improper for him to comment on the judgment of the Division Bench while disposing of the application expressing reservation about his powers to grant the interim order. Therefore, it has to be stated that the Appellate Authority has not proceeded to appreciate the points raised by the petitioners in support of his prayer for grant of interim order based on materials available before him, Instead, he has ventured into discussions which are irrelevant and impermissible having regard to the binding precedent in the form of a direction issued by the Division Bench. The Commissioner is well advised to confine himself to the facts of the case and the law applicable to the controversy raised while deciding the applications filed. Suffice to observe that the impugned order passed cannot be sustained having regard to the infirmities pointed out herein above,
9. Hence, these writ petitions are allowed. The impugned orders are quashed. Respondent No,1 is directed to re-hear the matter and pass appropriate orders in accordance with law on the merits of the case. It is made clear that until the applications are heard and decided, the Assessing Officer shall not proceed to initiate any coercive measures.