Case Law Details
Hindustan Lever Limited Vs DCIT (ITAT Mumbai)
section 254(1) of the Act provides that “(t)he Appellate Tribunal may, after giving both the parties to the appeal an opportunity of being heard, pass such orders thereon as it thinks fit”. While explaining the scope of the powers of the Tribunal under section 254(1), Hon‟ble Supreme Court has indeed held, as rightly pointed out by the learned counsel, that “In our opinion, the Appellate Tribunal must be held to have the power to grant stay as incidental or ancillary to its appellate jurisdiction. This is particularly so when section 220(6) deals expressly with a situation when an appeal is pending before the Appellate Assistant Commissioner, but the Act is silent in that behalf when an appeal is pending before the Appellate Tribunal. It could well be said that when section 254 confers appellate jurisdiction, it impliedly grants the power of doing all such acts, or employing such means, as are essentially necessary to its execution and that the statutory power carries with it the duty in proper cases to make such orders for staying proceeding as will prevent the appeal if successful from being rendered nugatory”. Their Lordships, however, hastened to add that these powers cannot be used in a routine manner, and added that, “A certain apprehension may legitimately arise in the minds of the authorities administering the Act that, if the Appellate Tribunal proceed to stay the recovery of taxes or penalties payable by or imposed on the assessee as a matter of course, the revenue will be put to great loss because of the inordinate delay in the disposal of appeals by the Appellate Tribunal. It is needless to point out that the power of stay by the Tribunal is not likely to be exercised in a routine way or as a matter of course in view of the special nature of taxation and revenue laws. It will only be when a strong prima facie case is made out that the Tribunal will consider whether to stay the recovery proceedings and on what conditions, and the stay will be granted in most deserving and appropriate cases where the Tribunal is satisfied that the entire purpose of the appeal will be frustrated or rendered nugatory by allowing the recovery proceedings to continue during the pendency of the appeal”. Be that as it may, that was a situation, as evident from these observations, when the statute did not vest any express powers in the Tribunal for grant of the stay on the collection/recovery of disputed demands during the pendency of the litigation before the Tribunal. As the legal position stands today, the first proviso to Section 254(2A), categorically inter alia provides that “…. the Appellate Tribunal may, after considering the merits of the application made by the assessee, pass an order of stay in any proceedings relating to an appeal filed under sub-section (1) of section 253, for a period not exceeding one hundred and eighty days from the date of such order subject to the condition that the assessee deposits not less than twenty per cent of the amount of tax, interest, fee, penalty, or any other sum payable under the provisions of this Act, or furnishes security of equal amount in respect thereof and the Appellate Tribunal shall dispose of the appeal within the said period of stay specified in that order” [Emphasis, by underlining, supplied by us]. Hon‟ble Supreme Court’s inferring the Tribunal’s power to grant the stay, in the absence of any specific statutory power to that effect, is one thing, and our dealing with a power statutorily recognized, even if implicitly, is quite another thing. In our considered view, once a statutory provision specifically provides that the Tribunal can only grant a stay subject to a deposit of not less than 20% of the disputed demand, or furnishing of security thereof, it cannot be open to us to grant a stay in violation of these basic statutory provisions.
The Income Tax Appellate Tribunal, being a creature of the statute itself, cannot question the reasonableness of this provision; that‟s a call to be taken by the Hon‟ble constitutional Courts above. It is also elementary that the provisions of the law are to be so read as to make them workable rather than redundant. If we are to read the source of this Tribunal’s powers for granting the stay, as section 254(1) on a standalone basis and in disjunction with the proviso to Section 254(2A), the said proviso will be rendered otiose. As observed by Hon‟ble Supreme Court, in the case of CIT Vs Hindustan Bulk Carriers [(2003) 259 ITR 449 (SC)], “A construction which reduces the statute to a futility has to be avoided. A statute or any enacting provision therein must be so construed as to make it effective and operative on the principle expressed in maxim us res magi’s valet quam periapt i.e., a liberal construction should be put upon written instruments, so as to uphold them, if possible, and carry into effect the intention of the parties. [See Broom’s Legal Maxims (10th Edition), page 361, Cries on Statutes (7th Edition) page 95 and Maxwell on Statutes (11th Edition) page 221.]”Applying this principle, a coordinate bench of this Tribunal, speaking through one of us (i.e. the Vice President) and in the case of ACIT Vs. Papillion Investments Pvt Ltd [(2005) 4 SOT 234 (Mum)] had observed that “That is certainly not an interpretation which can be termed as UT res magi’s valet quam periapt, i.e., to make the statute effective rather than making it redundant. As held by Hon‟ble Supreme Court, in the case of S. Teja Singh (supra) a construction which results in rendering a provision redundant must be avoided. For this reason alone, the interpretation canvassed by the revenue is to be rejected”. The view so taken has been affirmed by the Hon‟ble jurisdictional High Court, in the judgment reported as CIT Vs. Papillion Investments Pvt Ltd [(2012) 20 taxmann.com 201 (Bom)]. What essentially follows from these discussions is that the powers of this Tribunal, under section 254(1), to grant a stay cannot be so interpreted as to make the first proviso to Section 254(2A) redundant.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
1. By way of this application, the taxpayer seeks a stay on collection/ recovery of the income tax and interest demands, aggregating to Rs 172,47,58,360, raised by the respondent Assessing Officer in the course of framing an assessment under section 143(3) r.w.s. 144C(13) of the Income Tax Act, 1961, for the assessment year 2018-19, which are currently impugned in appeal before of us and out of which not even a partial payment is made by the taxpayer.
Please become a Premium member. If you are already a Premium member, login here to access the full content.
