J&K Yateem Foundation Vs ITAT (Jammu & Kashmir High Court)
The Jammu & Kashmir High Court considered a writ petition challenging an order of the Income-tax Appellate Tribunal (ITAT), Amritsar Bench, which had dismissed a stay application on the ground that no tax demand was outstanding and, therefore, the Tribunal lacked jurisdiction to stay the operation of the order under appeal. The petitioner, a society registered under the Societies Registration Act, had been granted registration under Section 12A of the Income-tax Act, 1961, which was subsequently cancelled by the Commissioner of Income-tax (Exemptions) under Section 12AB(4)(ii). Aggrieved by the cancellation, the petitioner filed an appeal before the ITAT along with a stay application seeking suspension of the cancellation order during pendency of the appeal.
The Tribunal rejected the stay application by holding that, in the absence of any subsisting tax demand, it had no jurisdiction to grant a stay. The petitioner contended before the High Court that this approach was contrary to the statutory scheme under Sections 253 and 254 of the Income-tax Act and inconsistent with settled judicial principles governing the scope of the Tribunal’s appellate powers.
The High Court framed the central issue as whether the ITAT has jurisdiction to stay the operation of an order appealed against even when no tax demand exists. After hearing the parties, the Court held that the issue was no longer res integra. It traced the legal position to earlier judicial pronouncements, beginning with the decision of the Kerala High Court in K. Mohammed Kunhi v. Income-tax Officer, which recognised that the power to grant stay is incidental and ancillary to appellate jurisdiction, even in the absence of an express statutory provision. This principle was affirmed by the Supreme Court in Income-tax Officer v. M.K. Mohammed Kunhi, where it was held that the conferment of appellate jurisdiction under Section 254 of the Act necessarily implies the power to pass interim orders to ensure that an appeal, if successful, is not rendered nugatory.
