1965 (9) TMI 60 - HC - Income Tax

Appellate Tribunal can stay penalty recovery pending appeal under Income-tax Act, 1961. Inherent power recognized.

The High Court of Kerala held that the Appellate Tribunal has the authority to stay the recovery of a penalty pending an appeal under the Income-tax Act, ... - Issues:1. Whether the Appellate Tribunal can stay recovery of penalty pending an appeal under the Income-tax Act, 1961.Analysis:The judgment delivered by the High Court of Kerala addressed the issue of whether the Appellate Tribunal has the authority to stay the recovery of a penalty imposed pending an appeal under the Income-tax Act, 1961. The petitioner argued that the power to stay recovery of tax or penalty is ancillary to the appellate power and can be exercised as such. The court, led by VELU PILLAI J., agreed with the petitioner on this ground without delving into the second argument regarding the Appellate Tribunal being deemed a court with inherent powers. The court cited the ruling by Rajagopala Ayyangar J. in Swarnambikai Motor Service v. Wahita Motor Service, emphasizing that the power to stay is incidental and necessary to the appellate power, even if not expressly conferred by the statute.The court further extended this principle to the case under the Income-tax Act, 1961, highlighting that the absence of an explicit provision does not negate the inherent power of the Appellate Tribunal to grant a stay. Reference was made to a case under the Motor Vehicles Act where the power to stay was considered a necessary corollary to the power to entertain an appeal or revision. The court also cited the opinion of M.S. Menon J. in Themmalapuram Bus Transport Ltd. v. Regional Transport Officer, emphasizing that the power to stay is a necessary corollary to the power to entertain an appeal or revision.Moreover, the judgment referenced a Full Bench decision regarding the Motor Vehicles Act, affirming that all powers and duties incidental and necessary to make legislation effective are included by implication. The court highlighted the distinction between the power to remand, which is integral to the exercise of the appellate power, and the power to stay, which is ancillary to it. The judgment cited various cases and legal opinions to support the view that the power to stay is inherent in the appellate jurisdiction, even if not expressly provided for in the statute.The court addressed the provisions of the Income-tax Act, 1961, raised by the revenue's counsel, emphasizing that as long as the power of stay is considered part of the appellate jurisdiction, the specific provisions cited have minimal relevance. The judgment also discussed the recommendations of the Direct Taxes Administration Enquiry Committee, highlighting that even without an express conferment, the appellate authority has the power to stay proceedings and collection pending appeal as incidental to its appellate jurisdiction.In conclusion, the High Court of Kerala held that the Appellate Tribunal was incorrect in thinking it lacked jurisdiction to entertain the application for stay. The court quashed the Tribunal's order and remanded the case for proper disposal in accordance with the law. The petition was allowed without costs.