2013 (10) TMI 1178 - HC - Income Tax

Court upholds Tribunal's refund order of Rs.208 crores to assessee, pending appeal decision.

The Deputy Commissioner of Income Tax, Circle-II, Gurgaon Versus The ITAT, Delhi Bench-I, New Delhi and another.

The Deputy Commissioner of Income Tax, Circle-II, Gurgaon Versus The ITAT, Delhi Bench-I, New Delhi and another. - TMI Issues Involved:1. Whether the conditional stay order dated 13.12.2012 was vacated due to the adjournment on 16.01.2013.2. Legality of the revenue's appropriation of Rs.208 crores from the assessee's account.3. Jurisdiction of the Income Tax Appellate Tribunal (ITAT) to order a refund of the appropriated amount.4. Whether the ITAT's order directing the refund was justified.Issue-Wise Detailed Analysis:1. Conditional Stay Order and Adjournment:The core issue is whether the conditional stay order dated 13.12.2012, which enjoined the assessee not to seek any adjournment, was vacated due to the adjournment granted on 16.01.2013. The revenue argued that the stay order was vacated because the assessee sought an adjournment, thus allowing the revenue to recover the tax due. The Tribunal, however, noted that the adjournment was granted because the appeal involved an issue pending before a Special Bench in the case of LG Electronics, and not at the behest of the assessee. The Tribunal held that the adjournment did not violate the stay order, as it was granted to maintain judicial propriety and discipline.2. Legality of Revenue's Appropriation:The revenue's action of appropriating Rs.208 crores was challenged on the grounds of legality and bonafides. The Tribunal found that the revenue acted inappropriately by interpreting the adjournment as a vacation of the stay order. The show cause notice issued by the revenue did not mention the vacation of the stay order but instead questioned the admission of the MAP application. The Tribunal concluded that the revenue's actions were driven by the need to meet year-end revenue collection targets, indicating a lack of bona fides.3. Jurisdiction of ITAT to Order Refund:The Tribunal asserted its jurisdiction to order a refund based on its inherent powers and Section 151 of the CPC, which allows it to pass orders necessary to achieve the ends of justice. The Tribunal emphasized that it has the duty to ensure that its orders are not violated and that any injustice caused during the pendency of an appeal is rectified. The Tribunal held that it was within its rights to order the refund of the amount illegally appropriated by the revenue.4. Justification of ITAT's Refund Order:The Tribunal's decision to order the refund was based on its finding that the stay order was not vacated and that the revenue's appropriation of funds was unjustified. The Tribunal framed five questions for adjudication, including whether the stay order was flouted by the assessee or the department, and whether the Tribunal had the power to direct a refund. The Tribunal concluded that the stay order remained in force, the revenue's actions were not bona fide, and it had the authority to order the refund to rectify the situation.Conclusion:The High Court dismissed the writ petition, affirming the Tribunal's order directing the refund of Rs.208 crores to the assessee. The Court held that the Tribunal acted within its jurisdiction and that its order did not suffer from any error of law or jurisdiction. The refund, however, was to await the decision of the appeal, which the Tribunal was directed to decide within one month from the receipt of a certified copy of the order.