Appealability of Commissioner (Appeals) stay orders recognised, and recovery stayed on a strong prima facie challenge to the demand.

The first appellate authority's inherent power to grant stay was treated as part of its section 250 jurisdiction, so a stay order passed in that context was held appealable under section 253(1)(a). On the merits of interim relief, the Tribunal found a strong prima facie challenge to the demand raised under the section 201 order, noted the assessee's role as custodian of employees' funds, and considered the applicable administrative instructions and circulars. Stay of recovery was therefore granted until disposal of the appeal before the Commissioner (Appeals), and the connected stay petitions became infructuous.

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Issues: (i) whether the appeal against the Commissioner (Appeals)' stay order was maintainable under section 253 of the Income-tax Act, 1961; (ii) whether stay of the demand arising from the section 201 order should be granted pending disposal of the appeal.

Issue (i): whether the appeal against the Commissioner (Appeals)' stay order was maintainable under section 253 of the Income-tax Act, 1961.

Analysis: The first appellate authority was held to possess inherent power to grant stay, even though the Act does not expressly confer such power. An order passed in exercise of that power was treated as an order under section 250 of the Income-tax Act, 1961. Since section 253(1)(a) permits an appeal to the Tribunal against an order of the Commissioner (Appeals) under section 250, the impugned stay order was held to be appealable.

Conclusion: The appeal was held to be maintainable.

Issue (ii): whether stay of the demand arising from the section 201 order should be granted pending disposal of the appeal.

Analysis: The demand was challenged on the basis that the provisions of Rules 8 and 9 of Part I of Schedule IV of the Income-tax Act, 1961 were not applicable to a provident fund organisation created under the Employees' Provident Fund and Miscellaneous Provisions Act, 1952. The Tribunal found a strong prima facie challenge to the demand, noted the assessee's role as custodian of employees' funds, and considered the interest of the employees along with the relevant administrative instructions and circulars.

Conclusion: Stay of the demand was granted till disposal of the appeal before the Commissioner (Appeals).

Final Conclusion: The Tribunal upheld its jurisdiction to entertain the appeal and protected the assessee by staying recovery of the demand pending disposal of the first appeal; the connected stay petitions then became infructuous.

Ratio Decidendi: A stay order passed by the Commissioner (Appeals) in exercise of inherent appellate power is an appealable order under section 253(1)(a) as one made under section 250, and stay of recovery may be granted where a strong prima facie case is made out.

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