1997 (5) TMI 71 - AT - Income Tax

Tribunal Upholds Stay Order, Asserts Inherent Powers, and Clarifies Distinction in Appellate Authority

The Tribunal dismissed the Department's petition challenging the stay order, emphasizing its inherent powers to grant stay orders and highlighting the ... - Issues:1. Validity of the stay petition filed by the assessee.2. Provisional attachment of assets under section 281B of the IT Act.3. Applicability of section 249(4)(a) in the case.4. Interpretation of the Tribunal's powers in granting stay orders.Analysis:1. The Tribunal initially directed the assessee to pay Rs. 50 lacs in two installments based on a stay petition filed in December 1996. However, the Department later filed a petition under section 254(2) challenging the stay order, primarily arguing that the assessee's petition is not maintainable under section 249(4)(a) of the Act as the self-assessment tax on the returned income had not been paid. The Departmental Representative contended that this ground was not raised during the initial hearing, and the Tribunal found no apparent mistake in its earlier order. Despite this, the Tribunal proceeded to address the arguments raised by both parties on merits.2. The Department also raised concerns about the provisional attachment of assets belonging to the assessee's group under section 281B of the IT Act. The Department clarified that the attachment was provisional and could only be extended for a maximum of two years. As the provisional attachment was in place until June 1997, the Department's petition was deemed devoid of substance, especially considering the Tribunal's directive for the assessee to pay Rs. 50 lacs by February 1997. The Tribunal highlighted that the powers of the Tribunal to grant stay orders are inherent and not restricted by section 249(4).3. The Departmental Representative argued the applicability of section 249(4)(a) to the case, contending that the assessee should have paid the tax due on the income returned. However, it was noted that the AO treated the return as invalid, and no notice indicating defects in the return was sent to the assessee. As there was no valid return on record, the plea that the petition for stay is not maintainable under section 249(4)(a) was deemed invalid. The Department also invoked section 249(4)(b), suggesting that the assessee should have paid an amount equal to the advance tax payable, which was not fully met by the assessee.4. The Tribunal emphasized its inherent powers to grant stay orders, citing judicial decisions that support the Tribunal's authority in this regard. It clarified that the provisions of section 249(4) cannot be implicitly applied to the Tribunal and highlighted the distinction in powers between the Tribunal and other appellate authorities. The Tribunal concluded that the Department's petition lacked merit both factually and legally. The Tribunal also noted the legislative amendment effective from July 1996, which altered the appellate process for block assessments, indicating that the provisions of section 249(4) may apply differently post-amendment. The Tribunal dismissed the Department's petition under section 254(2) and directed the Asstt. Registrar to expedite the appeal hearing if the assessee complied with the payment conditions.