Inherent powers and section 263: Tribunal granted a limited stay on withdrawal of investment allowance, subject to security.

The Tribunal considered whether it could use its inherent powers to restrain the Income-tax Officer from acting on a section 263 direction to withdraw investment allowance and recompute income while the assessee's appeal remained pending. It noted that the Commissioner's direction left only consequential action in the assessment process, and that immediate implementation could prejudice the assessee. To avoid such prejudice, the Tribunal granted a limited stay of further proceedings for a fixed period, while requiring the assessee to furnish suitable security to protect any additional tax that might become payable if the withdrawal was ultimately upheld.

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Issues: Whether the Tribunal could, in exercise of its inherent powers, stay the Income-tax Officer from acting upon the Commissioner's direction under section 263 to withdraw investment allowance and recompute the income, pending disposal of the assessee's appeal.

Analysis: The Commissioner had directed withdrawal of the investment allowance already granted in the original assessment, leaving the Income-tax Officer with only the consequential step of revising the demand. In view of the pending appeal and to prevent consequential prejudice to the assessee, the Tribunal exercised its inherent powers and stayed further proceedings for a limited period. The Tribunal also required the assessee to furnish suitable security to safeguard any additional amount that might become leviable if the withdrawal of the investment allowance ultimately stood.

Conclusion: The Tribunal granted a limited stay of the proceedings and the assessee's request succeeded to that extent, subject to furnishing security.

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