TaxTMI 
TaxTMI 
2013 (7) TMI 1254
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....d." [1.1] By way of this petition under Article 226 of the Constitution of India, the petitioner Revenue has questioned the impugned order passed by the ITAT dated 04.01.2013 by which on a stay application preferred by the assessee - appellant in quantum appeal against the order passed by the CIT(A), the ITAT has granted stay of further proceedings of the penalty proceedings under Section 271(1)(c) of the Income Tax Act, 1961 [hereinafter referred to as "IT Act"] initiated pursuant to the order passed by the CIT (A) against which the assessee has preferred the quantum appeal. [2.0] Facts leading to the present petition in nut­shell are as under: [2.1] That the respondent assessee filed the return of the income before the Assessing Officer for the assessment year 2004­05. That the AO completed the assessment and passed an assessment order under Section 143(3) of the IT Act by order dated 29.12.2006. Feeling aggrieved and dissatisfied with the assessment order, the assessee preferred appeal before the CIT (A) and by order dated 17.07.2012, the CIT (A) partly allowed the appeal of the assessee and directed the AO to make Transfer Pricing Adjustment on account of Ar....
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.... further six months time to dispose of the penalty proceedings from the end of the month in which the order of Tribunal is received by the Commissioner / Chief Commissioner and observing that during the quantum appeal if the Commissioner is allowed to proceed with the penalty proceedings, prejudice will be caused to the assessee as it will have to face multiplicity of proceedings and relying upon the decision of the Hon'ble Supreme Court in the case of Income Tax Officer, Cannanore vs. M.K. Mohammed Kunhi reported in 71 ITR 815, the ITAT has allowed the stay application submitted by the assessee and has directed the Commissioner to keep the penalty proceedings in abeyance till disposal of quantum appeal before the ITAT. Feeling aggrieved and dissatisfied with the impugned order dated 04.01.2013 passed by the ITAT in stay application in the quantum appeal preferred by the petitioner and directing to keep the penalty proceedings in abeyance till the disposal of quantum appeal, the petitioner revenue has preferred the present Special Civil Application raising the question of law "Whether in a quantum appeal preferred by the assessee before the ITAT under Section 254 of the....
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....evied by the concerned authorities within such time limit. But in no way the AO/Commissioner or Chief Commissioner can be restrained from imposing the penalty under Section 271(1)(c) of the IT Act till relevant assessment or other order is subject matter of appeal before the CIT(A). It is submitted that thus section 275(1)(a) of the IT Act has laid down bar of limitation for imposing the penalties i.e. no order imposing the penalty shall be passed in a case where the relevant assessment or the other order is subject matter of appeal before the CIT (A) under Section 246 or 246(a) of the IT Act or appeal to the appellate Tribunal under Section 253, after the expiry of financial year in which the proceedings in the course of which action for imposition of penalty has been initiated, are completed, or six months from the end of the month in which the order of CIT (A) or, as the case may be, the Tribunal is received by the Chief Commissioner or Commissioner, whichever period expires later. It is submitted by Shri Parikh, learned counsel that thus after expiry of such period, no order imposing the penalty under Section 271(1)(c) of the IT Act shall be passed, but the AO or the Commission....
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....eedings under Section 271(1)(c) of the IT Act on the said enhancement and therefore, as such the quantum appeal preferred by the assessee before the ITAT would be the first appeal. It is submitted that in case the assessee succeeds in the quantum appeal and the order passed by the CIT (A) of enhancement is set aside by the ITAT by holding that the method adopted by the assessee was just and proper, in that case, there shall not be any further penalty proceedings. [4.3] It is further submitted by Shri Soparkar, learned Counsel appearing on behalf of the respondent assessee that even considering section 271(1)(iii) of the IT Act, the penalty can be levied for a sum which shall not be less than, but which shall not exceed three times, the amount of tax sought to be evaded by a reason of the concealment of particulars of his income or fringe benefits or the furnishing of inaccurate particulars of such income. It is submitted that meaning thereby even imposition of the penalty has a direct bearing on the amount of tax alleged to be evaded. It is submitted that therefore the result in the quantum appeal has direct bearing on even imposition of the penalty and therefore also, it will b....
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....ons that in exercise of powers under Section 254 of the IT Act, the ITAT would have jurisdiction and/or powers to grant any ancillary and/or incidental relief so as to see that the proceedings may not become infructuous and to avoid any further multiplicity of proceedings. 1. Income Tax Officer, Cannanore vs. M.K. Mohammed Kunhi (1969) 71 ITR 815 (SC) 2. Commissioner of Income Tax vs. Kalpetta Estates Ltd. (1987) 167 ITR 666 3. Paulsons Litho Works vs. Income Tax Officer & Ors. (1994) 208 ITR 676 4. SBI Home Finance Ltd. vs. Commissioner of Income Tax (2001) 249 ITR 438 (Calcutta) 5. Decision of Allahabad High Court in the case of Commercial Engineers and Body Builders Pvt. Ltd. vs. Union of India (2007)163 Taxman 218 (Allahabad) 6. Unreported decision of the Bombay High Court in the case of Commissioner of Income Tax - 10, Mumbai vs. M/s. Wander Pvt. Ltd. dated 21.08.2012 passed in Income Tax Appeal No. 2753/2010 Making above submissions and relying upon above decisions, it is requested to dismiss the present Special Civil Application. [5.0] Heard learned Counsel appearing for the respective parties at length. At ....
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....less than, but which shall not exceed three times the amount of tax sought to be evaded by a reason of the concealment particulars of his income or the furnishing of inaccurate particulars of such income. Thus, as such the amount of tax evaded by a reason of the concealment or on furnishing inaccurate particulars of such income has a direct bearing in imposing the penalty under Section 271(1)(c) of the IT Act. In the present case as such the alleged inaccurate particulars of income for which the penalty proceedings under Section 271(1)(c) of the IT Act are initiated is for an amount of Rs. 5,50,73,555/­ and the said order is under challenge before the ITAT. Under the circumstances, the outcome of the decision in appeal by the ITAT has direct bearing on the penalty proceedings. Under the circumstances and with a view of see that the appeal before the ITAT does not become infructuous and/or to avoid any further multiplicity of proceedings, when the ITAT has passed an order to stay the penalty proceedings during the appeal before it, as such it cannot be said that the Tribunal has committed any error and/or illegality. At this stage it is required to be noted that in an appea....
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....hardly be put at par with a statutory power as is contained in Section 220 (6) which is confined only to the stage of pendency of an appeal before the Appellate Assistant Commissioner. The argument advanced on behalf of the appellant before us that in the absence of any express provisions in Sections 254 and 255 of the Act relating to stay of recovery during the pendency of an appeal it must be held that no such power can be exercised by the tribunal, suffers from a fundamental infirmity inasmuch as it assumes and proceeds on the premise that the statute confers such a power on the Income­tax Officer who can give the necessary relief to an assessee. The right of appeal is a substantive right and the questions of fact and law are at large and are open to review by the appellate tribunal. Indeed the tribunal has been given very wide powers under Section 254 (1) for it may pass such orders as it thinks fit after giving full hearing to both the parties to the appeal. If the Income­tax Officer and the Appellate Assistant Commissioner have made assessments or imposed penalties raising very large demands and if the appellate tribunal is entirely helpless in the matter of stay of r....
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....ontinue during the pendency of the appeal. Thus, as such in the aforesaid decision, the Hon'ble Supreme Court has specifically held that while exercising the powers under Section 254 of the IT Act, the Tribunal has the implied power of doing such acts, or employing such means, as are essentially necessary to its execution and that the statutory power carries with it the duty in proper cases to make such orders for staying proceeding as will prevent the appeal if successful from being rendered nugatory. In the case of SBI Home Finance Ltd. vs. Commissioner of Income Tax reported in 249 ITR 438, the Hon'ble Supreme Court has held that as under section 260A of the IT Act, the High Court is conferred with power to entertain a second appeal, in an appeal against the order passed by the Tribunal confirming the order of assessment under which even the penalty proceedings are initiated under Section 271(1)(c), and by exercising inherent powers of the Court under Section 151 of the Code of Civil Procedure, 1908, the High Court in exercise of its appellate jurisdiction can stay the penalty proceedings. [5.3] The issue raised in the present special civil application with respect to stay....