BHOJA REDDY VS COMMISSIONER OF INCOME-TAX
1999 P T D 3979
[231 I T R 47]
[Andhra Pradesh High Court (India)]
Before P. Venkatarama Reddi and Krishna Saran Shrivastav, JJ
BHOJA REDDY
Versus
COMMISSIONER OF INCOME-TAX and another
Writ Petition No.30202 of 1997, decided on 18/11/1997.
Income-tax--
----Writ---Recovery of tax---Appellate Tribunal---Power to grant stay of recovery of tax is incidental and ancillary to appellate jurisdiction of Tribunal---Exercise of such power takes within its fold power to grant stay of recovery of interest also ---Assessee to move Tribunal first for grant of stay of demand of interest---Writ petition not maintainable at this stage---Indian Income Tax Act, 1961, S.220(2)---Constitution of India, Arts.226 & 227.
The power to grant stay of recovery of tax is incidental and ancillary to the appellate jurisdiction and exercise of such incidental and ancillary power by the Income-tax Appellate Tribunal will take in its fold the power to grant stay of recovery of interest as well under section 220(2) of the. Income Tax Act, 1961, Interest is lined up with tax and if a reference is answered in favour of the assessee and the tax, demand is set aside, the interest levied under section 220(2) will be consequentially wiped out Therefore, there could be no bar against the power to stay the recovery o interest:
Held, on the facts, that the petitioner should first move the Income tax Appellate Tribunal for grant of stay of the demand representing the interest levied under section 220(2). The writ petition filed by the petitioner was premature and could not be entertained. In case the Tribunal committed a jurisdictional error or acted improperly in exercise of its jurisdiction, the Appellate Authority's order could be corrected by the High Court under Articles 226 and 227 of the Constitution.
CIT v Bansi Dhar & Sons (1986) 157 ITR 665 (SC) ref.
L. Venkateshwar Rao for Petitioner.
J. V. Prasad for Respondent.
JUDGMENT
P. VENKATARAMA REDDI, J.----Heard both counsel at the stage of admission. This writ petition is filed seeking for a direction to the second respondent not to take coercive steps for recovery of interest of Rs.5,62,188 levied under section 220(2) of the Income-tax Act for the. assessment years 1988-89 and 1989-90 pending the disposal of R. C. No. 8 of 1994 on the file of this Court.
R. C. No. 8 of 1994 relates to the assessment year 1988-89. It is stated that a similar reference application is pending for the year 1989-90. As the reference Court has no inherent or incidental power to grant stay of recovery of tax or other dues, learned counsel for the petitioner submits that the petitioner is 'constrained to file this petition under Article 226 of the Constitution. The Supreme Court in CIT v. Bansi Dhar & Sons (1986) 157 ITR 665, held that the jurisdiction under section 256 of the Income-tax Act is advisory in nature and notwithstanding the reference, the appeal before the Tribunal must be deemed to be still pending and the, Tribunal retains its jurisdiction to grant stay. as part of its incidental or ancillary power. It was further observed that (page 681):
"In an appropriate case, if the assessee feels that a stay of recovery pending disposal of the reference is necessary or is in the interest of justice, then, the assessee is entitled to apply before the appellate authority to grate a staff until disposal of the reference by the High Court or until such time as the appellate authority thought fit."
It was also pointed out that in case the appellate authority committed a jurisdictional error or acted improperly in exercise of its jurisdiction, the appellate authority's order can be corrected by the High Court under Articles 226 and 227 of the Constitution.
In view of this pronouncement of the Supreme Court, we are of the view that the petitioner should first move the Income-tax Appellate Tribunal for the grant of stay of the demand representing the interest levied under section 220(2). Learned counsel expressed a doubt whether the power of the Tribunal to grant stay could be extended to the collection of interest, in view of the fact that the issue as regards the propriety of collection of interest as such is not the subject-matter of reference before the High Court. We do not think that there is anything in the decision of the Supreme Court which limits the power of the Tribunal only to stay the recovery. of tax but not the interest due thereon.
It is to be noted that the interest is linked up with tax and if the reference is answered in favour of the assessee and the tax demand is set aside, the interest levied under section 220(2) will be consequentially wiped out. That being the case, we are not in a position to appreciate as to how there could be a bar against the power to stay the recovery of interest. No doubt, the Supreme Court employed the wording "tax" in the aforementioned decision. But, from that, it does not follow that the Supreme Court wanted to limit the power of the Tribunal to grant stay only in respect of tax but not interest which is consequential. The expression "tax" used by the Supreme Court must be understood contextually. The Supreme Court was not concerned with interest; hence, the said word was not used. What we have to see is whether the ratio laid down by the Supreme Court applies. As pointed out by the Supreme Court, the power to grant stay is incidental and ancillary to appellate jurisdiction and the exercise of such incidental and ancillary power will certainly take within its fold the power to grant stay of recovery of interest as well.
We, therefore, see no ground to entertain this writ petition at this stage. It is-open to the petitioner to file an application before the Income-tax Appellate Tribunal seeking stay of recovery of interest and if such application is filed, we hope that the same will be disposed of expeditiously by the Tribunal.
The writ petition is dismissed with the above observation.
M.B.A./3167/FC Petition dismissed.