A trivial adjournment, an overzealous revenue department, compelled apparently by year ending revenue collection targets = unnecessary litigation
THIS is how the High Court started its judgement in a writ petition filed by the Income Tax Department. "A trivial adjournment, an overzealous revenue department, compelled apparently by year ending revenue collection targets, has led to this unnecessary litigation. The bone of contention between parties is whether in view of adjournment of the appeal, by the Tribunal on 16.01.2013, the conditional stay order, passed by the Tribunal on 13.12.2012, stands vacated. The revenue strenuously asserts that the stay order stands vacated and, therefore, the revenue has appropriated Rs.208 crores from the account of the assessee, whereas the assessee urges to the contrary. The Tribunal has ordered the revenue to refund this amount."
The DCIT Circle-II, Gurgaon, raised a demand of Rs.210.57 Crores under Section 143(3), read with Section 144 C of the Income Tax Act for the assessment year 2008-09, pursuant to an order passed by the Dispute Resolution Panel. The assessee filed an appeal before the Income Tax Appellate Tribunal, New Delhi, accompanied by an application for stay of the demand. Vide order dated 13.12.2012, a stay of the demand for a period of 180 days or disposal of the appeal or of the MAP application, whichever is earlier was granted.
The conditional order dated 13.12.2012 reads as follows: "In consideration of the application of the assessee in the light of rival submissions and material on record, we grant of stay of recovery, subject to condition that assessee shall deposit Rs.2.50 crores on or before 21.12.2012 and shall furnish bank guarantee for the amount involved for which MAP application has been filed, on or before 31.12.2012, for a period of 180 days or disposal of the appeal/MAP application, whichever is earlier. However, assessee shall not seek any adjournment and get finalised the appeal fixed for hearing on 13.01.2013 or any subsequent date. In case assessee seeks adjournment or commits default in making payment or furnish bank guarantee within the stipulated time, the accommodation herein granted shall stand automatically cancelled and entire outstanding demand would be recoverable as per law."
The assessee, admittedly, complied with these conditions and it is not denied that MAP proceedings are pending. The appeal came up for hearing on 16.01.2013, and the following order was passed:-
"Ld. Counsel for the assessee contends that the appeal involved AMP issue on which the Special Bench order in the case of the LG Electronics is awaited. Adjourned to 16.04.2013."
The revenue, however, proceeded to appropriate the amount of tax due from the assessee by serving a notice on Standard Chartered Bank.
The assessee filed an application under Section 151 of the Code of Civil Procedure, before the Income Tax Appellate Tribunal, for refund of the amount recovered by the revenue. The revenue raised a plea that as the stay order stood vacated, in view of adjournment, dated 16.01.2013, the Income Tax Appellate Tribunal has no jurisdiction to order refund.
The Income Tax Appellate Tribunal held that adjournment was granted by the Tribunal in conformity with judicial discipline and judicial propriety as the appeal could not be decided in view of pendency of another appeal, before a Special Bench and, therefore, the appeal had been adjourned, suomoto.The Income Tax Appellate Tribunal also held, on the basis of certain judgment and by relying upon Section 151 of the CPC, that it is empowered to pass an order of refund of an amount illegally appropriated by the revenue and, thus, proceeded to pass an order directing the revenue to refund the amount collected in violation of the stay order dated 13.12.2012 on or before 18.04.2013.
The High Court observed, "The vacillating stand of the revenue clearly indicates a confused state of mind, apparently compelled by the need to achieve targets fixed by superiors of the department. We, therefore, find no reason to differ with the opinion recorded by the Tribunal that as counsel for the assessee did not pray for an adjournment, the stay order did not stand vacated.
The power to ensure that its orders are not violated during pendency of a lis are inherent in any Court or Tribunal. In fact it is the bounden duty of the Tribunal to ensure where its order is violated that the violation is adequately redressed and money appropriated, is restituted. If such a power is held not to be available to the Tribunal, its interim orders would be flouted with impunity. If, the revenue was of the opinion that the stay order has been violated by the assessee or has been vacated, it should have approached the Tribunal for clarification by way of an appropriate application but instead proceeded in a ham-handed manner, to appropriate this amount. The order passed by the Tribunal, in our considered opinion, does not suffer from any error of jurisdiction or of law and must, therefore, be affirmed.
In view of what has been stated hereinabove, the writ petition is dismissed."
And here comes the twist in the tale.
The High Court did not order refund of the amount attached by Revenue but ordered that refund of the amount shall await decision of the appeal, which shall be decided by the Tribunal, within one month from receipt of a certified copy of this order.