ORDER
O.P. Jain, Judicial Member
1. This petition for stay by the assesses raises an important point of law, vis., whether the Tribunal has the power and jurisdiction to stay the recovery proceedings till the disposal of the assessee’s Reference Application by the Hon’ble High Court.
2. Referring to the provisions contained in Sections 254(4), 256 and 260(1) of the Income-tax Act, 1961 (the ‘Act’ for short), Shri Prakash Narain, appearing on behalf of the assessee has contended that on a reference being made to the High Court, the finality of the Tribunal’s order is disturbed, and after the question referred to the High Court is answered by the High Court, the Appellate Tribunal takes up the appeal and disposes it conformably with the answer returned by the High Court. According to him, on a reference being made to the High Court, the appeal before the Appellate Tribunal is kept pending. He has further submitted that during the pendency of appeal, the Appellate Authority has the power and jurisdiction to grant stay of the recovery proceedings. In that connection, he has referred to the case of ITO v. M.K. Mohammed Kunhi [1969] 71 ITR 815 wherein the Hon’ble Supreme Court has held that Section 254 of the Act which confers on the Appellate Tribunal powers of the widest amplitude in dealing with appeals before it, grants by implication the power of doing all such acts, or employing such means, as are essentially necessary to its execution. It was further held that the statutory power under Section 254 carries with it the duty, in proper cases, to make such orders for staying recovery proceedings pending in appeal before the Tribunal. With regard to his contention that during the pendency of a reference to the High Court, an appeal remains pending and the finality of the order passed by the Tribunal is disturbed, he has invited our attention to Sub-section (4) of Section 254 of the Act which provides that save as provided in Section 256 orders passed by the Appellate Tribunal on appeal shall be final. Further, he referred to Sub-section (1) of Section 260 which provides that after the decision of the High Court or Supreme Court, the Appellate Tribunal shall pass such orders as are necessary to dispose of the case conformably to such judgment. On the basis of these provisions, it was argued by him that the Tribunal would have to pass an order disposing of the appeal after the order of the High Court is received and before such an order is received, the appeal remains pending before the Appellate Tribunal. To support his view he has cited the case of Liquidator of Mahamudabad Properties (P.) Ltd. v. CIT [1980] 124 ITR 31 wherein it was held by the Hon’ble Supreme Court that, the High Court, on a reference before it, does not act as a court of appeal. Its jurisdiction is advisory and no more. The High Court is empowered to decide the question of law referred to it and to return its answer to the Appellate Tribunal. The Appellate Tribunal then takes up the appeal and disposes of it conformably with the answer returned by the High Court. Against this, the learned Departmental Representative placed reliance on Section 265 of the Act and has submitted that notwithstanding the pendency of a reference, tax shall be payable by the assesses in accordance with the decision delivered by the Appellate Tribunal, which is the final fact finding authority. According to the submissions made by him, it cannot be said that the appeal remains pending during the pendency of a reference to the High Court.
3. We have given our anxious consideration to the rival submissions. Though the point involved is of serious import, we feel that it should not detain us for long. In the case of CIT v. Bansi Dhar & Sons [1986] 24 Taxman 11, the Hon’ble Supreme Court had considered the provisions contained in Section 66 of the Indian Income-tax Act, 1922, and Section 256 of the Income-tax Act, 1961, which relate to reference to the High Court. It was observed by the Hon’ble Court that under Section 256, the provision of reference to the High Court is the same as under Section 66 with slight difference. It was further observed that the scheme of the 1961 Act, so far as the scheme of reference to the High Court on a question of law is concerned, is the same as that of 1922 Act. Dealing with the jurisdiction of the High Court, it was held that the jurisdiction exercised by the High Courts is purely advisory and the appeal is kept pending before the Tribunal. Dealing with the incidental or ancillary powers of the High Court in matters of reference, it was held that incidental powers cannot be so construed so as to confer the power of stay of recovery of taxes pending a reference which lies in the domain of an appellate authority. It was further held that the concept of granting stay in a reference ex debito justitiae does not arise. That concept might arise in case of the appellate authority exercising its power to grant stay where there is no express provision. The Hon’ble Court further expressed the opinion that it cannot be said that the High Court has inherent power or incidental power in the matter of a reference pending before it to grant stay of realisation or to grant injunction. It categorically observed that must remain within the jurisdiction of the appellate authority and pendency of a reference does not detract from that jurisdiction of the appellate authority.
4. In view of the above pronouncement by the Hon’ble Supreme Court, there can be no doubt that during the pendency of a reference, the appeal remains pending before the Appellate Tribunal and the Tribunal, which is the appellate authority has the power and jurisdiction to grant stay of realisation of taxes during the pendency of appeal. We therefore, hold that the Tribunal has the power and jurisdiction to stay recovery proceedings during the pendency of a reference to the High Court.
5. The question that now crops up for determination is whether in the circumstances and facts of the case, the recovery proceedings should be stayed till disposal of the assessee’s reference application. The learned authorised representative for the assessee has submitted that during the pendency of the appeal, the Tribunal was pleased to stay recovery proceedings and for similar reasons, the recovery proceedings may be stayed now. The applicant has also alleged in the application that after disposal of the appeal by the Tribunal, the assessing officer has summoned the assessee along with the account books for the current year, i.e., 1988-89 and has seized its bank account with the Bank of India, Lucknow. It is further alleged that the assessing officer has issued notices to M/s. Fairdeal Agencies and International Electronics under Section 226(3) of the Act requiring them to pay the loan standing to the credit of the assessee to the Income-tax department on account of the demand in question. Due to such measures taken by the assessing officer, the business of the assessee has come to a standstill jeopardising the livelihood of a number of people employed by the assessee and it has created a panic in the organisational set up of the assessee which is at the verge of collapse any moment. An affidavit sworn by Shri R.N. Arora has been filed in support of the application. In his affidavit Shri Arora has stated that the business of the assessee has been paralysed and present financial position and economic circumstances are not such that he can pay the disputed demand. That affidavit has been sworn by Shri Arora to his best knowledge and belief.
6. It is now well settled that the power of stay is not likely to be exercised in a routine way or as a matter of course in view of the special nature of taxation and revenue laws. Only when a strong prima facie case is made out, the Tribunal will consider whether to stay the recovery proceedings. In that connection, reference may be made to the case of M.K. Mohammed Kunhi (supra). A bare statement that the assessee will suffer substantial loss is not a sufficient ground for stay. The kind of loss must be specified, details must be given and the conscious of the Tribunal must be satisfied that such loss will really ensue. In the instant case, a vague assertion has been made that the business of the assessee has come to a standstill jeopardising the livelihood of a number of its employees and the business is at the verge of collapse due to the measures taken by the assessing officer. The statement contained in the affidavit that the present financial position and economic circumstances are not such that the disputed amount can be paid is also too vague and general. Moreover, the circumstances on which the stay was granted during the pendency of the appeal before the Tribunal no longer exist. The Tribunal had granted stay on 17th March, 1987, for a period up to 22nd April, 1987, and that stay was granted having regard to the entirety of the facts and circumstances of the case. The fact that the assessee has been unsuccessful in the second appeal as well goes to indicate that no prima facie case exists for the grant of stay as claimed. Therefore, we turn down the request of the assessee to stay the recovery proceedings.
7. We have turned down the assessee’s request on merits. That apart, there is yet another aspect of the case on account of which the assessee is not entitled to the stay as claimed by him. The petition for stay was moved along with the application for reference under Section 256(1) of the Act. The application for reference is still pending and no reference has yet been made to the Hon’ble High Court. Unless a reference is made to the High Court, it is not possible to hold that the appeal by the assessee is pending with the Tribunal, and unless there is an appeal pending, no stay can be granted.
8. In the result, the petition moved by the assessee is hereby rejected.