ORDER
Per Shri R. Rangayya, Accountant Member – By this reference application under section 256(1) of the Income-tax Act, 1961, the Commissioner of Income-tax wants the Tribunal to refer the following question, said to be of law and said to arise out of the aforesaid order of the Tribunal to the Honble Madras High Court for its opinion :
“Whether, the inherent appellate power of the Tribunal to stay the demand would extend to specifying the mode of recovery like the granting of instalments ?”
Inasmuch as, in our opinion, no referable question of law arises out of the order of the Tribunal, we refuse to state a case for the reasons stated below.
2. The assessee in this case filed an appeal for the asst. year 1985-86. During the course of pendency of the said appeal, the assessee requested for stay of demand of Rs. 1,87,357 and interest under sections 139(8) and 215 at Rs. 21,830 and Rs. 74,799 respectively. It was the assessees contention that the above demand is a result of certain decisions of the authorities below, which were not correct in law and on the facts of the case. It was contended that the assessee was not in a position to pay the above demands due to financial stringency and so requested that the above demands may be stayed till the disposal of the Appeal. After hearing the parties, the Tribunal had directed the assessee to pay the total amount of tax and interest due from him for the year under consideration by monthly instalments of Rs. 25,000 per month subject to the assessee furnishing security to the satisfaction of the ITO within one month from the date of its order.
3. The Revenue now question the inherent power of the Tribunal to grant instalments or allow stay on terms. The Supreme Court in the case of ITO v. M. K. Mohammed Kunhi [1969] 71 ITR 815 had held that section 254 of the Income-tax Act, 1961, 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. The statutory power under section 254 carries with it the duty in proper cases to make such orders for staying recovery proceedings pending an appeal before the Tribunal, as will prevent the appeal, if successful, from being rendered nugatory. The Supreme Court further laid down that the power of stay is not likely to be exercised in routine way or as a matter of course in views of the special nature of taxation and revenue laws. Only when a strong prima facie case is made out will the Tribunal consider whether to stay the recovery proceedings. Stay will be granted only in deserving and appropriate cases, where the Tribunal is satisfied that the entire purpose of the appeal will be frustrated or rendered nugatory by allowing the recovery proceedings to continue during the pendency of the appeal before it.
4. The Supreme Court had once again an opportunity to examine the provisions relating to the powers of stay during the pendency of the appeals or reference before the High Court, in the case of CIT v. Bansi Dhar & Sons [1986] 157 ITR 665/24 Taxman 11. It was held therein that the power to grant stay in incidental and ancillary to appellate jurisdiction. It was held by the Court that 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 grant a stay until disposal of the reference by the High Court or until such item as the appellate authority thought fit.
5. The Supreme Court in the case of Asstt. Collector of Central Excise v. Dunlop India Ltd. [1985] 154 ITR 172 observed that while passing interim orders the Courts should also take the balance of convenience and public interest into account.
6. The Madras High Court while dealing with a similar power of stay vested in ITO under section 220(3) and 223(6), in the case of K. M. Rahmath Bibi v. First ITO [1969] 72 ITR 73, observed that the powers of the ITO under sub-section (6) gives a very wide scope to the discretion entrusted to the officer as well as the conditions which he may stipulate in his discretion. They are wide enough to cover a stay on condition that the assessee should pay the disputed amount in instalments either in whole or in part and should furnish security for the balance. The inherent powers of the Tribunal, in our opinion, are equally wide enough to allow grant stay on terms or allowing payment of the disputed amounts by instalments.
7. It is clear from the above authorities that the Tribunal has inherent powers to stay the demand, pending disposal of the appeal. The powers stay not only include power to grant absolute stay but also stay on terms like stay on payment of instalments or stay on furnishing of security to the satisfaction of the authorities concerned. This is a discretionary power to be exercised by the Tribunal in the manner which is appropriate in each case, taking into account not only the prejudice to be caused to the appellant but also public interest. When a person who seeks stay of the demand till the disposal of appeal, ultimately in agreeable to pay the sum by way of instalments, the Tribunal while allowing such payments by instalments not only takes into account the grievance of the appellant but also public interest.
8. Thus, in our opinion, the inherent powers of the Tribunal in the matter of stay of disputed demand comprehend within itself the power to allow payments in instalments or asking the appellant to provide proper security for the demand.
9. In the light of the above, we are of the opinion that the answer to the question sought to be raised by the Commissioner is obvious and the question need not be referred to the High Court. The decision of the Tribunal is also in accordance with the decisions of the Supreme Court and the Madras High Court mentioned above.
10. It may also be noted that the question whether, the Tribunal had jurisdiction or not grant instalments was never argued before the Tribunal when the Tribunal passed its order granting stay in instalments. In the circumstances, the question cannot be said to arise out of the order of the Tribunal.
11. For the above reasons, the reference application filed by the Commissioner is rejected.