B. S. SALUJA, J. M. :
The assessee has moved this stay application for stay of outstanding demand of Rs. 5,48,726 out of the total tax demand of Rs. 6,48,725.
2. The learned counsel for the assessee, Shri R. Santhanam, submitted that in this case regular assessment had been made on 23rd March, 1994 under s. 143(3) and the same was accepted by the assessee as well as by the Department. He further submitted that the AO proceeded to make rectification in the said assessment order with reference to the adjustment made under s. 143(1), which was before the regular assessment. In the intimation received under s. 143(1)(a) an adjustment of an amount Rs. 10,995 had been made with reference to the provisions of s. 43B on account of non-furnishing of proof of payment along with the return of income. He also submitted that in the order made under s. 154 the AO held that there was a mistake apparent from record insofar as the assessee-company had not made any disallowance in respect of interest amounting to Rs. 88,33,031 which had accrued and was payable to ICI, IDBI, and IFCI. The AO had also observed that the assessee-company had erred in adding interest of amount of Rs. 17,92,652 under s. 43B as the said provisions do not extend to the interest payable to banks. He further observed that since the assessee company had made disallowance under s. 43B of Rs. 41,96,933, the addition worked out to Rs. 70,40,379. The AO, therefore, revised the loss returned by the assessee at Rs. 6,52,52,551 to Rs. 5,82,12,172. The learned counsel submitted that in the circumstances the order made by the AO under s. 154 was bad in law as there was no question of rectifying the intimation under s. 143(1)(a) after making a regular assessment. He was fair enough to mention that the said order made by the AO under s. 154 has been confirmed by the Tribunal and that the assessee has already moved reference application as also miscellaneous application against the said order of the Tribunal.
2.1 The learned counsel further invited out attention to Annex. I to the stay application, where copy of the order of the Honble High Court of Delhi made with reference of the writ petition filed by the assessee is placed. The Honble High Court have observed that it would be open to the petitioner to file appropriate application before the Tribunal under s. 256(1) of the IT Act, 1961, as also an application seeking stay from the Tribunal. The dismissal of this writ petition would be without prejudice to the rights of the petitioner, if any, to challenge the order of the Tribunal, in case stay is refused to the petitioner. In this connection the learned counsel relied on the decision in the case of CIT vs. Bansi Dhari & Sons (1986) 157 ITR 665 (SC) for the proposition that in such a situation the Tribunal still has jurisdiction to hear and grant stay. He further submitted that the bank account of the assessee has been attached and that the assessee is facing financial hardship. In this connection he invited our attention to Annex. II to the stay application where a copy of letter dt. 13th March, 1996 addressed to the CIT is placed, wherein details of attachment of bank account and financial hardship had been mentioned. The learned counsel further submitted that the case of the assessee-company is being considered by the Board for Industrial and Financial Reconstruction under the provisions of the Sick Industrial Companies (Special Provisions) Act, 1985. In this connection he referred to the provisions of s. 22(1) of the said Act whereunder mandatory permission is required from the said Board for effecting any recovery of the revenue. In this connection he referred to the decision of the Honable Supreme Court in the case of Gram Panchayat vs. Shree Vallabh Glass Works Ltd. AIR 1990 SC 1017 (copy placed at pages 9 to 12), where the apex Court has observed in paragraph 10 that in the light of steps taken by the Board under ss. 16 and 17 of the Act, no proceedings for execution, the distress or the like proceedings against any of the properties of the company shall lie or be proceeded further except with the consent of the Board. It has further observed that there would be automatic suspension of such proceeding against the companys property as soon as the enquiry under s. 16 is ordered by the Board. The apex Court has further observed that it may be against the principle of the equity if the creditors are not allowed to recover their dues from the company, but such creditors may approach the Board for permission to proceed against the company for recovery of their dues. In this context the apex Court has further observed that if the approval is not granted by the Board the remedy is not extinguished as s. 22(5) provides for exclusion of the period during which the remedy is suspended while computing the period of limitation for recovering the dues. The learned counsel also submitted that these facts were placed before the learned CIT who was requested to grant stay but request of the assessee has been rejected by the learned CIT, (p. 8 of the P. B) as perhaps he had his own limitations in view of the upholding of he order of AO made under s. 154 by the Tribunal. In view of the foregoing the learned counsel urged that the stay may be granted and the Department may be directed to lift the attachment of bank account.
3. The learned Departmental Representative, Shri B. K. Halder, strongly opposed the granting of stay. He submitted that there was no appeal pending before the Tribunal as the order under s. 154 made by AO has already been confirmed and, therefore, no stay could be granted to the assessee. He also referred to the decision of the Hounable Supreme Court reported in (1986) 157 ITR 665 (SC) (supra) and submitted that even if the Tribunal has jurisdiction, the assessee has to satisfy the other conditions before a stay could be granted. He also submitted that in the orders passed by the Board for Industrial and Financial Reconstruction, no restrictions have been placed by the said Board with reference to the provisions of s. 22 and that if there was a violation of the said provisions, the assessee could approach the said Board. He further submitted that the Department has only to seek approval of the Board under the said provisions for making recovery of taxes. He further submitted that no stay of demand was required if the Department had no power to enforce recovery under the provisions of s. 22 of the aforesaid Act.
4. In his rejoinder the learned counsel prayed that the stay application may be treated as having been filed with reference to the reference application pending before the Tribunal and in view of the submissions already made the stay may be granted.
5. We have heard the learned representatives of the parties and have also perused the relevant record. We have also seen the relevant provisions of the Sick Industrial Companies (Special Provisions) Act, 1985 and the decision of the Honble Supreme Court relied upon by the learned counsel as reported in AIR 1990 SC 1017 (supra) as also the decision reported in (1986) 157 ITR 665 (SC) (supra). We have also seen the order of the Honble Delhi High Court made in the writ petition filed by the assessee and which is placed at Annex-I to the stay application. After considering all the facts we feel that it is a fit case for grant of stay of outstanding demand of Rs. 5,48,726 against the assessee till the disposal of the reference application No. 123 (Del) 96 in ITA No. 647 (Del) 95 for the asst. yr. 1991-92 filed by the assessee. The stay is, however, subject to the condition that the assessee will not seek adjournment of hearing of the reference application as and when it is fixed, as otherwise, it will run the risk of exposing itself to this stay being vacated.
6. The stay application is allowed as above.