VELU PILLAI J. – The question for decision in this writ petition by an assessee under the Income-tax Act, 1961, is whether, pending an appeal before it, the Appellate Tribunal can stay recovery of the penalty imposed. Learned counsel for the petitioner contended that it can, on two grounds, first, that the power to stay recovery of tax or penalty is ancillary or incidental to the appellate power and may be exercised as such and second, that the Appellate Tribunal must be deemed to a court, and to be vested, as in the case of a civil court, with inherent powers, including the power to stay recovery. We think that the petitioner is entitled to succeed on the first ground, and that it is unnecessary to consider the validity of the second ground. That the power to stay is a necessary corollary and is incidental to the appellate power has been ruled by Rajagopala Ayyangar J., as a judge of the Madras High Court, in Swarnambikai Motor Service v. Wahita Motor Service. The short report of the case sets out the relevant passages as follows :
“It is no doubt true that there is a distinction between courts in the strict sense and Tribunals, judicial or quasi-judicial; and the generally accepted principle of inherent powers of courts are not applicable as such to the Tribunals. Whatever may be the position as regards purely administrative Tribunals, as regard quasi-judicial Tribunals dealing with the rights of parties even those powers, which are incidental and ancillary or which follow as necessary implication to the exercise of the powers expressly conferred upon them. Otherwise, the jurisdiction conferred upon them could not be effectually exercised and in most cases may become illusory and ineffective.”
That case arose under section 64(2) of the Motor Vehicles Act as amended by Act 39 of 1954, which did not expressly confer a power on the authority to pass an interim order to stay, pending revision before it. We see no reason why the above principle cannot be extended to the case before us, under the Income-tax Act, 1961, which,` though it does not confer such power on the Appellate Tribunal in specific terms, however creates no express bar against its exercise. The principle is, that the power to stay is incidental or is a necessary corollary to the appellate power. The same view has been expressed by M. S. Menon J. (as he then was) in Themmalapuram Bus Transport Ltd. v. Regional Transport Officer, Malabar, also a case arising under the Motor Vehicles Act, in which the learned judge observed :
“The power to stay is a necessary corollary to the power to entertain an appeal or revision.”
The question as to whether the appellate authority under the Motor Vehicles Act has power to remand the case to the subordinate authority, was answered in the affirmative by a Full Bench of this court in Dharmadas v. State Transport Appellate Tribunal where the learned Chief Justice, relying on Sutherland, 3rd edition, volume III page 19, observed that “where a statue confers powers or duties in general terms, all powers and duties incidental and necessary to make such legislation effective are included by implication” and held that the power to remand the case “is incidental to and implicit in the appellate jurisdiction created by that section (section 64 of the Motor Vehicles Act, 1939).” There is of course a distinction that the power to remand is integrally connected with, and pertains to, the actual exercise of the appellate power, while a power to stay and preserve the status quo, is but incidental or ancillary to it, but this ought not to make any difference in the result. In an early case, Panchanan Singha Roy v. Dwarka Nath Roy Mookerjee J. observed :
“It appears to me to be quiet clear that this court has power to stay all proceedings that may be taken in pursuance of the order of the court below, on the broad ground that the court which has seizin of the appeal can make order staying proceeding pending its hearing… the power to stay proceedings is ancillary to the power of this court as the appellate authority to reverse the order of the inferior court. Without such power, the exercise of our appellate jurisdiction might in many instances prove infructuous. As regards the argument that there is no express statutory provision on the subject, I need only refer to a well known passage from Domats Civil Law, Chapter XII, Sec. XVII (Cushings Edition Vol. 1 p. 88) which is quoted with approval by Sir Barnes Peacock C.J. in his judgment in the Full Bench case of Hurro Chunder Roy Chowdhry v. Soorodhonee Debia : Since laws are general rules, the cannot regulate the time to come, so as to make express provision against all inconveniences, which are infinite in number, and that their dispositions should express all the cases that may possibly happen; but it is only the prudence and duty of a law-giver to foresee the most natural and most ordinary events, and to form his dispositions in such a manner as that, without entering into the details of the singular cases, he may establish rules common to them all by discerning that which may deserve either exceptions or particular dispositions. And next it is the duty of the judges to apply the laws, not only to what appears to be regulated by their express dispositions, but to all the cases where a just application of them may be made, and which appeared to be comprehended either within the express sense of the law, or within the consequences that may be gathered from it. I entertain no doubt whatever that as we have seizin of the appeal, we have power to make an order staying proceedings pending its hearing.”
Of course, the case related to a proceeding in court, but the observations are of general application. In Burhanpur Tapti Mill Ltd. v. Board of Revenue Madhya Pradesh, the Nagpur High Court considered the precise question but as arising under the Central Provinces and Bear Sales Tax Act (21 of 1947), and held that the Board of Revenue, which is the Appellate Tribunal, has the power to stay the proceedings of the subordinate authority pending the decision of the appeal, as such a power is implicit in the appellate power and necessary to the proper exercise that power.
But in Vetcha Sreeramamurthy v. Income-tax Officer, Vizianagaram, Viswanatha Sastri J. said with reference to the Income-tax Act, 1922, that “there is no conferment of an express power of granting a stay of realisation of the tax, though the effect of an order in favour of the assessee under section 45 of the Act is a stay… Neither the Appellate Assistant Commissioner nor the Appellate Tribunal is given the power to stay the collection of tax”. The power under section 45 is but to treat the assessee as not being in default, and is exercisable only by the income-tax authority and is therefore a different power and is no substitute for the power of the appellate authority to stay the proceedings of recovery. As for the need for a power to stay, the same learned judge stated thus, at page 268 of the report :
“…. cases might easily be conceived and do occur, where the assessee would suffer financial ruin and irreparable injury if an order for stay of collection the demand is not made. Sometimes assessment for these years and more are completed at the same time and the assessee is called upon to pay a heavy demand of tax within a few days.”
If, as think, the power to grant a stay is incidental or ancillary to the appellate jurisdiction, the absence of conferment of such a power in specific terms cannot make a difference.
Our attention was invited by counsel for the revenue to certain provisions of the Income-tax Act, 1961, as leading to a different conclusion. Section 220, sub-section (6) corresponds to section 45 of the Act of 1922, adverted to above, and section 220, sub-section (3) empowers the Income-tax Officer to extend the time for payment or allow payment by instalments on an application made by the assessee, before the expiry of the due date as specified in (1) which in the generality of cases, could not be made before the appeal is presented to the Appellate Tribunal. Section 225, sub-section (1), enables the Income-tax Officer to grant time for the payment of tax after the issue of a certificate to the Tax Recovery Officer, which can take place only when the assessee is in default or is deemed to be in default and sub-section (3) enables him to stay recovery of that part of the tax, which has been reduced in appeal. Section 253 provides for appeal to be preferred to the Appellate Tribunal. Though in section 265 it is provided, that “notwithstanding that a reference has been made to the High Court or the Supreme Court or an appeal has been preferred to the Supreme Court, tax shall be payable in accordance with the assessment made in the case”, the Andhra High Court held in Polisetty Narayana Rao v. Commissioner of Income-tax Act that the High Court has power by virtue of section 151, Civil Procedure Code, and article 227 of the Constitution, to grant stay of proceedings. In our opinion, so long as the power of stay is considered to be part and parcel of the appellate jurisdiction, the provisions referred to have very little relevance.
Learned counsel for the revenue then took us through paragraph 4.49 to 4.52 of the Report of the Direct Taxes Administration Enquiry Committee, 1958-59, for contending that the legislature did not intend to confer a power of stay on the Appellate Tribunal. The Committee considered two proposals. One was that, pending appeals, there ought to be an automatic stay of collection of tax. In the United Kingdom, the law as stated in Halsburys Laws of England, 3rd edition, volume 20, page 705, paragraph 1399, is as follows :
“No tax is payable while the assessment is the subject-matter of an appeal, except such part of the tax assessed as appears to the Commissioners seized of the appeal not to be in dispute. Tax is, however, payable on determination of the appeal in so far as the assessment is confirmed, notwithstanding the demand of a stated case, subject to subsequent adjustment if necessary.”
The committee was not in favour of this proposal. The second proposal was that of the Income-tax Investigation Commission, that a power of stay may be expressly conferred on the appellate authority; the Committee recommended that the “present provision for the stay of disputed demands at the discretion of the assessing officer should continue, but the assessee should be provided with a right to approach” the higher authorities. The argument of the counsel was that this is what has been provided under the section in the Act above referred to. We are by no means sure as to this. But we think that this is all irrelevant in the view we have taken, that even without an express conferment, the appellate authority has the power to stay the proceedings and the collection pending appeal, as incidental or ancillary to its appellate jurisdiction.
We, therefore, come to the conclusion that the Appellate Tribunal was wrong in thinking that it had not jurisdiction to entertain the application for stay. In the result, we quash the order of the Appellate Tribunal, and send back the case to it for disposal in due course of law. This petition is allowed, but without costs.