Can ITAT decide on stay of demand without having quantum appeal before it?

Case Citation- Employees Provident Fund Organization Vs. Addl. CIT (T.D.S); I.T.A Nos. 1766 to 1768/Del/2015; Date of pronouncement: 10.04.2015; Assessment Years-2011-12 to 2013-14

Background-:

1. We all are aware that, for various reasons, CIT(A) is reluctant to give stay of demand then be it for collecting more revenue, instructions of CBDT, meeting the target etc.

2. The preponderant legal position in respect of challenging the disposal by CIT(A) of stay of demand is that the assessee has to approach his jurisdictional HC by way of a WRIT.

3. Practically speaking for small assessees, WRIT is a costly affair, both time and money consuming.

4. As compared to approaching HC, ITAT is much better an option.

5. The moot question being, whether one can approach ITAT in such a situation.

Takeaway-:

6. One precedence is there whereby a person aggrieved by the disposal of application for stay of demand can approach ITAT instead of writ to HC.

7. Delhi ITAT has, in the case of Employees’ Provident Fund Vs. Addl. CIT (T.D.S) dated 10.04.2015 has admitted the appeal and has granted a stay on such demand when quantum appeal is not pending before it.

8. I do not know whether other judicial forums will uphold it or not.

Facts in specific-:

9. The DCIT(TDS) passed an order dated on 31-March-2014 treating the assessee as assessee in default for non payment u/s 201 and section 201(1A)

10. Aggrieved by the order, an appeal was filed before CIT(A)

11. While the quantum appeal is still pending, an application for stay of demand was made by the assessee.

Judgement – First Appellate Authority – CIT(A)

12. The CIT(A) disposed off the stay application rejecting the stay and directing the AO to take action for recovery on 19-3-2015.

13. Aggrieved by such disposal, the assessee filed appeal before ITAT in form 36 on 20-3-2015.

Arguments – revenue

14. The appeal is not maintainable in terms of section 253. At this stage, I am restricting myself only to the question as to whether the appeal is maintainable.

Arguments – assessee

15. Assessee relied upon various case laws with a prayer to admit the appeal. At this stage, I am restricting myself only to the question as to whether the appeal is maintainable.

Moot questions-:

16. Whether such disposal of application for stay of demand is an order u/s 250?

17. Whether ITAT can admit a matter only for the limited purpose of stay of demand where the main quantum appeal is not before ITAT

Judgement – Second Appellate Authority – ITAT

18. The order disposing of application of stay of demand does not mention any section.

19. CIT(A) can pass or has to pass an order u/s 250 only.

20. Section 253 has a specific mention of order u/s 250

21. CIT(A) has inherent power to stay the demand arising of quantum appeal pending before it as been settled by SC decision in the case of ITO Vs. M.K. Mohammad Kunhi, 71 ITR 815 (SC)

22. ITAT has observed that

“It is well settled that the order need not be an order of civil court alone, it can be of any other statutory authority [C.G. Ghanshamdas v. Collector of Madras, AIR 1987 SC 180, (1986) 4 SCC 305, (1986) 2 APLJ (SC) 25]”

Other Points

23. Though the ITAT has stopped at above point to come to a decision that the appeal is admissible, there may be some more points as well.

Regarding what is an order.

24. The source of Requirements of section 250 regarding passing an order lies in Rule 31 of the

Order LXI of the code of civil procedures 1908 which reads as follows

31. Contents, date and signature of judgment.- The judgment of the Appellate Court shall be in writing and shall state—

(a) the points for determination;

(b) the decision thereon;

(c) the reasons for the decision; and

(d) where the decree appealed from is reversed or varied, the relief to which the appellant is entitled, and shall at the time that it is pronounced be signed and dated by the Judge or by the Judges concurring there in.

25. Thus by this analogy, one may conclude that, any disposal by CIT(A) u/s 250 is an order.

Refer Rule 35A of the Income Tax Appellate Rules, 1963

26. One can get a clue from the requirements of Rule 35A above where by clauses (ii) and (iv) of Rule 35A(2)

35A. (1)(a)…

(b) ..

(2) Every application shall be neatly typed on one side of the paper and shall be in English and shall set forth concisely the following :—

(ii) the result of the appeal filed before the CIT (Appeals), if any ;

(iv) the date of filing the appeal before the Tribunal and its number, if known;

27. There is no mandate that following two conditions must be there. These things are optional.

§ the result of appeal before CIT(A)

§ Particulars of appeal before ITAT

Can stay of demand alone can be segregated from quantum appeal?

28. Power to stay demand is inherent and comes with main quantum appeal.

29. It is so because the justice should not get evaporated in the process of appeal being disposed off.

30. It is so because if the demand is enforced, it may culminate into a permanent loss to the assessee and may land him in a position where the ultimate disposal of appeal [ even favourable] may become infructuous

31. A quantum appeal reflected in the grounds of appeal are the various points by which the assessee is aggrieved and has sought a relief.

32. Needless to say, stay of demand is one such relief sought by assessee.

33. When a stay of demand is rejected or partly accepted, out of total quantum appeal, a part thereof gets decided.

34. Thus the quantum appeal gets divided into two parts, one being matter of stay of demand which stands decided and other points pending before the CIT(A).

My personal view -:

35. I do not know whether this order will be upheld at various other judicial forums.

36. It is a novel way of interpreting the law.

37. Practically speaking, there is huge pendency of cases at all judicial forums especially at High Court.

38. For a small [ even for medium ] scale assessee, approaching a high court by way of writ is a costly affair in terms of time and cost for filing the writ and the uncertainty regarding the timing of disposal and relief sought.

39. Comparatively, ITAT is a better forum for above purposes. Otherwise also, an order of CIT(A) is appellable before ITAT only.

40. Legislation may consider an amendment in law making it more clear that a disposal of stay of demand by CIT(A) is appellable before ITAT.

( Author CA. Yogesh S. Limaye can be reached at yogesh@salcoca.com)