Pramod Kumar, A.M.
The assessee has moved these stay petitions, under rule 35A of the Appellate Tribunal Rules, 1963, to seek stay on collection/recovery of income-tax demand of Rs. 10,24,699 and Rs. 94,75,718, created by order under section 154 read with section 143(1)(a) and under section 143(3) read with section 148, respectively, for the assessment year 1993-94. The aforesaid demands were created on account of assessing officers recomputation of allowable deduction under section 80HHC. On assessees appeal against this recomputation, the Commissioner (Appeals), instead of giving any relief to the assessee and instead of even examining merits of the recomputation, declined the claim for deduction under section 80HHC per se on the ground that chartered accountants certificate on Form No. 10CCAC was an invalid certificate. The admitted defect in the chartered accountants certificate was that Annexure A to the aforesaid certificate was on a performa which ceased to be effective from 1-4-1992, onwards, though a revised certificate has since been filed before the lower authorities. The learned Commissioner (Appeals) declined to admit the revised certificate and directed the assessing officer to take deduction under section 80HHC at nil. In effect, the Commissioner (Appeals) directed enhancement of assessed income. With these compounded grievances, the assessee had filed appeals before this Tribunal and has also preferred the present stay petitions.
2. Learned counsel for the assessee, with a view to demonstrate that he has a strong prima facie case in appeal, submitted that the assessing officers recomputation of allowable deduction under section 80HHC is wholly erroneous. It was submitted that the chartered accountants certificate in support of deduction under section 80HHC as filed along with the income-tax return, showed the allowable deduction at Rs. 3,09,84,137 which was worked out as per the old formula which admittedly ceased to be effective from 1-4-1992. However, as per the scheme of amendments effective from 1-4-1992, the allowable deduction works out to even higher an amount i.e., at Rs. 4,55,79,721 but the assessing officer has recomputed the allowable deduction at Rs. 2,42,96,210. It was further submitted that the difference between these two figures is explained mainly by following errors committed by the assessing officer :
(a) assessing officer did not exclude Rs. 84,55,318 from direct costs being freight and insurance though this figure was excluded from export turnover .,
(b) the assessing officer did not exclude Rs. 11,15,431 from direct costs though this amount was admittedly on account of loss by silk fabrics destroyed in the fire; and
(c) the assessing officer did not make adjustment in indirect costs for 10 per cent of other income (such as interest income of Rs. 368 lakhs and export entitlements of Rs. 298 lakhs) which works out to Rs. 66,67,316 and which was required to be excluded from indirect costs in terms of para 32.11 of the Central Board of Direct Taxes Circular No. 530.
The learned counsel filed detailed statement to demonstrate that on making these adjustments which were claimed to be mandatory as per provisions of the Income Tax Act, the section 80HHC claim will in fact go up to Rs. 4,55,79,921 as against that of Rs. 3,09,84,137 originally claimed by the assessee, and as against Rs. 2,42,96,210 worked out by the assessing officer in the orders impugned in appeal before us. It was then submitted that Commissioner (Appeals) has not disposed of assessees contentions on the legal grounds about the errors in computation of deduction under section 80HHC, but has rejected the claim of section 80HHC per se on a technical ground i.e., since the Annexure A to certificate on Form No. IOCCAC was on a proforma which ceased to be effective from 1-4-1992, the certificate itself is an invalid certificate and, consequently, no deduction under section 80HHC is admissible. According to the learned counsel, not only that the computation of deduction under section 80HHC has glaring errors, of law, which have not been subject-matter of judicial scrutiny by the lower appellate authority even view taken by the learned Commissioner (Appeals) regarding rejection of claim of deduction under section 80HHC per se merely because annexure A to Form 10CCAC was on old format, is a hyper-technical view and is not in consonance with the judicial precedents on the subject. The assessee, thus, claimed to have a strong prima facie case. On the strength of these submissions, it was prayed that the assessees appeal may be fixed for hearing at the earliest and, pending disposal of appeal, collection of disputed demand may be stayed. The learned counsel also prayed for stay on assessing officers giving effect to the enhancement directed by the Commissioner (Appeals), and made reference to the judgment in ITO v. Khalid Mehdi Khan : 110ITR79(AP) in this regard.
3. Shri D.K. Ghosh, learned Senior Departmental Representative, strongly opposed the stay applications. The learned Departmental Representative submitted that since the assessee has not made out a case for financial stringency nor has he alleged mala fides, it is not a fit case for grant of stay, reliance was placed on the judgment in Asstt. CCE v. Dunlop India Ltd. : 1985ECR4(SC) . In response to Benchs specific question about prima facie merits of computation of deduction under section 80HHC by the assessing officer, the learned Departmental Representative merely submitted that the demands raised by the assessing officer have already been subject to judicial scrutiny by one appellate authority and, therefore, presumption has to be taken against the assessee. According to the learned Departmental Representative merits are required to be discussed only at the time of disposal of appeal itself. It was also submitted that grant of stay is not a matter of normal course and, therefore, merely because assessee has a good prima facie case stay should not be granted. On the strength of these submissions, the learned Departmental Representative urged us to reject the stay applications though, according to the Departmental Representative he had no objection to other prayers of the assessee being accepted.
4. We have heard the rival contentions and though we do not wish to go into merits of the case, we can place on record our satisfaction that at least a strong prima facie case has been successfully made out by the assessee. We have also noticed that the assessee had offered to give an undertaking not to withdraw/encash fixed deposits to the extent of Rs. 3,00,00,000 lying with Ing Bank and Mashreque Bank, New Delhi, we are, keeping in view all the relevant factors, of the considered opinion that it will be just and proper to direct the Registry that this appeal may be taken up for out of turn hearing on 18-12-2000, and to direct the revenue authorities that pending disposal of the appeal or till further orders by the Tribunal, whichever is earlier, no coercive measures should be taken for collection/recovery of these disputed demands aggregating to Rs. 1,05,00,417. As this date of hearing has already been announced in open court, no formal notices need be issued. These directions are, however, subject to the stipulations that the assessee shall not seek any adjournment; the assessee will fully co-operate in expeditious disposal of the appeal; and that the assessee will not withdraw/encash fixed deposits lying with Ing Bank and Mashreque Bank, till these appeals are disposed of. We are also of the view that since these appeals are fixed for hearing within this month itself, the assessing officer should refrain from giving effect to the Commissioner (Appeals)s orders impugned in this appeal, till these appeals are disposed of; order accordingly.
5. Before parting with the matter, we may make some observations on revenue s objection, relying on Honble Supreme Courts observations in Dunlops case (supra), to the stay petition on the ground that paucity of funds has not been sufficiently demonstrated and that for this reason alone stay should not be granted. Honble Supreme Court has indeed decried the practice of granting interim orders merely because assessee is able to show a good prima facie case, but to appreciate true import of Honble Supreme Courts censure, one has to understand the context in which their Lordships expressed such feelings. Their Lordships started with the observation that..' It is indeed a great pity and we wish we did not have to say it but we are signally failing in our duty if we do not do so that some courts, of late, appear to have developed an unwarranted tendency to grant interim orders-interim orders with a grant potential for public mischief-for the mere asking. We find it more distressing that such interim orders, often ex parte and non-speaking, are made by the High Courts by entertaining writ petitions under Article 226 of the Constitution.' Their Lordships, a little later in this order, further observed that :
. . . . . 'There cannot be and there are no hard and fast rules. But prudence, discretion and circumspection are called for. There are several other vital considerations apart from existence of prima facie case. There is the question of balance of convenience. There is the question of irrepairable injury. There is the question of public interest. There are many such factors worthy of consideration. We often wonder why in the case of indirect taxation where the burden has already been passed on to the consumer, any interim relief should be given to the manufacturer, dealer and the like.' It will, therefore, be clear that the context in which Honble Supreme Court disapproved the practice of granting interim orders, solely on the ground that a prima facie case is made out, was relevant to the cases in which High Courts were entertaining writ petitions under Article 226 of the Constitution of India as also the cases in which disputed demands related to indirect taxes where burden has already been passed to the consumer. We cannot be oblivious to the distinction between nature of writ jurisdiction of the Honble High Courts, and the nature of appellate jurisdiction of this Tribunal. In writ proceedings, Honble High Courts step in only when fundamental rights of the petitioner are violated and therefore, they have to resist interfering in the matter until a clear case is made out that not only that an assessee has a strong prima facie case but also that there is a serious threat of infringement to petitioners rights guaranteed under Chapter III of the Constitution. On the other hand, Tribunals jurisdiction is akin to that of an appellate court under the CPC, as observed in CIT v. Hajarimal Nagji & Co. : 46ITR1168(Bom) and in New Indian Assurance Co. Ltd. v. CIT : 31ITR844(Bom) , and right to appeal before the Tribunal is provided in the statute itself. Therefore, observations of Honble Supreme Court in the context of grant of stay in writ proceedings do not have the binding force on, or even direct relevance to, the principles governing grant of stay during these appellate proceedings. In this context, we are reminded of the observations of Honble Supreme Court, in Mumbai Kamgar Sabha v. Abdulbhai Faizullbhai : (1976)IILLJ186SC , that..............
. . . . . . . . 'It is trite, going by Anglophonic principles, that a ruling of superior court is binding in law. It is not of spiritual sanctity but is of ratio-wise luminosity within the edifice of facts where the judicial lamps plays the legal flame. Beyond those walls and de hors the milleu we cannot impart the eternal vernal value to the decision, exalting the doctrine of precedents into prison house of bigotry, regardless of varying circumstances and myriad developments, Realism dictates that a judgment has to be read, subject to the facts directly presented for consideration and not affecting those matters which may lurk in the dark'.
6. We are, therefore, of the view Honble Supreme Courts obiter dicta should not be perceived as a blind mans walking stick, but as luminosity of a judicial lamp in the light of which we have to perform our obligations of imparting justice. On principles governing the decision to grant stay, we undoubtedly find guidance from. Their Lordships observations that though there are no hard and fast rules regarding grant of stay, but prudence, discretion and circumspection are called for and that stay should not be granted as a matter of course. Considerations about balance of convenience, question of irrepairable injury and implications to public interest are to be borne in mind. We are also conscious to the apprehension that 'if the Tribunal proceeds to stay recovery of taxes or penalties payable by or imposed on the assessee as a matter of course, the revenue will be put to great loss because of the inordinate delay in disposal of appeals by the Tribunal, (Income Tax Officer v. M.K. Mohd Kunhi (1969) 71 ITR 815 (SC) at p. 822), and therefore, the grant of stay by this Tribunal is always coupled with grant of an out of turn hearing which, in the present case, is to take place within three weeks from today. In the present case since the appeals are scheduled to be disposed of within next few weeks, and since admittedly there is no serious apprehension to the revenue s rights of recovery being prejudiced by further waiting till the outcome of the appeals, the balance of convenience is in favour of not collecting the demand immediately. We are, therefore, of the considered view that Honble Supreme Courts observations in Dunlops case (supra) cannot be interpreted to mean that this Tribunal is denuded of the powers to grant stay until case for financial stringency is successfully made out by the applicant. However, we see no conflict in holding this view as also adhering to the settled principles governing grant of stay which lay down that financial constraints of the applicant are important, even if not sole of qualifying, consideration in entertaining a stay application, besides considerations like existence of strong prima facie case, balance of convenience and possibilities of revenue s rights of recovery being prejudiced by waiting till the outcome of appeals. In this view of the matter, we are unable to sustain the objection raised by the revenue.
7. In the result, stay petitions are allowed.