O.P. Khaitan vs Assistant Commissioner of Income Tax

Though a written counter and reply have not been filed, looking to the nature of short controversy arising for decision, the petition is heard finally with the consent of the learned counsel for the parties.

Rule DB

The relevant facts are found mentioned in the order dated 27-8-1998

whereby CM 8694 of 1998 seeking interim relief filed by the petitioner was disposed of and it is not necessary to restate the same facts.

The subject-matter of challenge before this Court is the order dated 21-7-1998, (Annexure-J) passed by the Tribunal whereby the petitioner''s application seeking an interim order of stay during the pendency of appeal was rejected. Having heard the learned counsels for the parties, we have only two observations to make touching the order passed by the Tribunal. The guiding factors to be kept in view, while considering a prayer for stay of the recovery of revenue are well-settled. The applicant must have a strong prima facie case. If the recovery is directed to be stayed, care should be taken to protect the interest of revenue as well. The other relevant fact is that along with an additional affidavit dated 1-9-1998, a number of documents have been filed by the petitioner before this Court. The learned counsel for the petitioner has submitted that these documents were available on the record of the Commissioner (Appeals) but admittedly they did not form part of the paperbook filed by the petitioner before the Tribunal. The learned counsel, however, submitted that if only these papers would have been before the Tribunal, the Tribunal itself would have felt satisfied of the availability of a strong prima facie case in favour of the petitioner and could have been legitimately persuaded to grant an interim order of stay of recovery pending the hearing of the appeal. The omission is sought to be explained by submitting that the petitioner remained under an impression that the record of the Commissioner (Appeals) would be available before the Tribunal and the petitioner would be in a position to make submission by referring to these documents.

During the course of hearing before this Court, the learned counsel for the petitioner submitted that either this Court may grant such interim relief to the petitioner as may remain in operation during the hearing of the appeal by the Tribunal or else the petitioner may be allowed the liberty of reiterating his prayer before the Tribunal. In the interest of justice and on the facts and in the circumstances of this case, we are of the opinion that the alternate prayer so made on behalf of the petitioner deserves to be allowed; moreso, when the petitioner has also offered to furnish such security as would protect the interest of the revenue. The petitioner himself is stated to be out of the country. His son who is also power of attorney holder of the petitioner has filed an undertaking on affidavit on behalf of the petitioner which we have perused and a copy thereof has been delivered to the senior standing counsel for the revenue.

Having perused the contents of the undertaking on affidavit and having heard the learned counsel for the parties, the petition is disposed of in terms of the following directions:

"1. The impugned order dated 21-7-1998 passed by the Tribunal is set aside. The application filed by the petitioner under rule 35A of the income tax Rules, 1962 shall be taken up for consideration afresh.

Till the date of passing orders on the application for stay or the decision in appeal, whichever be earlier, the recovery from the petitioner under the order impugned before the Tribunal shall remain stayed. Such stay order passed by this Court shall cease to operate on orders being passed by the Tribunal on the application for stay or appeal (whichever be earlier) which order shall on the date of passing come into operation in place of this order.

The undertaking on affidavit filed by the son and power of attorney holder of the petitioner is accepted as an undertaking by the petitioner. Indeed the learned counsel for the petitioner has also offered before the Court that the same may be so accepted. The property mentioned by the petitioner in the said affidavit/undertaking shall be available for recovery in the event of the demand against the petitioner being ultimately upheld and shall not be encumbered, charged or alienated in any manner whatsoever until the appeal is decided.

Orders u/s 226(3) of income tax Act, shall be withdrawn forthwith by the respondents awaiting the orders of the Tribunal."

In view of the short controversy arising for decision in the appeal, the Tribunal is requested to accommodate the appeal filed by the petitioner for hearing out of turn and dispose of the same at the earliest preferably within a period of three months from the date of communication of this order.