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Judgment
At the request of the learned Counsel for the parties, the petition itself is being disposed of at the stage of admission.
This petition under Article 226 of the Constitution is directed against the orders dated 7 March 2014 and 5 September 2014 of the Income Tax Appellate Tribunal (Tribunal). By the impugned orders, the Tribunal in exercise of its inherent powers refused to grant complete stay of recovery of demand of Rs.125.52 crores made for the Assessment Year 2009-10 in an appeal pending by directing the petitioners to pay Rs.3 Crores per month commencing from April 2014.
Briefly the facts necessary for the disposal of this petition are:
(a) For the Assessment Year 2008-09 the petitioner claimed deduction under Section 80IC of the Income Tax Act, 1961 ("the Act") to the extent of Rs.247.10 crores. As some international transactions were also involved in that Assessment year the transactions were referred to the Transfer Pricing Officer and thereafter the Assessing Officer on 29 December 2011 passed a Draft Assessment Order inter alia accepting the petitioner''s claim for deduction under Section 80IC of the Act. The petitioner accepted the Draft Assessment Order. However, in the final Assessment Order dated 29 February 2012 the Assessing Officer for the first time denied deduction under Section 80IC of the Act for failure to fulfill the conditions therein.
(b) Being aggrieved the petitioner carried the order dated 29 February 2012 of the Assessing Officer for the A. Y. 2008-09 in appeal before the Commissioner of Income Tax (Appeals [CIT (Appeals)]. At the same time, the petitioner also filed a writ petition being writ petition no. 1324 of 2012 challenging the final order dated 29 February 2012 being beyond the draft assessment order which was accepted by the petitioner. This Court by the order dated 4 September 2012 while refusing to interfere in writ jurisdiction granted liberty to the petitioner to file a stay application before the CIT (Appeals) and the Assessing Officer was granted liberty to either decide the application for stay or to finally decide the appeal, as he deems fit. The CIT (Appeals) has not disposed of the stay application filed by the petitioner and is hearing the appeal for final disposal. The CIT (Appeals) has not till date disposed of the petitioner''s appeal from the order dated 29 February 2012 passed by the Assessing Officer for the A.Y. 2008-09. The appeal before the CIT (Appeals) is awaiting remand reports from the Assessing Officer, the last such request being made on 8 July 2014.
(c) In the meantime, the Assessing Officer by an assessment order dated 28 January 2014 for the A.Y. 2009-10 denied the petitioner''s claim for deduction under Section 80IC of the Act. This denial was for the reasons given by the Assessing Officer in the order dated 29 February 2012 passed for the A.Y. 2008-09. Consequently a demand of Rs.125.53 crores was raised against the petitioner. The order dated 28 January 2014 was passed by the Assessing Officer consequent to the directions of the Dispute Resolution Panel (DRP) after consideration of his Draft Assessment Order for the A.Y. 2009-10.
(d) The petitioner being aggrieved by the order dated 28 January 2014 filed an appeal to the Tribunal inter alia challenging the denial of deduction under Section 80IC of the Act. In this case the petitioner could not file an appeal to the CIT (Appeals) as the final assessment order dated 28 January 2014 for A.Y. 2009-10 was filed consequent to the directions of the DRP. The petitioner also filed an application for stay of the demand of Rs.125.53 crores before the Tribunal till the disposal of the appeal for A.Y. 2009-10 by the Tribunal.
(e) By order dated 7 March 2014, the Tribunal disposed of the petitioner''s stay application. After observing that the issues arising for consideration for A.Y. 2009-10 in respect of deduction under Section 80IC of the Act are similar to the issues arising in the preceding A. Y. i.e. A. Y. 2008-09, which is pending before the CIT (Appeals), the petitioner''s undertaking to make all possible efforts for expeditious disposal of the appeal for A.Y. 2008- 09 pending before CIT (Appeals) was recorded. In the circumstances, the Tribunal directed the petitioner to pay a sum of Rs.5 crores on or before 25 March 2014 and thereafter a sum of Rs.3 crores every month commencing from April 2014 and the balance amount of demand was stayed. The Tribunal also directed Registry to place for out of turn the appeal for A.Y. 2009-10 for final hearing on 17 June 2014.
(f) Thereafter the events which have taken place are recorded as hereunder:
(g) On 5 September 2014 by order the Tribunal extended the stay on similar terms as contained in the order dated 7 March 2014 and declining to accept the petitioner''s contention that further requirement of payment of monthly instalments of Rs.3 crores be dispensed with while extending the stay. The petitioner''s submission that the delay in disposal of appeal which had been listed out of turn by the order dated 7 March 2014 was only in view of adjournments taken by the Revenue. The Tribunal held that the adjournments would have been granted for only good and sufficient cause and a prayer for the variation of the terms of a stay ought to have been made by the petitioner at the time when adjournments were granted at the behest of the Revenue. Moreover, the Tribunal also recorded the fact that the Petitioner''s appeal for A.Y. 2008-09 on an identical issue was pending with CIT (Appeals) and it was in the Revenue''s interest to have the appeal disposed of by the CIT (Appeals) as expeditiously as possible. However in view of the peculiar facts, the date of hearing of the petitioner''s appeal was preponed to 1 October 2014 as agreed to by both the sides while making it clear that no adjournments will be granted except for exceptional circumstances.
(h) In accordance with the order dated 5 September 2014 the petitioner continued making the payment of Rs.3 crores per month.
Further events which took place in respect of the pending appeal for A.Y. 2009-10 were as under:
(i) On 10 November 2014, the Tribunal adjourned the hearing to 9 December 2014, after recording that the ground relating to deduction under Section 80IC for the A.Y. 2009-10 the Assessing officer and the DRP had merely followed the order dated 29 February 2012 of the Assessing officer for the A.Y. 2008-09. Thus, the petitioner was directed to address it on the issue whether the Tribunal could proceed ahead with the hearing of A.Y. 2009-10 in the absence of the orders for A.Y. 2008-09 being before them on the next occasion.
(j) Thereafter the following events took place resulting in the appeal not being disposed of by the Tribunal till date.
The grievance of the petitioner is that the Tribunal is not deciding its appeal for A.Y. 2009-10 on the ground that the same is dependent upon the result in the appeal for A.Y. 2008-09 pending before the CIT (Appeals). This even though the appeal before the CIT (Appeals) is pending since 2012 and the Revenue seems to be deliberately delaying it. In the meantime the Tribunal is insisting that the petitioner deposit / pay the demand for A.Y. 2009-10. Thus ignoring the fact that for A.Y. 2009-10 an implied stay has been granted by the CIT (Appeals) as he has not disposed of the stay application and is in the process of hearing the appeal finally. The Revenue is deliberately not expediting the hearing before the CIT (Appeals) inspite of being was aware that the stay granted by the Tribunal in its order dated 7 March 2014 had posted the hearing of the appeal out of turn on 17 June 2014. Even thereafter the CIT (Appeals) is not expediting the decision in the pending appeal before him for A.Y. 2008-09. Further even after the order dated 5 September 2014 was passed and the final hearing was preponed, the Revenue has been taking time before the Tribunal and on the other hand the CIT (Appeals) is not finally disposing of the petitioner''s appeal for A.Y. 2008-09 only with a view to enable the Revenue to collect Rs.3 crores per month so as to recover the entire tax demanded for A.Y. 2009-10. In the above view, it is submitted that either the deposit of Rs.3 crores per month directed by the Tribunal be done away with or the Tribunal be directed to hear and dispose of the matter on the next occasion.
As against the above, Mr. Ahuja, learned Counsel appearing for the Revenue states that there is no deliberate delay in hearing the appeal for the A.Y. 2008-09 by the CIT (Appeals). Mr. Ahuja, learned Counsel for the Revenue placed reliance upon the affidavit in reply filed by Mr. Rajesh Menon, Deputy Commissioner of Income Tax and points out that consequent to the CIT (Appeals) seeking a remand report, the Assessing Officer by letters dated 23 January 2013, 14 February 2013, 22 August 2013, 6 February 2014 and 15 May 2014 has made a remand reports. This itself is evidence of the fact that the CIT (Appeals) is seized of the appeal and is giving full attention to it for satisfactory disposal of the appeal before him. It is further stated by Mr. Ahuja that one more remand report has been called for by then CIT (Appeals) and the remand report is under preparation by the Assessing Officer. In the above circumstances, it is submitted that the suspicion of the petitioner that there is a deliberate delay by the CIT (Appeals) in disposing of its appeals for the A. Y. 2008-09 is not justified. This Court should not interfere with the orders of the Tribunal dated 7 March 2014 and 5 September 2014. In the alternative, it is submitted that this application could very well be made by them before the Tribunal which would consider the same on its own merits but this Court should not interfere. Moreover, the clarification sought for by the Tribunal in its order dated 10 November 2014 could be addressed by the petitioner before the Tribunal on the next occasion.
Normally, we would not interfere with an exercise of discretion under its inherent powers by the Tribunal particularly on the terms on which a stay is granted so long as it is a considered decision and not perverse. However, in present case looking at the overall facts and the manner in which the Revenue has acted has impelled us to consider the order passed by the Tribunal. In the present facts, for the A. Y. 2009-10, the DRP and consequently the Assessing Officer have denied the petitioner''s claim for deduction under Section 80IA by merely following the order dated 29 February 2012 of the Assessing Officer for the A.Y. 2008-09. So far as A.Y. 2008-09 is concerned, the petitioner has carried the order of the Assessing Officer in Appeal to the CIT (Appeals). The CIT (Appeals) is seized of the appeal since 2012. The petitioner was last given a hearing by the CIT (Appeals) on 28 March 2014 after having received four remand reports. Thereafter another remand report was called for by the CIT (Appeals) and that was received by the CIT (Appeals) on 15 May 2014 from the Assessing Officer. However no hearing thereafter was given by the CIT (Appeals) although the Revenue was aware that the appeal has been fixed by the Tribunal on 17 June 2014 in its order dated 7 March 2014. The Revenue was also conscious of the fact that the order of the CIT (Appeals) for A.Y. 2008-09 may be relevant to decide the appeal before the Tribunal. However, Mr. Ahuja invites our attention to the affidavit in reply wherein Mr. Menon states that the process of submission of the last remand report called for by the CIT (Appeals) is in progress. This remand report was called for by a letter dated 8 July 2014 and it is still under preparation.
It is the above conduct on the part of the Revenue in not expediting the process of disposal of appeal for A.Y. 2008-09 before the CIT (Appeals) which seems to indicate that it is deliberate as it works to the advantage of the Revenue. This seems to be particularly so as the appeal has been pending since 2012 before CIT (Appeals).
The Tribunal appears to be prima facie of the view as is evident from the orders dated 7 March 2014, 5 September 2014 and the order sheet dated 10 November 2014 which was handed across the bar that in the absence of the appeal for the A.Y. 2008-09 also being before them, it may not be possible for the Tribunal to dispose of an appeal for the A. Y. 2009-10. This may not be entirely correct. So far as A. Y. 2008-09 is concerned, the Assessing Officer denied the petitioner''s the benefit of Section 80IC of the Act (although the same was not part of the Draft Assessment Order), the petitioners have carried the same in appeal before the CIT (Appeals). The same is still awaiting disposal since 2012. So far as the A.Y. 2009-10 is concerned, the order of the Assessing Officer has been passed consequent to the directions of the DRP. Consequently such an order passed pursuant to the directions of the DRP is appeallable directly to the Tribunal. The DRP as well as Assessing Officer for the A.Y. 2009-10 relied upon the finding of the Assessing Officer in his order dated 29 February 2012 for the A.Y. 2008-09 for denying the petitioner the benefit of Section 80IC of the Act. Therefore, in a manner of speaking the DRP directions and the Assessment Order for A.Y. 2009-10 incorporates the findings and the reasons in the Assessment Order dated 29 February 2012 for the A. Y. 2008-09 so far as the claim for deduction under Section 80IC of the Act, into its order. In the petition, it is stated that the petitioner has filed with the Tribunal all documents and other relevant material which are filed before the CIT (Appeals) for the A.Y. 2008-09. In any case, Mr. Mistri, the learned Senior Counsel for the petitioner undertakes to file further papers and documents in the form of a paper book, which are available with them in respect of the documents / evidence before the Assessing Officer at the time of passing the order for the A. Y. 2008-09. A set of the paper book which has already been filed containing the material documents / evidence which were filed before the CIT (Appeals) along with the further paper book, if any, would be furnished to the Revenue on or before 3 January 2015. In case the Revenue seeks to bring to the notice of the Tribunal any other evidence which was before the lower authority it may do so by filing a paper book on or before 10 January 2015.
One more fact which must be borne in mind that so far as A.Y. 2008-09 is concerned, there is an implied stay granted by the Commissioner of Income Tax in as much as he is deciding the entire appeal on merits without insisting upon any predeposit. We are informed that the stay application is still pending before the CIT (Appeals) although some amount has been voluntarily paid by the petitioner. Therefore, when the basis of the demand for the A.Y. 2009-10 is said to be the order passed in A.Y. 2008-09 in respect of which the Revenue has impliedly granted the stay, there is no reason why the petitioner should be directed to deposit any amounts for disposal of its appeal for the A.Y. 2009-10. Be that as it may, the Tribunal has directed the petitioner to pay a sum of Rs.3 crores per month from April 2014 onwards. The petitioners had been paying the same till date. The appeals have been listed for hearing on 13 January 2015. The Tribunal should take up the appeal on 13 January 2015 and hear the parties for the purposes of disposal of the appeal as expeditiously as possible. As pointed out herein above, it may not be necessary for the Tribunal to await the result of the proceedings before the CIT (Appeals) for the A.Y. 2008-09 to dispose of the petitioner''s appeal for the A.Y. 2009-10 when all the relevant record which were a subject matter of the orders passed for the A.Y. 2008-09 are also available with the Tribunal.
We are constrained to direct the Tribunal to take up this matter on an urgent basis only in view of the fact that we notice that since 2012 the appeal has been pending before the CIT (Appeals) for the A.Y. 2008-09. When the Tribunal passed the order of stay on 7 March 2014 as well as on 5 September 2014 dates were fixed for out of turn final hearing of appeals and in fact in the order dated 5 September 2014 while proponing the hearing to 1 October 2014 consent of both the parties was taken for that date and yet on 1 October 2014 the Revenue sought time. It is in the above circumstances that we direct the Tribunal to take up the petitioners appeal for final disposal on the scheduled date i.e. 13 January 2015. We are otherwise not interfering with the impugned orders of the Tribunal which has directed the petitioner to deposit Rs.3 crores per month.
However, it is made clear that in case the Tribunal is unable to dispose of the appeal on 13 January 2015 for any reason (not on account of the petitioner) then the direction of the Tribunal requiring the petitioner to deposit Rs.3 crores per month would stand modified to the extent that the petitioner would not be required to deposit any further amounts till the disposal of the appeal by the Tribunal. This would apply so long as the adjournments are not on account of the petitioner.
Accordingly, the petition is disposed of with the above directions.