2005 PLP (Trib (PTD)

(12) That again on expiry of stay granted vide order dated 9-4-2004 the applicant moved another Miscellaneous Application M.A. (Stay) No. 146/LB of 2004 for extension of stay, whereupon the Hon'ble. Tribunal was pleased to extend the stay of recovery, proceedings till 15th of May, 2004 or the decision of the Reference Application, whichever is earlier vide order dated 6-5-2004. (13) That after expiry of stay granted by the Hon'ble Tribunal, vide order dated 6-5-2004, the applicant has not other option but to file another application for extension of stay. The learned A.R. and the learned D.R. have been heard. The learned A.R. submitted that although the Honourable Appellate Tribunal had decided the appeal, the miscellaneous application and the reference application referring two questions of law arising out of the order of the Appellate Tribunal to the Honourable High Court for decision and no matter pertaining to the appeal was pending before the Appellate Tribunal yet this forum had power to grant stay of recovery proceedings. In support of his contention the A.R. relied on a case reported as 1988 PTD 907 wherein the Supreme Court of India has held that grant of stay of recovery of tax was within the jurisdiction of, Appellate Authority and pendency of reference before the High Court would not detract from that jurisdiction of Appellate Authority. The operative part of the judgment of the apex Court of India reads as follows: "In an appropriate case, if the assessee feels that a stay of recovery pending disposal of the reference is necessary or is in the interest of justice, then the assessee is entitled to apply before the Appellate Authority to grant, a stay until disposal of reference by the High Court or until such time as the Appellate Authority thought fit. But in case the Appellate Authority acted without jurisdiction or in excessive jurisdiction or in improper exercise of the jurisdiction then the decision of such Appellate Authority can be corrected by the High Courts by issuing appropriate writs under Articles 226 and 227 of the Constitution: It has to be borne in mind that in answering questions or disposing of references either under section 66 of the 1922 Act or section 256 of the 1961 Act the High Courts do not exercise any jurisdiction conferred upon them by the Code of Civil Procedure or the Charters or by the Acts establishing the respective High Courts. Therefore in our opinion it cannot be said that the High Court has inherent power or incidental power in the matter of reference pending before it to grant stay of realization or to grant injunction. That must remain within the jurisdiction of the Appellate Authority and pendency of a reference does not detract from that jurisdiction of the Appellate Authority. In our opinion, therefore, the High Court fell in error in exercising its jurisdiction by passing an order of stay of realization under section 151 of the Code of Civil Procedure in a pending reference. The High Court could have exercised its power if the Appellate Authority had not properly exercised its jurisdiction, not in reference jurisdiction but by virtue of its jurisdiction under Article 225 or Article 227 in appropriate cases." Relying on this judgment the A.R. submitted that the High Court or the Supreme Court had no authority to stay the demand under the Income Tax Ordinance or even under section 151 of the Civil Procedure Code which confers inherent powers upon the Court to make such order as may be necessary for the ends of justice. However the High Court could grant stay of recovery proceedings in appropriate cases in exercise of its Constitutional jurisdiction under Article 199 of the Constitution. It was further submitted that jurisdiction exercised by the High Court in reference is purely advisory and not that of a Civil Court exercising original or appellate or revisional jurisdiction. On the basis of the afore -cited judgment it was further submitted by the learned A.R. that notwithstanding the reference to the High Court the appeal is kept pending before the Appellate Tribunal. There is farce in the arguments of the learned A. R. because when the questions of law have been answered by the High Court in its advisory jurisdiction, the Appellate Tribunal has to pass thereafter such orders as are necessary to dispose of the case conformably to such judgment of the High Court. In this regard it will be appropriate to quote subsection (6) of section 136 of the I. T. Ordinance, 1979, which reads as follows: "(6) The High Court upon the hearing of any such case, shall decide the questions of law raised thereby and shall deliver its judgment thereon containing the grounds on which such decision is founded and shall send a copy of such judgment under the seal of the Court and the signature of the Registrar to the Appellate Tribunal which shall pass such orders as are necessary to dispose of the case conformable to such judgment." Similar provision is contained in subsection (1) of section 260 of the Income Tax Ordinance, L

961. This reads as follows: "260(1). The High Court or the Supreme Court upon hearing any such case shall decide the questions of law raised therein, and shall deliver its judgment thereon containing the grounds on which such decision is founded, and a copy of the judgment shall be sent under the seal of the Court and the signature of the Registrar to the Appellate Tribunal which shall pass such orders as are necessary to dispose of the case conformably to such judgment. " Commenting on the disposal of the case conformably to High Court's decision the learned authors of the Law and Practice of Income Tax Messrs Kanga and Palkhivala's in 7th Edition of their book at page 1169 have written as follows: "Disposal of case conformable to Court's decision.

After a reference has been answered by the Court, it is the duty of the Tribunal under this section to pass such an order as is necessary to dispose of the case conformably to the judgment. Such an order would be passed under section 254 read with this section; and the Tribunal cannot thereafter review or revise its own order. But the order, that the Tribunal can pass under this section is not merely a formal order, for instance, if the Court has held the ground of assessment to be incorrect, the Tribunal may pass an order confirming the assessment on another ground based on facts or findings, already on record or may deal with the remaining points which were earlier left undecided. The Supreme Court ruled in CIT v. India Molasses Co. Ltd. That when the Court lays down the legal principles and declines to answer the question because the Tribunal has not considered some aspects of the case the Tribunal is entitled, while disposing of the case under this section to take additional evidence. The Madras High Court has upheld this power of the Tribunal even where the Court answered the question." It will be seen that order to dispose of the case conformable to the judgment of the High Court would be an order passed under section

254. This section of the Indian Income Tax Act reads as follows:-- "254(1). The Appellate Tribunal may, after giving both the parties to the appeal an opportunity of being heard, pass such orders thereon as it thinks fit,

" Section 254 (subsections (1) and (2) of section 135 of the Income Tax Ordinance, 1979 being the corresponding provisions) is the section under which the Tribunal is empowered to pass orders on appeals filed before it. Since the order which is passed by the Appellate Tribunal after decision of the questions of law referred to the High Court is an order under section 135 of the Income Tax Ordinance, 1979, it is an appellate order of the Appellate Tribunal in the exercise of its jurisdiction conferred upon it under the income tax law to dispose of appeals. This shows that when certain questions of law arising out of the order of the Appellate Tribunal have been referred to the High Court for its determination the appellate jurisdiction of the Appellate Tribunal does not cease in that case as the proceedings of that appeal are under the law still pending before the Appellate Tribunal until the order it passed by the Tribunal in such appeal conformably to the decision of such questions of law by the High Court. The order so passed is also not merely a formal order because if the Court has held the ground of assessment to be incorrect, the Tribunal may pass an order confirming the assessment on another ground based on facts or findings already on record or may deal with the remaining points which were earlier left undecided. Similarly if the Court declines to answer a question because the Tribunal has not considered some aspects of the case, it is entitled, while disposing of the case under section 135 read with subsection (6) of section 136 of the Income Tax Ordinance, 1979 to take additional evidence. In view of the foregoing the Appellate Tribunal is still vested with the Appellate Authority over such appeals which although have been decided by the Appellate Tribunal but questions of law arising therefrom have been referred to the High Court in its advisory jurisdiction for decision. Since the Appellate Tribunal is not divested of its appellate jurisdiction in such cases it has authority to grant stay of recovery proceedings and accordingly stay of recovery proceedings is granted in the present case for a further period of two months or till the order is passed under subsection (6) of section 136 whichever is earlier. H.B.T./315/Tax(Trib.) Stay of recovery proceedings granted.