1985 PLP (Trib (PTD)

"Arguments heard at length. Mr.‑ Amin‑e‑Ajam prays that this application may be adjourned, for further hearing to May 19, 1984, as it involves do important point of law concerning the jurisdiction of the Tribunal in granting stay of recovery of the demand of tax issued pursuant to the re‑assessment made by the Income‑tax Officer in compliance with the impugned order of the C.I.T. (Appeals). He undertakes that no proceedings for recovery of tax demand in question shall be adopted against the assessee until the hearing of this application on Saturday, the 19th instant. Mr. Faruq Ali has no objection to his request being acceded to in view of the clear undertaking given by him (the D.R.) to keep the recovery proceedings of tax suspended until the hearing of the application. It is, therefore, ordered that this application shall come up for further hearing .on 19‑5‑1984. The main appeal shall also be fixed for hearing on that date. The parties' representatives have been informed accordingly." When the case came up for hearing on 19‑5‑1984 the parties', represen tatives concluded their arguments and the Tribunal ordered the stay of the recovery of tax demand until 28th instant. The order of the Tribunal, dated 19‑5‑1984 reads as follows:‑ "Mr. A... A... Advocate assisted by Mr. S... F... A... F.C.A., for the applicant and Mr. A . . .O. . . A . . . DR assisted by Mr. A... A... S..., I.T.O. for the respondent are present." Further arguments heard and concluded. The main appeal has been adjourned at the request of C .I. T. Final order on this application cannot be passed today as one of us (Chairman) is leaving for L .. on official tour for a week. It is, therefore, tentatively ordered that the recovery of the tax demand relating to the year under appeal will not be enforced till 28th instant. Parties informed. (Sd.) Chairman. (Sd.) Member... ".

4. The learned Departmental. Representative raised a preliminary objection to the effect that the Tribunal is not competent to grant stay to the applicant for the obvious reason that the assessment order passed on 2‑5‑1984 is not the subject‑matter of this appeal. In his submission the application is misconceived and is liable to be dismissed as such. He vociferously argued that the subject‑matter of this appeal is the order of the learned Commissioner of Income‑tax (Appeals), which in turn disposed of the assessee's appeal against the assessment order of the Income‑tax Officer, dated 13‑11‑1983. 'The learned Departmental Representative contended that the assessee can assail the assessment order, dated 2‑5‑1984 only by filing an appeal before the first Appellate Authority (A . A . C . or C . I . T . (Appeals), but it cannot seek remedy from the Appellate Tribunal by filing the stay application. According to him, no tax demand was left to be realised or recovered from the assessee pursuant to the impugned order of the Commissioner of Income tax (Appeals) or the assessment by the Income‑tax Officer on 13‑11‑1983, which was the subject‑matter of the appeals before the Commissioner of Income‑tax (Appeals). Mr. A... A... learned ‑counsel for the applicant, on the other hand, submitted that the demand created by virtue of the assessment, dated 2‑5‑1984 is the result of the impugned order. He submitted that even the said assessment order clearly mentions that it has been made under section 59(1)(3)/132 of the Income‑tax Ordinance. The counsel, therefore, urged that the jurisdiction of the Income‑tax Officer depends upon the validity of the impugned order passed by the Commissioner of Income‑tax (Appeals). In his submission the demand raised by the Income‑tax Officer which is sought to be stayed, is the demand under section 132 of the Ordinance. The Income‑tax Officer could not frame the second assessment had there been no order of the Commissioner of Income‑tax (Appeals) directing him to do so. The second order of assessment is, therefore, the counsel so maintained, not independent. Relying upon section 66 of the Ordinance he maintained that no assessment could be made where an appeal is carried under section

134. The framing of the second assessment was, according to the counsel, gross abuse of process of law. It is, he emphasised, truly speaking a fraud on the statute. He drew our attention to the assessee's authorised representative's letter, dated 25‑4‑1984 to contend that further assessment proceedings were sought to be stayed as the making of fresh assessment was likely to create legal confusion. He further submitted that the Income‑tax Officer has passed the assessment order, dated 2‑5‑1984 under the mistaken notion that the assessment under section 59(1) was to be finalized during assessment year ending on 30th June, 1984. The counsel urged with vehemence that by necessary implication section 66 of the Ordinance debars tax Officer from making re‑assessment and there is, otherwise no specific provision for re‑assessment. The counsel contended that the applicant had already paid Rs.25 Lakh after the first assessment and that he is not possessed of the funds so as to pay the demand in question inasmuch as the assessee's overdraft limits have already exhausted. Even otherwise, in his submission, the0appellant would be burdened with the payment of interest on the amount of over‑drawings and it would thus unnecessarily. be put to financial loss. The counsel, therefore, prayed that the Tribunal, in exercise of its inherent jurisdiction, which is recognised by subsection (6) of the section 134 of the Ordinance., order the stay demand raised pursuant to the impugned order.

5. We have given our earnest consideration to the submissions made at the bar. We do not find any force in the contention of the learned Departmental Representative. The Income‑tax Officer has, passed assessment order; dated 2‑5‑1984 only by virtue or the order of the Commissioner of Income‑tax (Appeals) on assessee's appeal relating to the assessment year 1983‑

84. The Income‑tax Officer has while framing the assessment, dated 2‑5‑1984 seemed to have been influenced by the fact, as is evident from the perusal of the said order, that the assessment under section 59(1) could not' be made after 30th June, 1984. The Income‑tax Officer was definitely wrong in saying so in view of the specific provisions of law as contained in section 66(1)(c) of the Ordinance. At any rate, it can also at the same time be not said that he could not frame the fresh assessment in compliance with the order of the Commissioner of Income‑tax. There is no bar to his doing so. The contention of Mr. A... A... in this behalf is based on the misreading of clause (c) of subsection (1) of section 66.of the Ordinance subsection (1) of section 66 of the Ordinance which provides limitation for assessment in certain cases without putting a specific clog to the obligation of the Income‑tax Officer to give effect to any finding or direction contained in the order of the first appellate authority. No doubt the demand to be stayed has been created by virtue of .the assessment, dated 2‑5‑1984 but the fact remains that it would not have come into existence had there been no order of setting aside the original assessment order. If the Commissioner of Income‑tax (Appeals) would have confirmed the impugned assessment before him then the demand originally raised would have remained in the files and there would have been no occasion for the Income‑tax Officer to make, fresh assessment. So, also had the Commissioner of Income‑tax (Appeals) allowed some reliefs to the assessee or enhanced the assessed income, the demand originally created would have been amended accordingly and a fresh demand in terms of the order of the Commissioner of Income tax (Appeals) could have been issued. The demand issued in furtherance of the assessment order, dated 2‑5‑1984 is in no manner different than the one, which could have been issued upon the original assessment being varied by the first Appellate Authority. The Commissioner of Income‑tax (Appeals) in the instant case preferred to set aside the assessment thereby directing the Income‑tax Officer to create a fresh demand on the assessee after making fresh assessment.

6. For the foregoing reasons the contention of the learned Departmental Representative is repelled and it is held that the Tribunal is competent to stay the recovery of the tax demand relating to the year under appeal notwithstanding the fact that it has been made pursuant to a re‑assessment order inasmuch as, the justifiability of the demand is concerned, it would depend upon the fate of assessee's appeal against the order of the Commissioner of Income‑tax (Appeals).

7. Now we proceed to consider whether it is a fit case wherein the recovery of the tax demand should be stayed. A perusal of the impugned order and the grounds of appeal taken by the appellant give us a fair impression that the appellant seems to have a good prima facie case. There is likelihood of interference with the impugned order of they Commissioner of Income‑tax (Appeals). The next question, which immediately engages our attention is whether some irreparable loss or injury is likely to be caused to the applicant if the stay is not granted. Here we find that 'the assessee has failed to prove on record through any reliable material that‑ it was financially not in a position to pay the tax demand. The oral statement made by the learned counsel for the applicant or for that matter the averment made in the application itself that it did not have resources, to pay the tax, is itself not satisfactory. Even the balance‑sheet of the assessee has riot been placed before us so, as to satisfy us that the assessee is really not in a position to, pay the tax demand in question. On the contrary, ‑ there is no averment about it even in the affidavit of Mr. A... a Director of the applicant Company. Moreover, we find that the assessee is still not without remedy as he may approach the tax authorities for granting stay of payment ‑of tax or for allowing Payment in instalments. A reference to subsection (2) of section 85 of the Income‑tax Ordinance lends support to our view.

8. For the foregoing reasons we do not find it to be a fit case for grant of stay of recovery of tax relating to the year under appeal.

10. In the result, the application is rejected. M.B.A Application rejected.