1968 INSC 0255 Income-Tax Officer, Cannanore Vs M. K. Mohammed Kunhi Civil Appeal No. 1164 of 1966 (A. N. Grover, J. C. Shah, V. Ramaswami-I JJ) 11.09.1968 JUDGMENT GROVER J. ­ The short but important question which is involved in this appeal by special leave from a judgment of the Kerala High Court is whether the Income-tax Appellate Tribunal has the power, under the relevant provisions of the Income-tax Act, 1961 (hereinafter called "the Act"), to stay the recovery of the realization of the penalty imposed by the departmental authorities on an assessee during the pendency of an appeal before it. The assessee, who is the respondent, was imposed penalties in the sum of Rs. 18,000, Rs. 1,700 and Rs. 14,000 respectively in respect of the assessment years 1954-55, 1960-61 and 1961-62. These penalties were imposed under section 271(1)(c) read with section 274(2) of the Act for concealment of particulars of income and furnishing inaccurate particulars. The assessee preferred appeals to the Income-tax Appellate Tribunal and made an interim prayer for stay of collection of the penalties imposed. The Tribunal declined to order any stay holding that it had no power to grant such a prayer. The assessee then moved the High Court under article 226 of the Constitution. The High Court held that the Tribunal had the power to stay the proceedings as also the collection of the penalties pending the appeal since that power was incidental and ancillary to its appellate jurisdiction. The Tribunal was consequently directed to dispose of the stay application in accordance with law. The relevant provisions of the Act may be first noticed. Section 156 provides that when any tax, interest, penalty, fine or any other sum is payable in consequence of any order passed under the Act, the Income-tax Officer shall serve upon the assessee a notice of demand in the prescribed form specifying the sum so payable. Under section 220(1) any amount specified in the notice of demand under section 156 has to be paid within 35 days of the service of the notice or within such lesser period as may be specified under the proviso to sub- section (1). If the amount is not paid within the period limited extended (the assessee can ask for an extension) the assessee shall be deemed to be in default. Sub-section (6) of section 220 provides that where an assessee has presented an appeal under section 246 the Income-tax Officer may, in his discretion and subject to such conditions as he may think fit, treat the assessee as not being in default so long as the appeal remains pending. Section 221 provides for the imposi "254. Orders of Appellate Tribunal. - (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 255 gives the procedure of the Appellate Tribunal. Sub- sections (5) and (6) of this section need alone be noticed : "(5) Subject to the provisions of this Act, the Appellate Tribunal shall have power to regulate its own procedure and the procedure of Benches thereof in all matters arising out of exercise of its powers or of the discharge of its functions, including the places at which the Benches shall hold their sittings. (6) The Appellate Tribunal shall, for the purpose of discharging its functions, have all the powers which are vested in the income-tax authorities referred to in section 131, and any proceeding before the Appellate Tribunal shall be deemed to be a judicial proceeding within the meaning of sections 193 and 228 and for the purpose of section 196 of the Indian Penal Code (XLV of 1860) and the Appellate Tribunal shall be deemed to be a civil court for all the purposes of section 195 and Chapter XXXV of the Code of Criminal Procedure, 1898 (V of 1898)." Section 131 may at this stage be referred to. It gives to the Income- tax Officer, the Appellate Assistant Commissioner and the Commissioner the same powers as are vested in the court under the Code of Civil Procedure when trying a suit in respect of the matters specified in the section. But these powers relates to discovery and inspection, enforcing the attendance of witnesses, compelling production of books of account, etc., issuing commissions and allied matters. There can be no manner of doubt that by the provisions of the Act or the Income-tax Appellate Tribunal Rules, 1963, powers have not been expressly conferred upon the Appellate Tribunal to stay proceedings relating to the recovery of penalty or tax due from an assessee. At the same time it is significant that under section 220(6) the power of stay by treating the assessee as not being in default during the pendency of an appeal has been given to the Income-tax Officer only when an appeal has been presented under section 246 which will be to the Appellate Assistant Commissioner and not to the Appellate Tribunal. There is no provision in section 220 under which the Income- tax Officer or any of his superior departmental officers can be moved for granting stay in the recovery of penalty or tax. It may be that section 225, notwithstanding that a certificate has been issued to the Tax Recovery Officer for the recovery of any tax (the position will be the same with regard to penalty), the Income-tax Officer may gran "It is the duty of the judges to apply the laws, not only to what appears to be regulated by their express dispositions, but to all the cases where a just application of them may be made, and which appear to be comprehended either within the consequences that may be gathered from it." Maxwell on Interpretation of Statutes, eleventh edition, contains a statement at page 350 that "where an Act confers a jurisdiction, it impliedly also grants the power of doing all such acts, or employing such means, as are essentially necessary to its execution. Cui jurisdiction date est, ea quoque concessa esse videntur, sine quibus jurisdictio explicari non potuit." An instance is given based on Ex parte Martin that "where an inferior court is empowered to grant an injuction, the power of punishing disobedience to it by commitment is impliedly coveyed by the enactment, for the power would be useless if it could not be enforced." The High Court in the present case has referred to certain decisions under the Motor Vehicles Act in which the question arose whether an interim order of stay could be passed although section 64(2) of the Motor Vehicles Act as amended did not expressly confer a power on the authority to pass such an order. It was held in those cases that the power to stay was a necessary corollary to the power to entertain an appeal or revision : Swarnambika Motor Service v. Wahita Motor Service; Themmalapuram Bus Transport Ltd. v. Regional Transport Officer, Malabar. The Full Bench decision in Dahrmadas v. State Transport Appellate Tribunal related to the question whether a remand could be ordered in exercise of appellate jurisdiction under section 64 of the Motor Vehicles Act in the absence of any express power to that effect existing in the statute. It was held that the power to remand was incidental to and implicit in the appellate jurisdiction created by section 64. According to the decision in Burhanpur Tapti Mill Ltd. It is well known that the Income-tax Appellate Tribunal is not a court but it exercise judicial powers. The Tribunal's powers in dealing with appeals are of the widest amplitude and have in some cases been held similar to and identical with the powers of an appellate court under the Civil Procedure Code : see Commissioner of Income-tax v. Hazarimal Nagji and Co.5 and New India Assurance Co. Ltd. v. Commissioner of Income-tax/Excess Profits Tax. In Polini v. Gray, this is what Jessel M. R. said about the powers of the Court of Appeal to grant stay at page 443 : "It appears to me on principle that the court ought to possess that jurisdiction, because the principle which underlies all orders for the preservation of property ending litigation is this, that the successful party in the litigation, that is, the ultimately successful party, is to reap the fruits of that litigation, and not obtain merely a barren success. That principle, as it appears to me, applies as much to the court of first instance before the first trial, and to the Court of Appeal before the second trial, as to the court of last instance before the hearing of the final appeal." There are certain decisions, however, in which difficulty was felt that the Appellate Tribunal did not possess the power to stay recovery during the pendency of an appeal. In Vetcha Sreeramamurthy v. Income- tax Officer, Vizianagaram, the assessee had not been stayed during the pendency of an appeal before the Tribunal. The controversy centered in the case mainly on the scope of the discretionary power conferred by section 45 of the Indian Income-tax Act, 1922, on the Income-tax Officer. It was held that a writ petition to compel the Income-tax Officer to exercise his discretion under section 45 or to exercise it honestly and objectively was not barred. But, on the merits, the court declined to issue a writ. Viswanatha Sastri J., in his separate judgment, made the following observations at page 271 : "Lastly, it has to be observed that section 45 of the Income-tax Act is somewhat cryptic in its terms and merely gives the Income-tax Officer power to declare a person to be not a default pending the appeal. There is no provision for stay similar to Order XLI, rules 5 and 6, of the Civil Procedure Code. There is no conferment of an express power of granting a stay of realisation of the tax, though the effect of an order in favour of the assessee under section 45 of the Act is a stay. Nor is there a provision for allowing the tax to be paid in instalments or for taking security for deferred payment. Neither the Appellate Assistant Commissioner nor the Appellate Tribunal is given the power to stay the collection of tax. Whether the law should not be made more liberal so as to enable an assessee who has preferred an appeal, to obtain from the appellate forum, a stay of collection of the tax, either in whole or in part, on furnishing suitable security, is a matter for the legislature to consider." It is interesting that in another case, Pollisetti Narayana Rao v. Commissioner of Income-tax, the same High Court held that stay could be granted by it pending reference of a case by the Appellate Tribunal to the High Court. This power the High Court had under section 151 of the Civil Procedure Code and under article 227 of the Constitution. The High Court, in the present case, referred to a passage from Halsbury's Laws of Englands, third edition, volume 20, page 705, where it is stated that"no tax is payable while the assessment is the subject-matter of an appeal, except such part of the tax assessed as appears to the Commissioners seized of the appeal not to be in dispute." This statement is apparently based on the provisions of the English statutes and it is not possible to derive any assistance from it. Section 255(5) of the Act does empower the Appellate Tribunal to regulate its own procedure, but it is very doubtful if the power of stay can be spelt out from that provision. In our opinion the Appellate Tribunal must be held to have the power to grant stay as incidental or ancillary to its appellate jurisdiction. This is particularly so when section 220(6) deals expressly with a situation when an appeal is pending before the Appellate Assistant Commissioner, but the Act is silent in that behalf when an appeal is pending before the Appellate Tribunal. It could well be said that when section 254 confers appellate jurisdiction, it impliedly grants the power of doing all such acts, or employing such means, as are essentially necessary to its executions and that the statutory power carries with it the duty in proper cases to make such orders for staying proceeding as will prevent the appeal if successful from being rendered nugatory. A certain apprehension may legitimately arise in the minds of the authorities administering the Act that, it the Appellate Tribunal proceed 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 grant loss because of the inordinate delay in the disposal of appeals by the Appellate Tribunal. It is needless to point out that the power of stay by the Tribunal is not likely to be exercised in a routine way or as a matter of course in view of the special nature of taxation and revenue laws. It will only be when a strong prima facie case is made out that the Tribunal will consider whether to stay the recovery proceedings and on what conditions, and the stay will be granted in most deserving and appropriate cases where the Tribunal is satisfied that the entire purpose of the appeal will be frustrated or rendered nugatory by allowing the recovery proceedings to continue during the pendency of the appeal. For all the reasons given above, the appeal fails and it is hereby dismissed. But, in view of the entire circumstances, the parties are left to bear their own costs. Appeal dismissed.