ITO (OSD) TDS 3(1), V. VODFONE ESSAR LTD,

MA 156/MUM/2010

• Counselvise Citation: [2010] 123 COUNSELVISE.COM (IT) 4980 (ITAT-MUMBAI)
• Duration Of Justice: 6 month(s) 6 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 15-09-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: misc
• Appeal Filed On: 09-03-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUM EET KUMAR
• Assessee Lawyers: SOLI E DASTUR
• Keywords: Recovery proceedings; Search and seizure; Period of limitation; Application of stay
• Section: 201(1); 246

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL F BENCH, MUMBAI. BEFORE SHRI R.V.EASWAR, PRESIDENT AND SHRI B.RAM AKOTAIAH , AM M.A.NO.156/MUM/10 IN S.A.NOS.224 TO 226/MUM/2009 (ARISING OUT OF ITA.NOS. 6058 TO 6060/MUM/09 & 155 TO 157/M/10) (ASSESSMENT YEARS : 2007-08 TO 2009-10) THE INCOME TAX OFFICER(OSD) TDS-3(1), MUMBAI. VS. M/S. VODAFONE ESSAR LTD., PENINSULA CORPORATE PARK, GANPATRAO KADAM MARG, LOWER PAREL, MUMBAI-400 013. PAN:AAACU5332B) (APPLICANT) (RESPONDENT) APPLICANT BY : MR. SUMEET KUMAR, DR RESPONDENT BY : MR. SOLI E.DASTUR O R D E R PER R.V.EASWAR, PRESIDENT: THIS IS A MISCELLANEOUS APPLICATION FILED BY THE REVENUE PURPORTING TO BE U /S.254(2) OF THE IT ACT AGAINST THE ORDER PASSED BY THE TRIBUNAL ON 26-2- 2010 GRANTING STAY OF THE DEMAND OF THE INTEREST CH ARGED U/S.201(1A) OF THE ACT. 2. THE BRIEF FACTS GIVING RISE TO THE APPLICATION A RE AS FOLLOW. THE ASSESSEES APPEALS IN ITA NOS.6058-6060/M/2009 AND 155- 157/M/2010 WERE POSTED FOR HEARING ON 26-2-2010 BEF ORE THE TRIBUNAL. THE REVENUE MOVED AN APPLICATION DATED 25 -2-2010 FOR ADJOURNMENT ON THE GROUND THAT SOME FURTHER TIM E IS NEEDED FOR PREPARATION AND THAT THE DR HAD TO ARGUE ANOTHE R SEARCH AND SEIZURE MATTER. THE ASSESSEE DID NOT OBJECT TO THE APPLICATION BUT POINTED OUT THAT THE ASSESSING OFFI CER WAS TAKING STEPS TO RECOVER THE INTEREST AMOUNT OF ABOU T RS.8.9 CRORES CHARGED U/S. 201(1A) AND HAS ASKED THE ASSES SEE TO PAY UP WITHIN 3 DAYS, THAT SUCH ACTION WAS ALSO APPROVE D BY THE CIT MA NO.156/MUM/10 2 AND THAT THE DEMAND OF THE SHORTFALL OF THE TAX RAI SED BY THE ORDER PASSED U/S 201(1) HAS ALREADY BEEN STAYED BY THE TRIBUNAL AND THAT THE INTEREST BEING CONSEQUENTIAL, THE RECOVERY THEREOF SHOULD ALSO BE STAYED. THE PRAYER WAS OPPOS ED BY THE REVENUE. THE TRIBUNAL, ON A CONSIDERATION OF THE MA TTER, PASSED AN ORDER SHEET ENTRY ON 26-2-2010 AS FOLLOWS:- THE DEPARTMENT HAS FILED AN APPLICATION FOR ADJOURNMENT. WHILE THE LEARNED COUNSEL FOR THE ASSESSEE HAD NO OBJECTION, HE POINTS OUT THAT THE ASSESSING OFFICER IS TAKING STEPS TO RECOVER INTERE ST UNDER SECTION 201(1A) AND HAS ASKED THE ASSESSEE TO PAY UP WITHIN THREE DAYS. HE HAS ALSO DRAWN OUR ATTENTION TO THE CITS ORDER APPROVING THE ASSESSIN G OFFICERS ACTION. ATTENTION WAS ALSO DRAWN TO THE ASSESSEES APPLICATION DATED 22.02.2010 SEEKING STAY AND ALSO POINTS OUT THAT THE TRIBUNAL HAS STAYED THE RECOVERY OF THE TAX UNDER SECTION 201(1) AND INTEREST UNDER SECTION 201(1A) BEING CONSEQUENTIAL, RECOVERY OF THE SAME MAY ALSO BE STAYED. PRAYER OPPOSED BY LEARNED CIT (DR). AFTER CONSIDERING THE MATTER, WE CONSIDER IT FIT TO STAY THE RECOVERY OF THE INTEREST UNDER SECTION 201(1A) ON THE SAME TERMS AND FOR THE SAME PERIOD AS IN THE TRIBUNALS ORDER GRANTING STAY OF DEMAND UNDER SECTION 201(1). THE APPEAL IS POSTED FOR HEARING ON 8 TH MARCH, 2010. ORDERS PRONOUNCED IN OPEN COURT. 3. IT IS AGAINST THE AFORESAID ORDER OF THE TRIBUNA L THAT THE REVENUE HAS FILED THE PRESENT APPLICATION, PURPORTE D TO BE U/S.254(2), ASKING FOR VACATING THE STAY SO THAT IT CAN PROCEED FURTHER FOR THE COLLECTION OF SOVEREIGN DUES. MA NO.156/MUM/10 3 4. THE ARGUMENT OF THE DEPARTMENT IS THAT NO APPEAL WAS PENDING BEFORE THE TRIBUNAL AT THE INSTANCE OF THE ASSESSEE AGAINST THE LEVY OF INTEREST U/S 201(1A) SO THAT TH E POWER TO GRANT STAY CAN BE EXERCISED. IT WAS ALSO CONTENDED THAT THE DECLARATION OF THE ASSESSEE TO BE IN DEFAULT UNDER SUB-SECTION (1) OF SECTION 201 AND THE LEVY OF INTEREST UNDER SUB-S ECTION (1A) THEREOF ARE INDEPENDENT OF EACH OTHER AND THE FOLLO WING AUTHORITIES WERE CITED IN SUPPORT OF THE CONTENTION : A) CIT V ELI LILLY AND CO (INDIA) PVT. LTD 312 ITR 225 (SC) B) KARNATAKA URBAN INFRASTRUCTURE DEVELOPMENT FINANCE CORPORATION V CIT (2008) 308 ITR 297 (KARNATAKA) C) CIT V DHANALAKSHMY WEAVING WORKS (2000) 245 ITR 13 (KERALA) THE ASSESSEE TOOK UP A PRELIMINARY OBJECTION TO THE EFFECT THAT AN APPLICATION U/S.254(2) AGAINST THE ORDER UNDER T HE PROVISO TO SECTION 254(2A) GRANTING STAY WAS NOT MAINTAINABLE SINCE UNDER THE FORMER, AN APPLICATION FOR RECTIFICATION CAN BE FILED ONLY AGAINST THE ORDER UNDER SUB-SECTION (1) OF SECTION 254. IN OUR VIEW THE PRELIMINARY OBJECTION IS NOT MAINTAINABLE FOR TWO REASONS. FIRSTLY, THOUGH IT IS STYLED AS AN APPLICA TION FOR RECTIFICATION U/S.254(2), WHAT HAS BEEN FILED BY TH E REVENUE IS IN SUBSTANCE ONLY AN APPLICATION FOR VACATING THE STAY . SUCH AN APPLICATION, EITHER FOR VACATING THE STAY OR MODIFY ING THE TERMS THEREOF, CAN ALWAYS BE FILED AGAINST AN ORDER OF ST AY GRANTED BY THE TRIBUNAL, IF THE CIRCUMSTANCES UNDER WHICH THE STAY WAS GRANTED HAVE UNDERGONE SOME MATERIAL CHANGE OR IF T HE STAY HAS BEEN GRANTED UNDER A MISTAKEN VIEW OF THE MATTER. I T MAY NOT BE REFERABLE TO ANY PARTICULAR STATUTORY PROVISION BUT IT SHOULD BE TREATED AS AN APPLICATION INVOKING THE INHERENT POW ER OF THE TRIBUNAL. SECONDLY, THE POWER TO GRANT STAY IS INCI DENTAL OR ANCILLARY TO THE POWER TO DISPOSE OF THE APPEAL AND IS THUS, IN OUR HUMBLE UNDERSTANDING, REFERABLE ONLY TO SUB-SEC TION (1) OF SECTION 254. THE PROVISO TO SUB-SECTION (2A) DOES N OT CONFER ANY MA NO.156/MUM/10 4 POWER ON THE TRIBUNAL TO GRANT STAY. SUCH A POWER I S EMBEDDED IN SUB-SECTION (1) ITSELF, HAVING REGARD TO THE OBS ERVATIONS OF THE SUPREME COURT IN ITO, CANNANORE V M.K. MOHAMMED KUN HI (1969) 71 ITR 815 @ 822 TO THE EFFECT THAT THE APPE LLATE JURISDICTION U/S 254 ITSELF CARRIES WITH IT THE DU TY IN PROPER CASES TO MAKE SUCH ORDERS FOR STAYING PROCEEDING AS WILL PREVENT THE APPEAL IF SUCCESSFUL FROM BEING RENDERED NUGATO RY. THE PROVISO INSERTED BY THE FINANCE ACT, 2001 AND MODIF IED BY THE FINANCE ACT, 2007 W.E.F. 1-6-2007 MERELY REGULATES OR RESTRICTS THE DURATION OF THE PERIOD FOR WHICH THE STAY WOULD REMAIN EFFECTIVE. THE REPOSITORY OF THE POWER TO GRANT STA Y IS NOT THE PROVISO TO SUB-SECTION (2A), BUT IT IS SUB-SECTION (1) ITSELF WHICH DEALS WITH THE APPELLATE JURISDICTION OF THE TRIBUN AL, AS EXPLAINED IN THE JUDGMENT CITED ABOVE. 5. IN THE AFORESAID VIEW OF THE MATTER, WE ARE UNAB LE TO UPHOLD THE PRELIMINARY OBJECTION OF MR. DASTUR, THE LEARNED COUNSEL FOR THE ASSESSEE. THE APPLICATION FILED BY THE REVENUE IS THEREFORE MAINTAINABLE. 6. WE MAY NOW DEAL WITH THE OTHER ARGUMENTS ADDRESS ED BEFORE US BY BOTH THE SIDES. THE PROVISO BELOW SUB- SECTION (2A) READS AS UNDER: PROVIDED THAT THE APPELLATE TRIBUNAL MAY, AFTER CONSIDERING THE MERITS OF THE APPLICATION MAD E BY THE ASSESSEE, PASS AN ORDER OF STAY IN ANY PROCEEDINGS RELATING TO AN APPEAL FILED UNDER SUB- SECTION (1) OF SECTION 253, FOR A PERIOD NOT EXCEE DING ONE HUNDRED AND EIGHTY DAYS FROM THE DATE OF SUCH ORDER AND THE APPELLATE TRIBUNAL SHALL DISPOSE OF T HE APPEAL WITHIN THE SAID PERIOD OF STAY SPECIFIED IN THAT ORDER. THE TRIBUNAL CAN THUS PASS AN ORDER OF STAY IN ANY PROCEEDINGS RELATING TO AN APPEAL FILED UNDER SUB-SECTION (1) O F SECTION 253. THE POWER IS THUS NOT CONFINED TO A CASE WHE RE AN MA NO.156/MUM/10 5 APPEAL IS PENDING BEFORE THE TRIBUNAL, BUT ALSO EXT ENDS TO ANY PROCEEDINGS RELATING TO AN APPEAL PENDING BEFORE IT . MR. DASTURS ARGUMENT IS THAT THE ORDER LEVYING INTEREST U/S.201 (1A) IS AN ORDER WHICH WAS PASSED IN PROCEEDINGS RELATING TO T HE APPEAL OF THE ASSESSEE FILED AGAINST THE ORDER U/S.201(1) AND THAT MOREOVER, INTEREST BEING AN ADJUNCT OF THE MAIN ORD ER PASSED UNDER SUB-SECTION (1), UNLESS RECOVERY THEREOF IS S TAYED THE RELIEF, IF ANY GRANTED TO THE ASSESSEE IN THE APPEA L WOULD BE RENDERED NUGATORY. IT WOULD ONLY BE A PYRRHIC VICTO RY. 7. IT SEEMS TO US THAT IT WOULD BE THE BETTER WAY O F LOOKING AT THE POWER TO GRANT STAY THAN THE ONE CANVASSED ON B EHALF OF THE DEPARTMENT. THOUGH THE ARGUMENT THAT THE TRIBUNAL C ANNOT PASS AN ORDER OF STAY WHERE IT HAS NO JURISDICTION OVER THE PROCEEDINGS BY WAY OF A PENDING APPEAL IS SOUND, HA VING REGARD TO THE OBSERVATIONS MADE BY THE SUPREME COURT IN MO HAMMED KUNHIS CASE IT SEEMS TO US THAT WHERE CIRCUMSTANCE S SO JUSTIFY, AND IF THE LANGUAGE OF THE PROVISO WARRANTS IT, THE POWER CAN ALSO BE EXERCISED OVER PROCEEDINGS WHICH ARE STRICT LY NOT IN APPEAL BEFORE THE TRIBUNAL BUT ARE RELATED TO THE A PPEAL. AS WE HAVE ALREADY NOTED, THE LANGUAGE OF THE PROVISO IS IN BROAD TERMS AND TAKES IN EVEN PROCEEDINGS RELATING TO AN APPEAL FILED UNDER SUB-SECTION (1) OF SECTION 253. IN THE CASE BEFORE US, THE ORDER THAT IS PENDING IN APPEAL BEFORE THE TRIBUNAL IS THE ONE PASSED UNDER SUB-SECTION (1) OF SECTION 201 HOLDING THE ASSESSEE TO BE IN DEFAULT. BUT THEN, SUB-SECTION (1 A) DECLARES THAT IN CASE OF DEFAULT IN DEDUCTING THE TAX OR PAY ING IT TO THE GOVERNMENT AFTER DEDUCTION, THE PERSON LIABLE TO DE DUCT THE TAX SHALL BE LIABLE TO PAY INTEREST. IT APPEARS TO US T HAT SUB-SECTION (1A) IS AN ADJUNCT TO SUB-SECTION (1) AND IS IN THA T SENSE CLOSELY RELATED. ONE CANNOT CONCEIVE OF A SITUATION WHERE T HE ASSESSEE IS DEEMED TO BE IN DEFAULT BY AN ORDER UNDER SUB-SE CTION (1) BUT NO INTEREST IS CHARGED ON HIM UNDER SUB-SECTION (1A ). MA NO.156/MUM/10 6 TECHNICALLY, IT APPEARS PERMISSIBLE EVEN TO PASS A SINGLE ORDER, HOLDING THE ASSESSEE TO BE IN DEFAULT AND ALSO CHAR GING INTEREST FOR THE DEFAULT. WE MAY REFER TO SECTION 246 WHICH PROVIDES FOR ORDERS APPEALABLE TO THE CIT(A). CLAUSE (I) OF SUB- SECTION (1) MAKES AN ORDER UNDER SECTION 201 APPEALABLE TO HI M. THIS CLAUSE MAKES NO DISTINCTION BETWEEN AN ORDER PASSED UNDER SUB-SECTION (1) OF SECTION 201 HOLDING THE ASSESSEE TO BE IN DEFAULT AND AN ORDER UNDER SUB-SECTION (1A) CHARGIN G INTEREST FOR THE DEFAULT. IT IS THUS POSSIBLE TO TAKE THE VI EW THAT AN ORDER CHARGING INTEREST UNDER SUB-SECTION (1A) OF SECTION 201 IS PART OF THE ORDER DEEMING THE ASSESSEE TO BE IN DEFAULT PAS SED UNDER SUB-SECTION (1) THEREOF, THOUGH TECHNICALLY TWO SEP ARATE ORDERS ARE PASSED IN A GIVEN CASE. 8. THE PROVISO TO SUB-SECTION (2A) OF SECTION 254 M AKES A DISTINCTION BETWEEN AN APPEAL PENDING BEFORE THE TR IBUNAL AND THE PROCEEDINGS THAT RELATE TO IT. IN VIEW OF WHAT IS STATED IN THE PRECEDING PARAGRAPH, A CASE OF CHARGE OF INTEREST U NDER SUB- SECTION (1A) OF SECTION 201 WOULD FALL TO BE CONSID ERED AS PROCEEDINGS RELATED TO THE APPEAL AGAINST THE ORDER UNDER SUB- SECTION (1) OF SECTION 201WHICH IS PENDING BEFORE T HE TRIBUNAL. 9. WE PUT IT TO MR. DASTUR AS TO WHETHER, IF WHAT H E CONTENDS IS CORRECT, IT WOULD BE PERMISSIBLE FOR TH E TRIBUNAL TO STAY RECOVERY OF PENALTY FOR CONCEALMENT IN A CASE WHERE NO APPEAL AGAINST THE ORDER OF PENALTY IS PENDING WITH THE TRIBUNAL AND IT IS ONLY THE APPEAL AGAINST THE ASSESSMENT TH AT IS PENDING. HE FRANKLY STATED THAT IN SUCH A CASE IT WOULD BE D IFFICULT TO EXERCISE THE POWER OF STAY AGAINST THE PENALTY BECA USE PENALTY IS NOT AN AUTOMATIC LEVY CONSEQUENT TO THE ASSESSMENT AND THERE ARE SEVERAL CONDITIONS TO BE SATISFIED BEFORE A CON CLUSION IS REACHED THAT THE ASSESSEE HAS CONCEALED HIS INCOME OR FURNISHED INACCURATE PARTICULARS THEREOF. HE HOWEVE R CLARIFIED MA NO.156/MUM/10 7 THAT THE POWER TO GRANT STAY IN RELATED PROCEEDINGS CAN ONLY BE EXERCISED WHERE THE RELATED PROCEEDINGS ARE IN THE NATURE OF CONSEQUENTIAL PROCEEDINGS WHERE NO FURTHER CONDITIO NS ARE REQUIRED TO BE COMPLIED WITH. IN HIS SUBMISSION, PE NALTY PROCEEDINGS WILL NOT FALL UNDER THIS CATEGORY. WE S EE FORCE IN THE CONTENTION AND IN THE DISTINCTION SOUGHT TO BE MADE BY MR. DASTUR, WHICH IS WARRANTED BY THE LANGUAGE OF THE P ROVISO TO SUB-SECTION (2A) OF SECTION 254. 10. MR. DASTUR DREW OUR ATTENTION TO THE JUDGMENT O F THE ANDHRA PRADESH HIGH COURT IN ITO, J-WARD, CIRCLE II , HYDERABAD V KHALID MEHDI KHAN (MINOR) (1977) 110 IT R 79. IN THIS CASE THE TRIBUNAL WAS HEARING AN APPEAL AGAINS T THE ORDER PASSED BY THE CIT U/S.263 OF THE INCOME TAX ACT. O N AN APPLICATION BY THE ASSESSEE WHO WAS IN APPEAL, THE TRIBUNAL GRANTED STAY OF THE FRESH ASSESSMENT PROCEEDINGS WH ICH WERE TO BE COMPLETED PURSUANT TO THE ORDER OF THE CIT. THE DEPARTMENT QUESTIONED THE ORDER OF STAY BEFORE THE HIGH COURT IN THE WRIT FILED AGAINST THE ORDER OF STAY GRANTED BY THE TRIB UNAL ON THE GROUND THAT IN VIEW OF THE PERIOD OF LIMITATION PRE SCRIBED BY SECTION 153(2A) FOR COMPLETION OF THE FRESH ASSESSM ENT PROCEEDINGS THE POWER OF THE TRIBUNAL MUST BE DEEME D TO HAVE BEEN CURTAILED. THIS CONTENTION WAS REJECTED BY THE HIGH COURT. IN THIS CASE, THERE WAS NO APPEAL PENDING AGAINST T HE ASSESSMENT BEFORE THE TRIBUNAL. HOWEVER, THE TRIBUN AL FELT, ON HEARING THE APPEAL AGAINST THE ORDER OF THE CIT U/S .263, THAT IN ORDER TO ENSURE THAT THE SUCCESS OF THE ASSESSEE IN THE APPEAL WAS NOT RENDERED NUGATORY IT WAS NECESSARY AND IN T HE INTEREST OF JUSTICE TO STAY THE FRESH ASSESSMENT ORDER TO BE PASSED BY THE ITO. THIS DECISION SHOWS THAT THE CONTOURS OF THE P OWER TO GRANT STAY CAN BE WIDENED IN A FIT CASE, TAKING INTO ACCO UNT THE CONSEQUENCES THAT MAY FOLLOW IF THE RECOVERY ACTION IS ALLOWED TO BE PROCEEDED WITH. IN THE CITED CASE, IF THE FRESH ASSESSMENT WAS MA NO.156/MUM/10 8 ALLOWED TO BE PROCEEDED WITH AS DIRECTED BY THE CIT , ADDITIONS AS SUGGESTED IN THE ORDER OF THE CIT COULD HAVE BEE N MADE AND THE TAXES THEREON COULD HAVE BEEN SOUGHT TO BE RECO VERED WHILE THE APPEAL AGAINST THE ORDER OF THE CIT, WHICH AUTH ORISED THE ASSESSING OFFICER TO MAKE A FRESH ASSESSMENT, WOULD ITSELF BE PENDING. IF THE APPEAL WERE TO BE ALLOWED BY THE TR IBUNAL EVENTUALLY AND THE ORDER OF THE CIT BE SET ASIDE, T HEN THE VERY AUTHORITY TO MAKE A FRESH ASSESSMENT WOULD HAVE BEE N KNOCKED DOWN. HOWEVER, IN THE MEANTIME, THE ASSESSING OFFIC ER COULD HAVE COLLECTED THE TAXES, THUS RENDERING THE SUCCES S IN THE APPEAL BEFORE THE TRIBUNAL NUGATORY. 11. SIMILARLY, IN THE CASE BEFORE US, IT WOULD BE A NOMALOUS TO ALLOW THE INTEREST CHARGED U/S.201(1A) TO BE RECOVE RED EVEN WHEN THE ASSESSEES APPEAL AGAINST THE ORDER U/S.20 1(1) DECLARING IT TO BE IN DEFAULT IS PENDING IN APPEAL BEFORE THE TRIBUNAL. THAT WOULD RENDER THE APPEAL BEFORE THE T RIBUNAL AGAINST THE ORDER DEEMING THE ASSESSEE TO BE IN DEF AULT NUGATORY. THE REVENUE HOWEVER POINTED OUT THAT IN C ASE THE ASSESSEE SUCCEEDED IN THE APPEAL AND THE ORDER U/S. 201(1) IS SET ASIDE, THE INTEREST RECOVERED IN THE MEANTIME C AN BE REFUNDED TO THE ASSESSEE AND NO PREJUDICE WOULD BE CAUSED. THAT IS SO IN ALL CASES BEFORE THE TRIBUNAL WHERE T HE SUCCESSFUL ASSESSEE GETS REFUND OF THE TAXES INCLUDING INTERES T IN APPROPRIATE CASES. IF THAT BE THE CRITERION, THE PO WER TO GRANT STAY VESTED IN THE TRIBUNAL WOULD BE MEANINGLESS AN D CAN, IN EVERY CASE, BE THWARTED BY SUCH AN ARGUMENT. THE PR EJUDICE OR DAMAGE CAUSED TO THE ASSESSEE IS THAT TODAY THE INT EREST WOULD BE RECOVERED, WHICH IN THE PRESENT CASE IS A SUBSTA NTIAL AMOUNT OF RS.8.9 CRORES, DEPLETING THE WORKING CAPITAL OR LIQUID FUNDS OF THE ASSESSEE EVEN WHEN THE VERY QUESTION WHETHER TH E ASSESSEE WAS IN DEFAULT IS PENDING ADJUDICATION BEFORE THE T RIBUNAL. AN ASSESSEE MAY BE FORCED TO BORROW MONIES FOR INTERES T BECAUSE OF MA NO.156/MUM/10 9 RECOVERY OF TAXES WHEN THE MAIN QUESTION RELATING T O HIS LIABILITY IS PENDING DECISION BEFORE THE TRIBUNAL. ALL THIS A LSO CAN CAUSE DAMAGE TO THE ASSESSEE AND CANNOT BE OVERLOOKED MER ELY BECAUSE IN THE ULTIMATE EVENT OF THE ASSESSEE SUCCE EDING, WHICH MAY TAKE CONSIDERABLE TIME, THE MONIES WOULD BE PAI D BACK TO HIM WITH INTEREST IN APPROPRIATE CASES. 12. THE LEARNED SENIOR DR CITED A FEW JUDGMENTS TO SHOW THAT THE ORDERS UNDER SUB-SECTIONS (1) AND (1A) OF SECTION 201 ARE INDEPENDENT OF EACH OTHER. IN CIT V ELI LILLY ( SUPRA), IT WAS OBSERVED IN THIS CASE BY THE SUPREME COURT THAT THE LEVY OF INTEREST UNDER SUB-SECTION (1A) IS COMPENSATORY ME ASURE FOR WITHHOLDING THE TAX WHICH OUGHT TO HAVE GONE TO THE EXCHEQUER. THE LEVY OF INTEREST IS MANDATORY AND THE ABSENCE O F LIABILITY FOR TAX WILL NOT DILUTE THE DEFAULT. SO LONG AS THE DE FAULT SUBSISTS, THE ASSESSEE IS ALSO LIABLE TO PAY INTEREST. THE SU B-SECTIONS WERE NO DOUBT TO BE CONSIDERED INDEPENDENTLY WITHOUT AFF ECTING THE RIGHTS MENTIONED IN EITHER OF THEM. THEY WERE THUS INDEPENDENT IN THE SENSE THAT THE DUTY TO DEDUCT TAX IS ON THE PERSON (DEDUCTOR) WHO IS VICARIOUSLY LIABLE TO PAY THE SAM E, THE REAL LIABILITY BEING THAT OF THE DEDUCTEE WHO IS THE PER SON WHO IS CHARGEABLE TO TAX. THE PERSON WHO IS LIABLE TO DEDU CT THE TAX IS NOT THE PERSON ON WHOM THE TAX IS IMPOSED. THAT HE IS THUS NOT LIABLE PRIMARILY FOR THE PAYMENT OF THE TAX SHALL N OT COME IN THE WAY OF MAKING HIM LIABLE FOR THE DEFAULT (OF NOT DE DUCTING THE TAX) AND ALSO TO PAY INTEREST FOR THE DEFAULT IN DE DUCTING AND PAYING THE TAX TO THE GOVERNMENT. BOTH THE SUB-SECT IONS ARE THUS INDEPENDENT IN THE SENSE THAT DESPITE BEING ON LY VICARIOUSLY LIABLE TO PAY THE TAX, THE DEDUCTOR IS LIABLE TO PAY INTEREST IN CASE OF DEFAULT. HOWEVER, THE LEVY OF I NTEREST IS DEPENDENT ON THE LIABILITY TO DEDUCT THE TAX IN THE FOLLOWING MANNER, WHERE THREE ELEMENTS ARE REQUIRED TO BE TAK EN INTO CONSIDERATION IN CHARGING THE INTEREST AS PER THE J UDGMENT OF THE MA NO.156/MUM/10 10 SUPREME COURT (SUPRA): (A) THE QUANTUM OF TAX ON WH ICH INTEREST IS TO BE CHARGED; (B) THE RATE OF INTEREST AND (C) THE PERIOD FOR WHICH INTEREST IS TO BE CHARGED. ALL THE THREE ELEMENTS COME INTO PLAY ONCE THE ASSESSEE IS HELD TO BE IN D EFAULT UNDER SUB-SECTION (1). THUS, ON A PROPER UNDERSTANDING OF THE JUDGMENT, IT IS OUR HUMBLE VIEW THAT THOUGH BOTH TH E SUB- SECTIONS (1) AND (1A) ARE INDEPENDENT IN A SENSE, T HE CHARGE OF INTEREST IS DEPENDENT ON THE DEFAULT IN THREE WAYS. IT IS THIS PART OF THE JUDGMENT THAT MR. DASTUR HAS RELIED UPON TO CONTEND THAT THE LEVY OF INTEREST UNDER SUB-SECTION (1A) IS IN R ELATED PROCEEDINGS SO THAT THE POWER TO GRANT STAY ON THE RECOVERY OF INTEREST, WHEN THE ORDER DEEMING THE ASSESSEE TO BE IN DEFAULT IS ITSELF PENDING IN APPEAL BEFORE THE TRIBUNAL, CAN B E EXERCISED. IN OUR HUMBLE VIEW, THERE IS MERIT IN THE CONTENTION. 13. THE OTHER TWO JUDGMENTS, ONE OF THE KERALA HIGH COURT (SUPRA) AND THE OTHER OF THE KARNATAKA HIGH COURT ( SUPRA) CITED BY THE LEARNED SR. DR ARE ALSO ON THE SAME LINES AS THAT OF THE SUPREME COURT IN ELI LILLY (SUPRA). 14. THE LEARNED SENIOR DR THEN POSED THE QUERY AS T O WHETHER THE TRIBUNAL WOULD, IN THE ABOVE UNDERSTAND ING OF THE POWER TO GRANT STAY, PROCEED TO STAY THE RECOVERY O F TAX PAYABLE BY AN ASSESSEE FOR A LATER YEAR, WHERE AN APPEAL IS PENDING BEFORE THE TRIBUNAL AT THE INSTANCE OF THE ASSESSEE FOR AN EARLIER YEAR MERELY BECAUSE THE PROCEEDINGS ARE OF THE SAME ASSESSEE AND HENCE RELATED. EACH ASSESSMENT YEAR IS DIFFEREN T AND THOUGH THE ASSESSMENT PROCEEDINGS MAY RELATE TO THE SAME PERSON THEY ARE SEPARATE AND DISTINCT PROCEEDINGS. THEY CANNOT BE SAID TO BE RELATED EVEN IF SOME OF THE ADDITIONS OR DISALLOWANCES OR DISPUTES RAISED ARE COMMON. SECOND LY, THE ANALOGY IS INAPPROPRIATE BECAUSE WHAT WE ARE DEALIN G WITH IS A CASE OF RECOVERY OF INTEREST WHICH IS RELATED TO TH E MAIN DEFAULT MA NO.156/MUM/10 11 IN THREE WAYS AS NOTED EARLIER. IN THE CASE OF THE ASSESSMENT PROCEEDINGS FOR TWO DIFFERENT YEARS THERE CAN BE NO SUCH CONNECTION. IN THE ANALOGY GIVEN BY THE LEARNED SR. DR, THERE IS NO QUESTION OF THE SUCCESS OF THE ASSESSEE IN THE A PPEAL PENDING BEFORE THE TRIBUNAL BEING RENDERED NUGATORY BECAUSE OF RECOVERY OF TAX RELATING TO ANOTHER YEAR WHICH IS NOT PENDIN G IN APPEAL BEFORE THE TRIBUNAL. WE DO NOT UNDERSTAND THE POWER TO GRANT STAY IN THIS MANNER, CERTAINLY NOT IN THE MANNER AP PREHENDED BY THE LEARNED SR. DR. WE ARE RESPECTFULLY BOUND BY THE OBSERVATIONS OF THE SUPREME COURT IN MOHAMMED KUNHI S CASE THAT STAY IS NOT TO BE GRANTED IN A ROUTINE WAY OR AS A MATTER OF COURSE IN VIEW OF THE SPECIAL NATURE OF TAXATION LA WS AND THAT IT WILL BE GRANTED ONLY ON THE EXISTENCE OF A PRIMA FA CIE CASE AND ONLY IN MOST DESERVING AND APPROPRIATE CASES WHERE THE TRIBUNAL IS SATISFIED THAT THE ENTIRE PURPOSE OF TH E APPEAL WILL BE FRUSTRATED OR RENDERED NUGATORY BY ALLOWING THE REC OVERY PROCEEDINGS TO CONTINUE DURING THE PENDENCY OF THE APPEAL. THESE OBSERVATIONS RULE OUT THE APPREHENSION OF THE LEARNED SR. DR. 15. FOR THE SAKE OF COMPLETENESS, WE MUST NOTICE AN OTHER ARGUMENT TAKEN BY MR. DASTUR BASED ON RULE 32 OF TH E APPELLATE TRIBUNAL RULES, 1963. HE POINTED OUT THAT THE ORDER OF STAY WAS ONE OF THE TERMS ON WHICH THE ADJOURNMENT SOUGHT FOR BY THE DEPARTMENT WAS GRANTED AND UNDER THE AFORESA ID RULE THE TRIBUNAL HAS THE POWER TO ADJOURN THE HEARING OF T HE APPEAL ON SUCH TERMS AS IT THINKS FIT. HE THUS CONTENDED THAT SUCH AN ORDER CANNOT BE CONSIDERED AS AN ORDER OF STAY AND DEALT WITH ACCORDINGLY. IN THE LIGHT OF THE VIEW WE HAVE TAKEN IN THE EARLIER PARAGRAPHS, WE CONSIDER IT UNNECESSARY TO DEAL WITH THIS ARGUMENT. MA NO.156/MUM/10 12 16. IN LIGHT OF THE FOREGOING DISCUSSION, WE REJECT THE APPLICATION FILED BY THE REVENUE. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 15 TH DAY OF SEPTEMBER, 2010. SD/- ( B.RAMAKOTAIAH ) SD/- ( R.V.EASWAR ) ACCOUNTANT MEMBER PRESIDENT MUMBAI, DATED 15 TH SEPTEMBER, 2010. SOMU COPY TO : 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT, TDS , MUMBAI. 4. THE CIT(A)-14 , MUMBAI 5. THE DR F BENCH /TRUE COPY/ BY ORDE R ASSTT. REGISTRAR, I.T.A.T, MUMBAI