MOHAMMAD KUNHI M K Vs. INCOME TAX OFFICER

JUDGEMENT

(1.) The question for decision in this writ petition by an assessee under the Income Tax Act, 1961 is whether, pending an appeal before it, the appellate tribunal can stay recovery of the penalty imposed. Learned counsel for the petitioner contended that it can, on two grounds, first, that the power to stay recovery of tax or penalty is ancillary or incidental to the appellate power and may be exercised as such and second, that the appellate tribunal must be deemed to be a court, and to be vested, as in the case of a civil court, with inherent powers, including the power to stay recovery. We think that the petitioner is entitled to succeed on the first ground, and that it is unnecessary to consider the validity of the second ground. That the power to, stay is a necessary corollary and is incidental to the appellate power has been ruled by Rajagopala Ayyangar, J. as a Judge of the Madras High Court, in Swarnambikai Motor Service v. Wahita Motor Service, Short notes 1956 (2) MLJ 12 (W. P. 427 and 438 of 1956). The short report of the case sets out the relevant passage as follows:

(2.) The question as to whether the appellate authority under the Motor Vehicles Act has power to remand the case to the subordinate authority, was answered in the affirmative by a full bench of this court, in Dharmadas v. State Transport Appellate Tribunal 1962 KLT 505 where the learned Chief Justice, relying on Sutherland, 3rd edition, Volume III, Page 19, observed, that "where a statute confers powers or duties in general terms, all powers and duties incidental and necessary to make such legislation effective are included by implication" and held that the power to remand the case "is incidental to and implicit in the appellate jurisdiction created by that section (S.64 of the Motor Vehicles Act, 1939)." There is of course a distinction that the power to remand is integrally connected with, and pertains to the actual exercise of the appellate power, while a power to stay and preserve the status quo, is but incidental or ancillary to it, but this ought not to make any difference in the result. In an early case, Panchanan Singha Roy v. Dwarka Nath Roy, 3 Calcutta Law Journal 29 Mookerjee, J. observed:

(3.) But in Vetcha Sreeramamuthy v. The Income Tax Officer, Vizinagaram 30 ITR 252 Viswanatha Sastri, J, said with reference to the Indian Income Tax Act, 1922, that "(here 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 S.45 of the Act is a stay...Neither the Appellate Assistant Commissioner nor the Appellate Tribunal is given the power to stay the collection of tax". The power under S.45 is but to treat the assessee as not being in default, and is exercisable only by the income tax authority and is therefore a different power and is no substitute far the power of the appellate authority to stay the proceedings or recovery. As for the need for a power to stay, the same learned Judge stated thus, at page 268 of the report: