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IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH: “I” NEW DELHI
BEFORE SHRI S.V.MEHROTRA, ACCOUNTANT MEMBER
AND
SMT. DIVA SINGH, JUDICIAL MEMBER
INTERIM ORDER IN I.T.A .No.-5797/Del/2012
(ASSESSMENT YEAR-2008-09)
Motorola Solutions India Pvt. Ltd., vs DCIT,
415/2, Mehrauli Gurgaon Road, Circle-2, 4th Floor,
Gurgaon-122001 Vanijya Kunj, HSIIDC Building,
Udyog Vihar Phase-V,
Nr. Shankar Chowk, N.H.-8,
Gurgaon.
PAN-AAACM9343D
(APPELLANT) (RESPONDENT)
Appellant by: Sh.C.S.Aggarwal, Sr. Adv,
Sh. Himanshu Shekhar Sinha, Adv.
Sh.Rajiv Anand, CA
Sh.Sujit Parakha, CA
Sh.Vipin Sharma, CA
Sh.Santdas Wadhwani, CA
Respondent by: Sh.Peeyush Jain, CIT DR
INTERIM ORDER
PER DIVA SINGH, JM
This application has been moved by the assessee in ITA No.-5797/Del/2013
in peculiar circumstances invoking the provisions of section 151 CPC in terms of
judgement of Supreme Court in ITO vs Mohd.Kunhi (1968) 71 ITR 815 (SC) at
819, praying for a refund of the amount recovered by the revenue in alleged
violation of a Stay order dated 13.12.2012 passed by this Tribunal in Stay Petition
No.273/Del/2012 in the said Appeal. While avoiding the danger of over
elaboration at the expense of clarity, in contrast to the opposite extreme of paucity http://www.itatonline.org
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and ambiguity of information on why and under what circumstances this
application has been moved, it would be true and fair that the essential facts are
first set out in a form it can be properly and readily appreciated.
2. In the case of the assessee, order was passed in the stay petition no-
273/Del/2012 in ITA No.-5797/Del/2013 which was disposed in the following
manner :-
“4. In consideration of the application of the assessee in the
light of rival submissions and material on record, we grant of stay
recovery, subject to condition that assessee shall deposit Rs.2.50
crores on or before 21.12.2012 and shall furnish bank guarantee in
the amount involved for which MAP application has been filed, on
or before 31.12.2012, for a period of 180 days or disposal of the
appeal/MAP application, whichever is earlier. However, assessee
shall not seek any adjournment and get finalized the appeal fixed
for hearing on 13.01.2013 or any subsequent date. In case assessee
seeks adjournment or commit default in making payment or furnish
bank guarantee within the stipulated time, the accommodation
herein granted shall stand automatically cancelled and entire
outstanding demand would be recoverable as per law.”
3. Consequent thereto, the appeal of the assessee came up for hearing on
16.01.2013 (in the order passed in the stay petition the date noted is 13.01.2013).
On the said date, the record shows that the appeal was adjourned by the Co-
ordinate Bench with the following noting :-
“Ld. Counsel for the assessee contends that the appeal involved
AMP issue on which the Special Bench order in the case of the LG
Electronics is awaited. Adjourned to 16.4.2013”.
3.1. However on the receipt of notices u/s 221(1) dated 22.03.2013 to the
assessee and notice u/s 226(3) received by the assessee’s bank, the assessee
approached the Tribunal seeking an order barring the department from collection
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of amounts stayed by the Tribunal. On the said request the following
administrative order was passed by the Senior Member:
“Put up before “I” Bench for 14.4.2013
S/d
U.B.S.Bedi
28/03/2013”
3.2. As a result of this, the Stay petition No-273/Del/2012 came to be listed for
hearing on 01.04.2013. Since it was considered appropriate to have an effective
response of the department , the hearing was adjourned to 02.04.2013.
3.3. On the said date on noting that the cause list showed that what was listed
was an already disposed Stay petition No-273/Del/2012 it was indicated that it is
non-maintainable, Ld. AR was put to notice of the said fact and heard on the
aspect. However on considering the orders and judgements relied on behalf of the
assessee, an opinion was formed that they are operating in different facts as therein
the appeal was pending and listed for hearing which was not the position before the
Division Bench on 02.04.2013. In support of the view formed we may mention
that Jurisdiction is not acquired either by the consent of the parties or on a
mistake or error on the part of the Court or Tribunal who proceeds to hear because
and if it was wanting ab-initio, no amount of hearings will confer jurisdiction
thereafter.
3.4. Since the department on the said dated was represented by CIT(Adm.),
Faridabad, Smt. Neena Kumar; Sh. Sampoorna Anand, JCIT; Smt. Shashi Kajle,
DCIT, Circle-II, Gurgaon, the concerned officers were heard. The sum total of
their submissions were that the action was taken on a strong bona fide belief that
the amounts were recoverable as the order in the stay petition in clear terms
mandated that in the event the assessee seeks adjournment , the stay will be
automatically cancelled and the efforts of the department showed that on
16.01.2013 adjournment was “prompted by” the assessee.
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3.5. Time was given to the parties on the said to arrive at a mutually acceptable
solution since bona fide belief was pleaded by the Revenue. However it did not
yield any result. The petition 273/Del/2013 was declared non-maintainable.
3.6. In the above-mentioned background the appeal which was listed for hearing
on 16.04.2013 came to be listed for hearing before the Bench on 08.04.2013 as the
assessee moved a petition dated 02.04.2013 before the Hon’ble Vice President,
ITAT, Delhi Benches requesting for pre-ponement of the appeal so that the
assessee may be able to address the petition for refund of the outstanding demand
collected in violation of the stay order.
3.6. The Hon’ble Vice President, Delhi Benches passes the following
administrative order:-
“Hearing of appeal is preponed to 08.04.2013. This letter of ‘a’ would also
be placed before the Bench on 08.04.2013.”
Sd/
(G.D.Agarwal)
03.04.2013
4. Accordingly the appeal stood preponed and duly listed in the cause list of
08.04.2013.
5. Ld. AR reiterated the position qua the collection of outstanding demand in
violation of the order of the Tribunal wherein for no fault on the part of the
assessee, it was put at a disadvantage despite having an order of stay in its favour
as the amounts stood withdrawn on 28.03.2003 and 30.03.2013. It was his
submission that the interest of the revenue was well protected as the assessee in
compliance of the direction of the Tribunal given in the stay order had furnished
bank guarantee amounting to Rs.208 crore odd. which was in the possession of the
department.
6. Before we proceed to discuss the merits of the petition wherein petition
dated 28.03.2013 was declared non-maintainability as the jurisdiction of the http://www.itatonline.org
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Tribunal had been invoked wrongly by way of filing stay petition No-
273/Del/2012 which already stood “killed” on the records of the ITAT. We
propose to briefly refer to some arguments advanced by the parties concerned
which though not relevant arguments for deciding the issue need a mention. The
need and necessity to mention the same arises on account of the fact that both the
sides had made anguished pleas in support of their respective stands which as
observed though judicially do not have any relevance in the present proceedings
however the anguish behind the ground realities expressed by the parties moves us
to make a reference to them.
7. Whereas the Ld. CIT(Admn.) Smt. Neena Kumar in support of the action
taken submitted that the action has been taken by the Revenue Officers in “a bona
fide belief” to “watch out for the interests of the Revenue” as such there can be
no occasion to even consider that there was any element of a personal interest, as
such, it was urged there can be no mala fide in the action taken; it was also her
vehement plea that the monies have been collected for the country and it was
also urged that apart from that the plight of the concerned officer may be given
due consideration when the order of the Tribunal passed in the stay petition
categorically mentioned that on mere seeking of an adjournment by the assessee,
the stay granted would be automatically cancelled; and the event occurred; in
the circumstances the concerned officers would have had no defence from the
audit objections etc. which would have been raised and comments from the
CAG etc. on the functioning of the said officers wherein loss has been caused to
the Government on account of non-action on the part of the Field Officers.
7.1. These laudable arguments and pleas seeking to perhaps ignite the spirit of
patriotism we humbly observe cannot be taken judicial notice for deciding the
issue in the present proceedings.
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7.2. Similarly, the arguments and pleas that an officer exercising its powers is
presumed to have always acted in a bona fide manner is a presumption available to
the officers in the discharge of their official duties however this is a rebuttable
presumption which an officer in facts and circumstances if so warranted can be
asked to explain.
7.3. However what has left a heavy impact on our judicial minds is the prevalent
ground reality wherein it seems to appear that the officers are working under
extremely trying circumstances and pressures where the decisive factor for
decision making may not necessarily only be the facts and circumstances of the
case vis-à-vis the position of law but the apprehensions and fears of being found to
be derelict in the discharge of their duties where comments, observations,
criticisms and may be strictures from the CAG/Audit would have a seriously
damaging effect on their carriers. These are grave concerns and even though not
relevant consideration for deciding the issue but move our conscience to request
the Competent Authority in the CBDT to make endeavours and create if so found
necessary an atmosphere of faith, trust and confidence in the officers through
which the aims and objects of the Income Tax Act are achieved. It may not be out
of place to make a mention that the government policies are sought to be
implemented through the vast arena of provisions of the Income Tax Act to give a
fillip/boost to the economy as such in our humble opinion, it is imperative to
ensure that the morale of the officers who perform the statutory functions undue
the Income Tax Act perform them fearless and confidently. The creation of a
conducive atmosphere can not be over-emphasized.
8. On behalf of the assessee the Ld. AR Sh.C.S.Aggarrwal, Sr. Adv. also apart
from arguing for a refund of the outstanding demand collected by the department
despite the operation of the stay order in its favour had also advanced various
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submissions which also were not relevant for deciding the allowability of
assessee’s claim however in our humble opinion they may merit a reference.
8.1. The Ld. AR made an impassioned plea that the officers should not act in
such manner where despite knowing that the Stay order was in existence in
assessee’s favour for reasons best known to themselves chose not to act
immediately after 16.01.2013 i.e the day on which the appeal was adjourned or
immediately thereafter and instead “suddenly woke-up” after a few months “close
to the end of the financial year” during the holiday week of “Holi” and “Good
Friday” putting the assessee to a disadvantage for no fault of it to such an extent
that the opportunity to seek legal remedy was also compromised.
8.2. It was his vehement argument that if the officers act in complete disregard
of orders of higher forums then faith in the fair functioning of the officers would
be eroded and all the efforts of the government to attract FDI and invite businesses
would be negated as the business climate of the country would be considered not
conducive to business and the “businesses” would flee the country.
9. As observed the concerns through grave have no relevance to deciding the
issue as the limited prayer in writing is refund of the dues collected in violation of
the stay order. However mention of the same is made as in our opinion it may call
for some contemplation on the administrative side of the department.
10. Addressing the issue before us in the present proceedings, we propose to
consider them in the following manner:-
“a) Has the stay order of the Tribunal been flouted by the
assessee;
b) Has the stay order of the Tribunal been flouted by the
department;
c) if the answer to b) is yes then is the action of the department
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bona fide or mala fide on facts;
d) if the answer to b) is yes then does the Tribunal have the
power to direct a refund;
e) in case the answer to d) is yes, then what are the safeguards
which can be ensured to protect the interests of the Revenue.”
11. Addressing the issues posed in a) we have taken into consideration the
order of the Tribunal dated 13.12.2012. On a perusal of the same, it is seen that in
the light of the rival submissions and material on record, the Co-ordinate Bench
granted stay of recovery subject to the conditions (i) that the assessee shall deposit
Rs.2.50 crores; and ii) shall furnish bank guarantee of the amount involved for
which MAP application had been filed. Both the conditions were to be fulfilled on
or before 31.12.2012. Apart from the said conditions, it is seen that the assessee
was further saddled with the condition that it shall not seek any adjournment and
get the appeal finalized fixed for hearing on 13.01.2013 (as noted by the Co-
ordinate Bench which on facts it is seen was infact listed for hearing on
16.01.2013) or any subsequent date. On the above terms and conditions stay was
granted for a period of 180 days or disposal of the appeal/MAP application
whichever was earlier. The assessee it is seen was put to the rigorous of automatic
cancellation of the accommodation granted by the Bench in the eventuality the
assessee either seeks an adjournment or commits a default in making the payment
or on non-furnishing of the bank guarantee covering the amounts involved in
MAP proceedings within the stipulated time.
11.1. It is not disputed that the conditions in regard to the deposit of
Rs.2.50 crores and furnishing of bank guarantee were fully complied with by the
assessee.
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11.2. The record shows that on 16.01.2013 the appeal was adjourned. The
adjournment was made in conformity with judicial discipline and judicial propriety
wherein the issues in the appeal could not be decided as the order of the Special
Bench on the same issued namely AMP (Advertising Marketing Promotion)
expenses was awaited as Special Bench (larger Bench consisting of 3 Members)
was constituted specifically for the said purpose and order was awaited.
11.3. It is a matter of record that the factum of the issue being a subject matter of
consideration by the Special Bench was pointed out on behalf of the assessee.
However, mere mention of the fact cannot be said to be an act of seeking
adjournment as the said fact in all fairness could have been pointed by either side.
The Advocates/CIT DR representing the respective sides before the Court/Tribunal
are expected to “act as officers of the Court” and they do so. As such they are duty
bound to assist the Court in the discharge of its duties and obligations. Infact if
none of the sides had pointed out to the Bench, the Division Bench on its own
motion on a bare perusal of the grounds raised namely Ground No-4 to 4.9 before
the Bench would have had no alternative but to itself suo motto adjourn the appeal
as judicial propriety, judicial decorum and judicial discipline mandates that when
the Bench is having knowledge of the fact that the specific issue is not being
proceeded with by different Benches of the ITAT and are awaiting the order of the
Special Bench constituted of three Members, it is appropriate for the Division
Bench to await the order. As such this could not have been considered that
adjournment was sought by the assessee.
11.4. Accordingly we hold that since no adjournment was sought by the assessee,
the order dated 13.12.2012 of the ITAT passed in the stay petition has not been
flouted by the assessee.
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12. Coming to the next question which we have posed to ourselves in b) and c)
namely to consider whether the stay order was flouted by the department and if
yes, was the action bona fide or mala fide on facts.
12.1. Giving our due consideration to the arguments advanced on behalf of the
assessee as well as by the CIT DR, we are of the view that the stay order passed by
the Tribunal was flouted by the Department.
12.2. Having come to the said conclusion on examination and considering the
arguments advanced we are of the view that the action was bona-fide. We have
come to the said conclusion after considering the submissions advanced by the
Field Officers which were reiterated by the Ld. CIT DR that the officers have acted
on a bona fide belief that they were required to do so. The Field Officers have
been able to show that efforts were made on their part through some Inspector to
obtain information in regard to the adjournment on 16.01.2013. Letter it was
shown was addressed to the Registry by the JCIT, Gurgaon seeking the requisite
information; whether any order was passed thereon could not be ascertained
however hand-written noting of the exact wording of the order-sheet dated
16.01.2013 was shown from the file by the AO who was unable to say whether it
was formally or informally obtained. We have also seen that the confusion has
occurred on a non-understanding of the relevance of the wordings that “the appeal
involves AMP issue on which the Special Bench order in the case of the L.G.
Electronics” and more attention was given to the wording “Ld. Counsel for the
assessee contends”. Had the propriety of Division Bench awaiting the Special
Bench on the very same issue had been given due care and consideration we are
confident the situation may not have occurred. Having thus observed we hold that
the action of the departmental officers was bona fide.
13. Considering the next question which arises for our consideration namely if
the assessee to (b) is yes then does the Tribunal have the powers to direct a refund.
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13.1. On a consideration of a catena of orders of the Tribunal and judgements
rendered by the Apex Court and various High Courts, we find that the Tribunal
has the power to direct refund.
13.2. For the said purpose, we may refer to CIT vs Bansi Dhar and Sons (1986)
157 ITR 665 wherein the Hon’ble Apex Court has held that the power of the
Tribunal is of widest amplitude in dealing with the appeals before it and that it has
the power of doing all such acts or employing such means as are essentially
necessary to its execution. Ordinarily when the demands gets collected, the
Tribunal does not interfere. Unfortunately in the facts of the present case, we
regret to note that the action of the AO to effect recoveries was clearly misplaced
and apparently on a misunderstanding of the actual position in regard to the
functioning of the ITAT namely that judicial propriety required the Division
Bench to await the order of a larger Bench on the very same issue. Considering
Section 254 of the Income Tax Act, it is seen that under sub-section (1) of the
same, the Tribunal is empowered after hearing the parties to pass such orders
“thereon” as it thinks fit. “Thereon” refers to subject matter of appeal pending
before the Tribunal and has been expanded to include pass any orders in rendering
justice “thereon”. It has been variously addressed by the Courts and Tribunals that
the Tribunal has the power to remedy any wrong committed in proceedings before
it. We may refer to the celebrated judgement of the Apex Court in the case of
ITO vs M.K.Mohammed Kunhi (1969) 71 ITR 815 (SC) which has held that
section 254 of the Income Tax Act, 1961 confers on the Appellate Tribunal powers
of the widest amplitude in dealing with appeals before it which thus grants by
implication the power of granting stay of recovery of the disputed tax. At the
relevant point of time the power to grant stay was not available to the Tribunal on
the Statute. The position being different now however the power to grant stay of
recovery of the disputed demand can be exercised only when an appeal is filed by
the assessee against the decision of the First Appellate Authority. Coming to the http://www.itatonline.org
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powers to direct a refund, reference may be made to the judgement of the Mumbai
High Court in Mahindra and Mahindra Ltd. (1992) 59 ELT 505 wherein the
customs authority had recovered the disputed demand by encashment of bank
guarantee during the pendency of the stay application and before the expiry of the
statutory period of three months for filing the appeal. Their Lordships held that the
customs authority was not justified to recover the disputed demand by encashment
of the bank guarantee during the pendency of the stay application and before the
expiry of the statutory period for filing the appeal. In the circumstances, the
department was directed to pay back the entire amount recovered by encashing the
bank guarantee.
13.2. Thus, on a consideration of the Section 254 & 255 of the Income Tax Act
and Section 131 of the Act, we are of the considered view that the Tribunal has the
power to pass such appropriate orders in the facts and circumstances of each case
to maintain judicial balance between the parties. As such Section 254 of the Act
would include the power to grant stay which is incidental and ancillary and while
exercising the powers to grant stay, the Tribunal would be having all the powers to
grant stay in the nature of prohibitory, mandatory or directory to order for refund
of the amount recovered by the revenue in appropriate cases where such directions
are warranted.
13.3. Section 151 of Code of Civil Procedure reads as under :-
“Nothing contained in this code shall be deemed to limit or
otherwise affect the inherent power of the court to make such orders
as may be deemed necessary for the ends of justice or to prevent
abuse of process of court.”
13.4. It may not be out of place to quote from ITO vs. Md Kunhi’s case (cited
supra) :-
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“it is firmly established rule that an express grant of statutory
power carries with it by necessary implication the authority to use all
reasonable means to make such grant effective.”
In view of the above facts and circumstances and position of law, we are of the
view that the Tribunal u/s 151 CPC can pass orders which includes all types of
orders which ought to be passed according to peculiar facts and circumstances in
appropriate cases to do justice between the parties.
13.4. We may also refer again to the judgement rendered in M.K.Md. Kunhi (cited
supra) wherein their Lordships quote from Domat’s Civil Law as under :
“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
appears to be comprehended either within the consequences that may
be gathered from it.”
13.5. Similarly Maxwell on Interpretation quoted by their Lordships may also be
referred to “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”
13.6 Accordingly, on a consideration of facts circumstances and position of law
we are of the view that “ex debito justitiae” mandates that we set right the wrong
done. We refer to another well recognized legal principle namely doctrine of
legitimate expectation which operates in assessee’s favour, as having fulfilled and
duly complied with the directions contained in the stay order the legitimate
expectation of the person is that he/it shall not be subjected to any act detrimental
to it during the existence of stay and it is this expectation which has not been
fulfilled in the present facts of the case. Justice demands that the wrong be set
right.
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14. Coming to the last question which we have posed to ourselves namely is the
interest of the Revenue protected? We have been informed on behalf of the
assessee that the bank guarantee furnished by the assessee amounting to Rs.208
crore odd is in the possession of the department as such the interest of the Revenue
is secured. This fact has not been disputed by the department.
15. Accordingly for the detailed reasons given hereinabove the petition of the
assessee is allowed. The Revenue is directed to refund the amounts collected in
violation of the stay order dated 13.12.2012 on or before 18.04.2013. During the
dictation given in the open Court on 08.04.2013 in the presence of the parties the
date announced for compliance was 15.04.2013, however due to
infrastructural/technical problems, the dictation could not be transcribed as such on
09.04.2013 the parties were informed in the open Court that the date for
compliance would be on or before 18.04.2013.
16. Before parting we may refer to Susanta Kumar Nayak vs. UOI (1990) 185
ITR 627 (Cal.) for making a mention of the legal position qua the interim orders of
Courts/ Tribunals namely every Bench hearing a matter on the facts and
circumstances of each case should have the right to grant interim orders on such
terms as it considers fit and proper and if it had granted the interim order at one
stage, it should have the right to vary or alter such interim orders if so warranted on
facts on law.
Order pronounced in the open Court on 10th
April, 2013.
Sd/- Sd/-
(S.V.MEHROTRA) (DIVA SINGH)
ACCOUNTANT MEMBER JUDICIAL MEMBER
I agree with the complete order except para 7.3 to which I do not subscribe. As
such as conclusion there is full agreement.
Sd/-
(S.V.MEHROTRA)
ACCOUNTANT MEMBER
Dated: 10/04/2013* Amit Kumar*
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