Law: Income Tax Act, 1961

Section: 274(2),271(1)(c),156,220,221,246,229,222 ,223,224,253,252

Law: Pakistan Penal Code, 1860

Section: 196

Section 254 of the Income-tax Act, 1961 - Appellate Tribunal - Powers of - Assessment years 1954-55, 1960-61 and 1961-62 - Whether Tribunal is not a Court but it exercises judicial powers - Held, yes - Whether Tribunal's powers in dealing with appeals are of widest amplitude and is identical with powers of an appellate Court under Civil Procedure Code - Held, yes - Whether Tribunals has power to grant stay as incidental or ancillary to its appellate orders - Held, yes - Whether when section 254 confers appellate jurisdiction, it impliedly grants power of doing all such acts, or employing such means, as are essentially necessary to its execution and that statutory power carries with it duty in proper cases to make such orders for staying proceeding as will prevent appeal if successful from being rendered nugatory - Held, yes - Whether power of stay by Tribunal is not likely to be exercised in a routine way or as a matter of course in view of special nature of taxation and revenue laws - Held, yes FACTS For the assessment years 1954-55, 1960-61 and 1961-62, certain penalties under section 271(1)(c), read with section 274(2) were imposed on the assessee. On appeal before the Tribunal, the assessee 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. On appeal to the Supreme Court: HELD 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 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 ITO only when an appeal has been presented under…

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