K.L.Sharma, J. - (1.) THIS writ petition is directed against the order dated September 30, 1994, whereby the Income-tax Appellate Tribunal, Allahabad, rejected the application of the petitioner for stay of the recovery proceeding's in respect of penalty imposed on him, during the pendency of the second appeal before the Tribunal.
(2.) I have heard Sri G.D. Srivastava, learned advocate for the petitioner, and Sri Ashok Kumar, learned counsel appearing on behalf of the respondents, and perused the material brought on record. Learned counsel for the petitioner has submitted that the reasons for rejection of the stay application accorded by the Tribunal in its impugned order dated September 30, 1994, are not at all justified on judicial principles. In support of his contention, he has invited my attention to the decision of the Supreme Court in the case of ITO v. M. K Mohammed Kunhi [1969] 71 ITR 815. In this case the Supreme Court has interpreted that even though there is no express provision in the Income-tax Act conferring power on the Income-tax Appellate Tribunal to stay the recovery proceedings, yet it is implied by conferment of the appellate jurisdiction under Section 254 of the Income-tax Act, 1961, that the Tribunal has got powers of doing all such acts, or employing such means, as are essentially necessary to its execution and that the statutory power carries within its sweep the duty in proper cases to make such orders for staying proceeding as will prevent the appeal if successful from being rendered nugatory. The Supreme Court further held as follows (at page 822) : "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. " It is now clear that the Income-tax Appellate Tribunal has got implied power of staying the recovery proceeding during the pendency of the appeal, but this power cannot be exercised in a routine way or as a mailer of course. The Tribunal is required to see whether there is strong prima facie case made out by the appellant that the stay of recovery proceeding is necessary with a view to prevent the frustration and negation of the purpose of filing the appeal, If the Tribunal considers that there is strong prima facie case, it should grant stay of the recovery proceeding in, such appropriate and deserving cases.
(3.) FOR ready reference the relevant portion containing reasons for the impugned order is reproduced as follows : " The matter involved in this appeal which gives rise to the present stay petition relates to the imposition and recovery of penalty under Section 271(1)(c) of the Income-tax Act, 1961. At the very outset, we would like to make it clear that this is not the proper stage at which the merits of levy under Section 271(1)(c) can be considered. It has not been the policy of the Bench to consider the merits in a stay petition. The merits can be considered only at the time of final disposal of the appeal. Secondly, this Bench has always expressed its opinion that recovery proceedings of the Revenue are the exclusive domain of the executive with which judicial interference is not desirable. Thirdly, granting of stay does not solve any problem either of the taxpayer or of the Department, Finally, all the conditions for grant of stay are not satisfied, as, for example, the liquidity position of the petitioner has not been clearly spelt out. FOR these reasons, we decline to grant stay notwithstanding the contentions to the contrary raised by the learned counsel for the assessee in this behalf. " Learned counsel for the petitioner has pointed out by reading the reasons from the impugned order that the Tribunal has not attempted to see whether there is strong prima facie case made out by the appellant and instead has refused to go into merits of the case with a view to dispose of the stay application. The Tribunal has referred to some policy of the Bench not to grant stay order. There cannot be any policy of refusing to grant stay of recovery proceeding, in view of the decision of the Supreme Court; The power of granting stay casts a duty upon the Tribunal to see whether strong prima facie case is made out or not, whether the recovery proceedings are required to be stayed during and until disposal of the appeal with a view to prevent the purpose from being frustrated or rendered nugatory. Learned counsel has further pointed out that the Tribunal was wholly erroneous in its approach that the recovery proceedings are in the exclusive domain of the executive. It appears that the Tribunal was not exercising its jurisdictional power in a judicial manner and was obsessed with the influence of the executive, even in the disposal of the judicial proceedings. It was also wrong on the part of the Tribunal to say that the stay of the recovery proceedings will not solve the problem either of the appellant or of the Department. In my view, the stay of the recovery proceedings would have brought great relief to the appellant and the Department, if so entitled, could have got its due revenue only after the disposal of the appeal, when there was a statutory right of the appellant to file the second appeal. The Tribunal has further vaguely mentioned that all the conditions for grant of stay have not been complied with whereas it could refer only to one condition that the liquidity position of the appellant has not been clearly spelt out. In my opinion, none of the reasons mentioned in the impugned order by the Tribunal for rejection of the stay application is judiciously justified.;