P.Venkatarama Reddi, J. - (1.) Heard both counsel at the stage of admission.
(2.) This writ petition is filed seeking for a direction to the second respondent not to take coercive steps for recovery of interest of Rs. 5,62,188 levied under s. 220(2) of the IT Act for the asst. yrs. 1988-89 and 1989-90 pending the disposal of R.C. No. 8 of 1994 on the file of this Court.
(3.) R.C. No. 8 of 1994 relates to the asst. yr. 1988-89. It is stated that a similar reference application is pending for the year 1989-90. As the reference Court has no inherent or incidental power to grant stay of recovery of tax or other dues, learned counsel for the petitioner submits that the petitioner is constrained to file this petition under Art. 226 of the Constitution. The Supreme Court in CIT vs. Bansi Dhar and Sons (1986) 50 CTR (SC) 250 : (1986) 157 ITR 665 (SC) : TC 55R.783, held that the jurisdiction under s. 256 of the IT Act is advisory in nature and notwithstanding the reference, the appeal before the Tribunal must be deemed to be still pending and the Tribunal retains its jurisdiction to grant stay as part of its incidental or ancillary power. It was further observed that : "In an appropriate case, if the assessee feels that a stay of recovery pending disposal of the reference is necessary or is in the interest of justice, then, the assessee is entitled to apply before the appellate authority to grant a stay until disposal of the reference by the High Court or until such time as the appellate authority thought fit." It was also pointed out that in case the appellate authority committed a jurisdictional error or acted improperly in exercise of its jurisdiction, the appellate authority's order can be corrected by the High Court under Arts. 226 and 227 of the Constitution. In view of this pronouncement of the Supreme Court, we are of the view that the petitioner should first move the Tribunal for the grant of stay of the demand representing the interest levied under s. 220(2). Learned counsel expressed a doubt whether the power of the Tribunal to grant stay could be extended to the collection of interest, in view of the fact that the issue as regards the propriety of collection of interest as such is not the subject-matter of reference before the High Court. We do not think that there is anything in the decision of the Supreme Court which limits the power of the Tribunal only to stay the recovery of tax but not the interest due thereon.;