TARUN CHATTERJEE, J. - (1.) THIS is to consider an application for stay of all further penalty proceedings initiated pursuant to a notice dt. 20th March, 2000, under s. 271(1)(c) of the IT Act (hereinafter referred to as "the Act") in respect of the asst. yr. 1995-96 till the disposal of the instant appeal. The appellant-assessee carries on inter alia, business of housing finance leasing. In the usual course of its business, in December, 1995, it purchased a bio gas plant (In short "Plant") from Western Paques (India) Ltd. (In short "W.P.I.L.") and also had the plant duly insured. The appellant duly paid the purchase price of Rs. 14.5 crores of the plant to W.P.I.L. By a deed of lease dt. 30th Dec., 1994, the appellant leased out the plant to W.P.I.L. for a period of 96 months from the date of commencement of the lease. In the return for the asst. yr. 1995-96, the appellant claimed depreciation for the plant. Although the rental income of the plant was assessed in the hands of the appellant, the claim for depreciation was however, disallowed by the AO. The appellant filed an appeal and ultimately the Income-tax Appellate Tribunal (in short "Tribunal") dismissed the appeal of the appellant. Feeling aggrieved by the order of the Tribunal the instant second appeal has been filed by the appellant and by an order dt. 19th June, 2000, of a Division Bench of this Court, this second appeal has been admitted and an order of stay of realisation of the demand was granted for a period of four weeks from the date of passing that order with liberty to the parties to apply for extension, variation, and modification of the interim order in presence of the other side. Before proceeding further, we may keep it on record that at the time of taking up for hearing of the instant application. Mr. Bajoria, appearing for the appellant, has submitted that as the dues in terms of the order of assessment has already been realised by the authorities, the application for stay shall not be proceeded with any further. That being the stand taken by the appellant, the application for stay of realisation of the payment of demand has now become infructuous and, therefore, the same is being disposed of as infructuous by treating the said application as on the "day's list".
(2.) LET us now consider the application filed by the appellant for stay of all further penalty proceedings, as noted herein earlier, till the disposal of this appeal. On the entertainability of this application for stay, Mr. Mullick, appearing for the Revenue raised a preliminary objection. According to Mr. Mullick, since penalty proceeding has not arisen out of the assessment order for the asst. yr. 1995-96 and as the penalty proceeding initiated under s. 271(1)(c) of the Act is a distinct and separate proceeding and in view of the fact that this appeal shall be decided by this Court only on the grounds formulated by it, the penalty proceeding which has no nexus with the pending appeal cannot be stayed pending disposal of the appeal. This submission of Mr. Mullick was hotly contested by Mr. Bajoria for the appellant/petitioner. On the question whether the preliminary objection as to the entertainability of the application for stay of the penalty proceeding in the pending appeal by this Court can be sustained, we have heard Mr. Bajoria, appearing for the assessee/appellant and Mr. Mullick for the Revenue. After hearing the learned senior counsel for the parties and after considering the scope and ambit of s. 260A of the Act, we are of the view that the High Court under s. 260A of the Act has been duly conferred with power to stay a penalty proceeding which has been initiated pursuant to the assessment order out of which the present instant appeal arises in this Court till the disposal of this appeal. Before we proceed further, we must keep it on record that from the assessment order for the asst. yr.1995-96, it is evident that the AO passed a direction for initiating a penalty proceeding against the assessee-appellant under s. 271(1)(c) of the Act. From the aforesaid assessment order, it reveals that : "Issue penalty notice under s. 271(1)(c) of the Act on the point of leased plant and machinery." Before we proceed further, let us now consider the relevant provisions for filing appeals under the Act. Chapter XX deals with appeals. Sec. 246 and s. 246A of the Act deal with appeals filed before the appropriate authority if the assessee is aggrieved by an order of the AO named therein, Sec. 249 deals with the form of appeal and limitation. Sec. 260 of the Act confers power on the High Court or the Supreme Court to decide question of law raised on the case stated in pursuance of the order passed under ss. 256(1) and 256(2) of the Act. Sub-s. (1) of s. 260 of the Act says that the High Court or the Supreme Court upon hearing any such case shall decide the questions of law raised therein and shall deliver its Judgment thereon containing the grounds on which such decision is founded and a copy of the judgment shall be sent under the seal of the Court and the signature of the Registrar to the Tribunal which shall pass such orders as are necessary to dispose of the case conformably to such judgment. Sub-s. (1A) of s. 260 has been introduced by an amendment in view of coming into force of s. 260A of the Act. In sub-s. (1A) of s. 260 of the Act, it has been made clear that where the High Court delivers a judgment in an appeal filed before it under s. 260A, effect shall be given to the order passed on the appeal by the AO on the basis of a certified copy of the judgment. In this case, we are concerned with the power of the High Court to deal with appeals from every order passed in appeal by the Tribunal and also the scope and ambit of the High Court to deal with such appeals and applications filed therein. By the introduction of s. 260A of the Act as indicated herein earlier, the High Court has now been conferred with power to entertain a second appeal against every order passed in appeal by the Tribunal, if the High Court is satisfied that the case involves substantial question of law. Sub-s. (3) of s. 260A says that where the High Court is satisfied about substantial question of law involved in any case, it shall formulate that question. Sub-s. (4) of s. 260A says that the appeal shall be heard only on the questions so formulated and the respondents, shall at the hearing of the appeal be allowed to argue that the case does not involve such question. Provided that nothing in this sub-section shall be deemed to take away or abridge the power of the Court to hear, for the reasons to be recorded, the appeal on any other substantial question of law not formulated by it, if it is satisfied that the case-involves such question. Sub-s. (5) of s. 260A confers powers on the High Court to decide question of law so formulated and delivers such judgment thereon containing the grounds on which such decision is founded and may award such cost as it deems fit. Sub-s. (6) of s. 260A confers powers on the High Court which may determine any issue which (a) has not been determined by the Tribunal or (b) has been wrongly determined by the Tribunal by reason of a decision on such question of law as is referred to in sub-s. (1). By a further amendment of s. 260A a new sub-section has been introduced by the legislature in the form of sub-s. (7) of s. 260A of the Act which runs as follows : "Save as otherwise provided in this Act, the provisions of the CPC, 1908 relating to appeals to the High Court, shall, as far as may be, apply in the case of appeals under this section."
(3.) AT this stage, we may keep it on record that Mr. Mullick, appearing for the Revenue could not dispute that the scope of reference and the scope of entertaining a second appeal under s. 260A of the Act are completely different. So far as s. 260A is concerned, a regular appeal shall lie to the High Court against every order passed in appeal by the Tribunal, if the High Court is satisfied that the case involves a substantial question of law as noted herein earlier. From sub-s. (6) of s. 260A it is pellucid that the sub-s. (6) of s. 260A of the Act has duly conferred power on the High Court to determine any issue which has not been determined by the Tribunal or has been wrongly determined by the Tribunal by reason of a decision on such question of law as is referred to sub-s. (1) of s. 260A. From a careful comparison of the language used in s. 260A of the Act and the language used in s. 100 of the CPC, it cannot be disputed that the language used in s. 260A of the Act is similar to the language used in s. 100 of the CPC. Similarly, sub-s. (6) of s. 260A of the Act is somewhat similar to s. 103 of the CPC. Keeping these provisions in mind, let us now, therefore, consider whether High Court, while exercising power under s. 260A of the Act is conferred with power to exercise O. 41, r. 5 of the CPC and is also conferred with inherent power under s. 151 of the CPC for the purpose of granting of refusing to grant an order of injunction or stay of the penalty proceeding pending disposal of a second appeal. Before we go into this question, we may also take note of Chapter XXI of the Act which deals with penalties imposable. Sec. 275 of the Act under this Chapter deals with bar of limitation for imposing penalties. For the purpose of deciding the issue at hand, we feel that only the Explanation to s. 275 of the Act would be required to be reiterated which is as follows : Explanation : In computing the period of limitation for the purposes of this section : (i) the time taken in giving an opportunity to the assessee to be reheard under the proviso to s. 129. (ii) any period during which the immunity granted under s. 245H remained in force; and (iii) any period during which a proceeding under this Chapter for the levy of penalty under this Chapter for the levy of penalty is stayed by an order of injunction of any Court. [Emphasis, italicised in print, added];