By C. N. Vaze, Shailesh Kamdar, Jagdish T. Punja bi, Bhadresh Doshi Chartered Accountants
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Proviso to section 254(2A) & 276C – the Tribunal has power to stay proceedings initiated by the assessing officer by issuing show-cause notice for launching prosecution u/s. 276C(1) during pendency of appeals against orders wherein the additions were made and penalty was levied.
Facts:
In the instant case, appeals in respect of the order passed u/s. 263 as well as the order u/s.143(3) pursuant to said order u/s. 263 are pending for disposal before the Tribunal. Besides this, appeal is also pending before the Tribunal against the levy of penalty u/s. 271(1)(c).
In the meantime, Assessing Officer has issued showcause notice to the assessee for initiating prosecution proceedings u/s. 276C(1) in respect of the additions made in the assessment.
The assessee filed the application for stay of launching of prosecution proceedings before the Tribunal.
Held:
From reading of proviso to section 254(2A) it is apparent that “the Tribunal can pass an order of stay in any proceedings relating to an appeal filed u/s. 253(1)”. This phrase mandates that this power is not confined to a case where the appeal is pending before the Tribunal but also extends to any proceedings relating to an appeal pending before it.
The appeals pending relate to the validity of the order passed by the CIT u/s. 263 in consequence of which the additions have been made by the AO in the assessment order passed subsequent to that. It is also not denied that the appeal is also pending in respect of the penalty imposed u/s. 271(1)(c).
Until and unless the additions as well as the penalty are sustained, it cannot be said whether there was an attempt to evade tax or not or whether this attempt was wilful or not. Steps taken by the AO for launching of the prosecution proceedings u/s. 276C(1) depend on the outcome of the appeals pending before this Tribunal.
The Tribunal noted that there is no limitation prescribed for launching the prosecution proceedings u/s. 276C(1). Therefore, when the order of the Tribunal will have a bearing on the prosecution proceedings, the Tribunal opined that there will not be any loss if the prosecution proceedings are not launched immediately but kept pending till the outcome of the order of the Tribunal. The Tribunal further opined that it is not a case where the prosecution proceedings have already been launched before the criminal Court. Had the prosecution proceedings already been launched before the criminal Court, the Tribunal would not have any jurisdiction to entertain such petition filed by the assessee. Since in this case the Revenue has not launched so far the prosecution against the assessee in any criminal Court, the Tribunal granted stay against the launching of prosecution proceedings.
