Jagdish Punjabi, Chartered Accountant
Devendra Jain, Advocate

47. Hindustan Lever Ltd. vs. DCIT
SA No. 116/Mum/2022 in ITA 2125/Mum./2022
(Mumbai-Trib.)
A.Y.: 2018-19
Date of order: 26th September, 2022
Section: 254(2A)

Once a statutory provision provides explicitly that the Tribunal can only grant a stay subject to a deposit of not less than 20 per cent of the disputed demand, or furnishing of security thereof, it is not open to the Tribunal to grant a stay in violation of these basic statutory provisions.

Law itself visualizes that the payment of 20 per cent of the disputed demands, impugned in the appeal before the Tribunal, cannot be viewed as a condition precedent for grant of stay by the Tribunal, in as much as when the applicant “furnishes security of equal amount in respect thereof”, the Tribunal can exercise its powers of granting a stay.

FACTS

By this stay application, the assessee sought a stay on the collection/recovery of the income-tax and interest demands aggregating to Rs. 172.47 crore raised by the AO in framing an assessment u/s 143(3) r.w.s. 144C(13) of the Act for the A.Y. 2018-19, which order has been impugned in an appeal before the Tribunal and out of which the assessee made not even a partial payment.

HELD

The Tribunal, after considering the decision of the Supreme Court in I.T.O. vs. M. K. Mohd. Kunhi [(1969) 71 ITR 815 (SC)], and the provisions of section 254(2A) as also the principle of harmonious construction as explained in the Principles of Statutory Interpretation by Justice G P Singh, held –

i) the Hon’ble Supreme Court’s inferring the Tribunal’s power to grant the stay, in the absence of specific statutory authority to that effect, is one thing, and the Tribunal’s dealing with a power statutorily recognised, even if implicitly, is quite another thing;

ii) once a statutory provision specifically provides that the Tribunal can only grant a stay subject to a deposit of not less than 20 per cent of the disputed demand, or furnishing of security thereof, it is not open to the Tribunal to grant a stay in violation of these basic statutory provisions;

iii) the powers of the Tribunal u/s 254(1) to grant a stay cannot be so interpreted to make the first proviso to Section 254(2A) redundant;

iv) if it is held that the Tribunal’s power of granting a stay, even after the enactment of the first proviso to Section 254(2A) remains unfettered in as much as a stay can indeed be granted even in clear disharmony with the statutory conditions set out under the first proviso to section 254(2A), the requirement with respect to the partial payment of demand or furnishing of security in relation thereof will thus be redundant;

v) the law as it stood at the point of time when Mohd. Kunhi’s judgment was delivered has undergone a significant change vis-à-vis the position prevailing as of now, and, therefore, the observations made by the Hon’ble SC a

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