w w w . L a w y e r S e r v i c e s . i n



Jindal Steel & Power Ltd. v/s Assistant Commissioner of Income-tax


Company & Directors' Information:- JINDAL POWER LIMITED [Active] CIN = U04010CT1995PLC008985

Company & Directors' Information:- JINDAL STEEL AND POWER LIMITED [Active] CIN = L27105HR1979PLC009913

Company & Directors' Information:- S. G. POWER AND STEEL PRIVATE LIMITED [Active] CIN = U14290DL2012PTC240718

Company & Directors' Information:- R. S. STEEL AND POWER PRIVATE LIMITED [Active] CIN = U70100CT2009PTC021362

    Stay Application No. 10 of 2015 IT Appeal No. 3052 of 2014

    Decided On, 25 March 2015

    At, Income Tax Appellate Tribunal Delhi

    By, THE HONOURABLE MR. P.K. BANSAL
    By, ACCOUNTANT MEMBER & THE HONOURABLE MR. A.T. VARKEY
    By, JUDICIAL MEMBER

    For the Appellant: Ajay Vohra, Rohit Jain, Deebesh Jain, Advocates. For the Respondent: Sulekha Verma, Advocate.



Judgment Text

P.K. Bansal, Accountant Member

1. This stay application has been tiled by the assessee for keeping in abeyance the launching of prosecution proceedings initiated by issuing show-cause notice dt 26th Dec, 2014 under s. 276C(1) for the asst. yr. 2008-09 in respect of the quantum appeals against the order passed under s. 143(3) r/w s. 263, against order passed under s. 263 and also against the penalty levied under s. 271(l)(c) which are pending before this Tribunal.

2.The brief facts of the case are that the assessee is a public limited Company engaged in the business of manufacturing steel and generation of power. Return for the impugned assessment year was filed on 29th Sept., 2008 at the total income of Rs. 7,66,99,04,200 which was subsequently revised to Rs. 7,66,72,79,900. The assessment was framed under s. 143(3) vide order dt. 27th Dec, 2010 at an income of Rs. 10,33,26,17,030. CIT(A) partly allowed the appeal vide order dt. 11th July. 2011. Against the order of CIT(A) both the assessee as well as the Revenue came in appeal before the Tribunal vide ITA Nos. 4185 and 4067/Del/2011. Those appeals have been adjourned from time to time. In the meantime, the CIT vide order dt. 25th March, 2013 by invoking jurisdiction under s. 263 set aside the assessment dt. 27th Dec, 2010 to the file of the AO for fresh examination on certain issues stated therein. Against the said order of the CIT, assessee filed appeal Before the Tribunal being ITA No. 3283/Del/2013. In consequence of the order of CIT, the AO passed fresh assessment order dt. 19th Sept., 2013 under s. 143(3) r/w s. 263 making certain additions. The order of the AO was confirmed by the CIT(A) vide order dt. 10th March, 2014. :, Against the said order, assessee has come in appeal before the Tribunal by way of ITA No. 3128/Del/20l4. In the meantime, the AO vide order dt. 28th Nov., 2013 levied penalty under s. 271(1)(c) amounting to Rs. 28,21,94,177 on the assessee which was confirmed by the CIT(A) vide order dt. 13th March, 2014. Against the order of CIT(A) the assessee filed appeal before the Tribunal being ITA No. 3052/Del/2014. All these appeals are pending for disposal before the Tribunal and were fixed for hearing on 2nd Feb., 2015 which were adjourned. On an application made by the assessee for the stay of demand in respect of the penalty, the Tribunal granted the stay for 50 per cent of the demand vide order dt. 16th June, 2014. Despite the fact that all the appeals are pending for adjudication before the Tribunal, in particular the appeal against the penalty imposed under s. 271(1)(c), the AO issued separate show-cause notices dt. 26th Dec, 2014 for launching prosecution proceedings under s. 276C(1) of the Act in the case of the assessee-company as well as its directors, viz.,

(1) Sh. Anand Goyal (the then Dy. managing director)

(2) Sh. Pritam Singh Rana (the then whole-time director)

(3) Sh. Arun Kumar Purwar (the then director)

(4) Sh. Ashok Alladi (the then director)

(5) Sh. Naveen Jindal (the then executive vice-chairman & managing director)

(6) Sh. R.V. Shahi (the then director)

(7) Sh. Ratan Jindal (the then director)

(8) Sh. Sushil K. Maroo (the then director).

The assessee has filed this application for stay of launching of prosecution proceedings.

3. The learned senior advocate contended that when the quantum appeal as well as the penalty appeal was pending for adjudication the AO hurriedly initiated the action for launching of prosecution proceedings. The Tribunal granted stay for the recovery of the outstanding demand as the assessee had aprima facie case. The Tribunal while granting stay order dt. 16th June, 2014 directed the Registry to fix the penalty appeal on 14th Aug., 2014. The assessee was ready to argue the appeal but the Departmental Representative requested that the penalty appeal be taken up along with the quantum appeal. The prosecution proceedings are not getting time-barred. There will be multiplicity of proceedings. The stay application has been moved to keep the launching of prosecution in abeyance and avoid multiplicity of proceedings otherwise there will be great hardship, inconvenience and avoidable harassment to the assessee and this will frustrate the entire purpose of the appeal once the prosecution is launched before the criminal Court. It is not understandable why the AO is showing so much urgency in initiating the action for launching prosecution proceedings under s. 276C(1) against the assessee as well as its various directors when the quantum as well as penalty appeals for asst. yr. 2008-09 are pending before the Tribunal. Maintainability of the prosecution proceedings depends on the outcome of the penalty appeal as well as quantum appeal before the Tribunal. In case the assessee succeeds, the prosecution proceedings would not survive. Therefore, it was vehemently contended that the launching of prosecution proceedings should await the outcome of the penalty appeal pending before the Tribunal and AO be directed not to proceed with the launching of prosecution proceedings sought to be initiated on the basis of the said show-cause notices dt. 26th Dec, 2014. On the issue whether this Tribunal has power, it was submitted that it is trite law that the Tribunal has inherent/Incidental/implied powers under s. 254(1) of the IT Act to do all such acts or employing such means as are essentially necessary to execution of the appeal and, in fact, there is a statutory duty cast upon the Tribunal to make such orders for staying connected proceedings which are necessary to prevent the effect of appeal, if successful and/or its fruits from being rendered nugatory. In this regard, attention was drawn towards the observation of the Hon'ble Supreme Court in the case of ITO v. M.K. Mohammed Kunhi [1969] 71 ITR 815 explaining the scope of inherent/implied powers of the Tribunal. It was further submitted that following the aforesaid decision of the Hon'ble Supreme Court, various Courts have held that the Tribunal has inherent/implied power to grant stay of assessment proceedings initiated pursuant to the order of the CIT under s. 263 of the IT Act. For this, our attention was drawn towards the following decisions (copies were filed in paperbook) :

(i) CIT v. ITAT, WP(C) No. 4684/2010 by which the Hon'ble Delhi High Court upheld the order passed by the Tribunal granting stay of the assessment proceedings in consequence of the order passed by the CIT under s. 263.

(ii) ITO v. Khalid Mehandi Khan [1977] 110 ITR 79 (AP).

(iii) Puran Mal Kauntia v. ITO [1975] 98 ITR 39 (Pat.).

(iv) Prima India Products v. ITO, IT Appeal No. 1242 Delhi 1987.

(v) Saw Pipes Ltd. v. Asstt. CIT [IT Appeal No. 278 Delhi/2004.

(vi) CIT v. Wander (P.) Ltd. [2013] 358 ITR 408 [2014] 224 Taxman 32 (Mag.)/44 taxmann.com 103 (Bom.)

(vii) GE India Industrial (P.) Ltd. v. CIT [2014] 148 ITD 10/[2013] 33 taxmann.com 15 (Ahd.)affirmed by the Gujarat High Court in Asstt. CIT v. GE India Industrial (P.) Ltd. [2013] 358 ITR 410/224 Taxman 140 (Mag.)/46 taxmann.com 374 (Guj.).

Thus, it was contended that the prosecution proceedings under s. 276C(1) are directly linked to and consequential upon the outcome of the quantum appeals against order under s. 263 and order passed under s. ; 143(3)/263 and also the penalty appeal against the order passed under s. 271(1)(c). In case the assessee gets relief in the quantum appeal or the penalty appeal or s. 263 appeal, the prosecution proceedings would be rendered without any basis and would consequently not survive.

4. The learned Departmental Representative on the other hand, relied on the written submission dt. 19th Jan., 2015 which reads as under :

'For asst. yr. 2008-09, show-cause notice of prosecution under s. 276C of the IT Act, 1961 has been served on the assessee. Instead of filing reply to the show-cause notice, vide its application dt. 3rd Jan., 2015, M/s Jindal Steel & Power Ltd. has requested Hon'ble Tribunal for stay of prosecution proceedings.

2.1 In this regard, it is submitted that mere issue of show-cause notice of prosecution does not amount to launching of prosecution. This is a long-drawn process duly delineated in Chapter XXII of the IT Act, 1961. Therefore, it is at a premature stage.

2.2 Even before institution of the proceedings, under s. 279(2) of the IT Act, 1961, the assessee may apply to the Chief CIT or the Director General of IT for compounding of offence.

2.3 In view of the above, a slew of remedies are available to the assessee. Therefore, instead of going into litigation, the assessee should file reply to the show-cause and avail remedies available with the IT authorities.

3.1 It is humbly submitted that as per the IT Act, 1961 no power is vested in the Hon'ble Tribunal to grant stay in respect of prosecution proceedings. Appellate jurisdiction of Hon'ble Tribunal has been provided under ss. 253(1) and 253(2) of the IT Act, 1961. Provisions of these sections do not provide any room for any such interpretation that Hon'ble Tribunal may grant stay of launching of prosecution proceedings.

3.2 The provisions of the IT Act, 1961 are absolutely clear. Under s. 280B of the IT Act, 1961, the offences punishable under Chapter XXII are triable only by the Special Court. This provision specifically excludes the Tribunal from exercising any power in respect of prosecution (including stay of the proceedings). The Tribunal is not a Court of law. However it exercises quasi-judicial powers. Like High Court and Supreme Court, it can never issue directions to a proper Court of law. Stay of premature prosecution proceedings would tantamount to interference in the jurisdiction of the civil Courts.

4. Vide Instruction dt. 28th January, 2011 in F. No. 285/90/2008-IT (Inv.), the CBDT has clarified that all the cases fulfilling ingredients of s. 276C(1) may be processed for launching of prosecution without waiting for any other proceedings pending in appeal. The above instructions of the CBDT are binding on the Revenue authorities. Hence, the show-cause notice issued to the assessee is mere compliance of CBDT instructions. Therefore, it would he incorrect to suggest that the Department harbours any bias against the assessee or has shown unwarranted or unreasonable hurry.

5.1 In its application, the assessee has taken misconceived plea that the AO has hurried to launch prosecution. There is no hurry at all. Both the Quantum of addition and penalty have passed the test of first appeal. Moreover, the major issue which forms the base of the quantum addition (sales-tax subsidy) has already been decided by the Tribunal in favour of the department (in asst. yrs. 2002-03, 2004-05 and 2005-06)]. Therefore, pendency of the appeal does not affect the case adversely.

5.l Further it is incorrect to state that during pendency of appeal against the order imposing penalty, the AO cannot launch prosecution, in case of P. Jayappan v. S.K. Perumal, ITO [1984] 42 CTR (SC) 180 : (1984) 149 ITR 696 (SC) Hon'ble Supreme Court has made it clear by observing as under :

"A mere expectation of success in some proceedings in an appeal or a reference under the IT Act cannot come in the way of the institution of criminal proceedings under s. 276C and s. 277 of the Act."

5.1.1 The case under consideration wherein prosecution notice has been issued under s. 276C of the Act is squarely covered by the above decision Hon'ble Supreme Court. This decision is binding on Hon'ble Tribunal.

5.2 Further, reliance on the decision of Hon'ble Karnataka High Court in of Shankar & Co. v. ITO[1991] 97 CTR (Kar.) 92 where Hon'ble High Court has stated that pendency of appeal is not a bar to the launching of prosecution proceedings.

5.3 In case of Gulab Chand Sharma v. H.P. Sharma, CIT [1974] 95 ITR 117 (Del.) Hon'ble Delhi High Court has said that penalty proceedings can continue simultaneously with the criminal complaints and thereby petitioner is not exposed to any double jeopardy.

6.1 As regards the case law cited by the assessee, it is submitted that none of them deals with the issue of prosecution. The assessee has unnecessarily tried to link unrelated issues. None of the cited case law comes to help the assessee. The facts and circumstances of this case are altogether different. In the case of ITO v. M.K. Mohammed Kunhi [1969] 71 ITR 815 (SC), the Hon'ble Supreme has focused on the issue that the Tribunal may stay recovery of outstanding demands. Through the above decision, the Hon'ble Supreme Court has not empowered the Tribunal to interfere in the jurisdiction of a criminal Court. By citing this case law the assessee is trying to mislead Hon'ble Tribunal and by intermingling two distinct issues of stay of recovery and criminal proceedings.

6.2 Even if the Hon'ble Tribunal decides the penalty in favour of the assessee or vice versa, this would not be the final verdict the losing party (the assessee or the Department) has right to file further appeal against the decision.

6.3 It is worthwhile to mention that for the asst. yr. 2009-10, Hon'ble Tribunal has already taken stand that stay of demand and penalty proceedings are separate and independent. Therefore, vide its decision dt. 27th Feb., 2014 (Stay No. 99/Del/2014, ITA No. 893/Del/2914) Hon'ble Tribunal has dismissed the request of the assessee for stay of penalty proceedings with the following observations :

** ** **

With regard to stay of penalty proceedings, we find no merits while deciding the stay application for demand, hence this plea is dismissed.'

Prayer:

In view of the above, it is respectfully prayed that the issue of stay of recovery and criminal proceedings be considered independent and separate and the application of the assessee be rejected summarily without going into further details.'

In addition to the written submission, our attention was drawn towards the decisions of the Hon'ble Supreme Court and the Hon'ble Delhi High Court referred to in the written submission and it was vehemently contended that this Tribunal does not have any power to grant stay and the case is duly covered by these decisions.

5. We heard the rival submissions and carefully considered the same along with the order of the tax authorities below. We have also gone through the case law cited before us. We noted that the assessee has moved an application before this Tribunal for the stay of the launching of the prosecution proceedings under s. 276C(1) dt. 3rd Jan., 2015. This stay application had come up for hearing before this Tribunal on 23rd Jan., 2015 along with the stay application for recovery of demand for penalty to be imposed under s. 271(l)(c). This Tribunal under para 4 passed the following interim order :

"4. Regarding application for staying the prosecution under s. 276C(1) of the Act, we direct that so far as filing of reply to show-cause and rejoinder, if any, are concerned, the Department will be at liberty to proceed but will keep in abeyance the launching of prosecution before the Court concerned till the next date of hearing i.e. 2nd Feb., 2015. We also direct that on 2nd Feb., 2015, the priority of hearing will be given to the appeal questioning the penalty. Copy of this order be supplied to both the parties."

Subsequent to this, when the matter came up for hearing on 2nd Feb.. 2015, the Tribunal continued the stay on launching of the prosecution proceedings. Again, all the appeals filed by the assessee were adjourned to 10th Feb., 2015. On 10th Feb., 2015 since the matter was adjourned to 13th Feb., 2015, therefore, the Tribunal directed that till that date (i.e. 13th Feb., 2015) the directions already given by the Tribunal vide order-sheet dt. 23rd Jan., 2015 with regard to stay of the recovery proceedings as well as launching of the prosecution proceedings shall continue. On 13th Feb., 2015 the matters were adjourned to 27th Feb.. 2015 when the Tribunal directed that the interim orders passed earlier will continue. On this date, when the matter came up before us, the matter was argued exhaustively by both the sides. The objection on behalf of the learned Departmental Representative was that this Tribunal does not have any power to grant stay in respect of the prosecution proceedings. Stay of premature prosecution proceedings would tantamount to interference in the; Jurisdiction of the civil Courts. In this regard, we may clarify that show-cause notice dt. 26th Dec, 2014 was issued by the AO to the assessee and its directors for giving an opportunity to show-cause as to why action as provided under s. 276C(1) of the IT Act should not be taken, against the company. This is not a case where the prosecution has already been launched against the assessee as well as its directors before criminal Court.

6. We would like to decide the issue whether this Tribunal has the power to stay the proceedings initiated by issuing show-cause notice for launching the prosecution proceedings under s. 276C(1). It is not a case where the prosecution proceedings have already been launched against the assessee before the criminal Court. Before deciding this issue we have to refer to the provisions of s. 276C(1). Sec. 276C(1) reads as under :

"276C.(1) If a person wilfully attempts in any manner whatsoever to evade any tax, penalty or interest chargeable or imposable under this Act, he shall, without prejudice to any penalty that may be imposable on Him under any other provision of this Act, be punishable :

(i) in a case where the amount sought to be evaded exceeds twenty-five thousand rupees, with rigorous imprisonment, for a term which shall not be less than six months but which may extend to seven years and with fine;

(ii) in any other case, with rigorous imprisonment for a term which shall not be less than three months but which may extend to two years and with fine."

From the reading of the said section it is apparent that a person shall be punishable under this provision if the person wilfully attempts in whatsoever manner to evade any tax, penalty or interest chargeable or imposable under this Act. The prosecution shall be without prejudice to any penalty that may be imposable on the assessee. From the reading of the show-cause notice we noted that the AO has issued the show-cause notice to the assessee for initiating the prosecution proceedings in respect of the additions made in the assessment order for the sales-tax subsidy as well as the disallowance made under s. 43B in respect of difference in the provision for gratuity as mentioned in the balance sheet and as shown in the audit report. These additions have been made in the assessment order dt. 19th Sept., 2013 passed in consequence of the original assessment dt. 27th Dec, 2010 set aside by the CIT by invoking jurisdiction under s. 263 vide order dt. 25th March, 2013. The appeals in respect of the order passed under s. 263 as well as the order passed under s. 143(3) r/w s. 263 dt. 19th Sept., 2013 are pending for disposal before this Tribunal. In the meantime, the AO also levied penalty under s. 271(l)(c) vide order dt. 28th Nov., 2013 not only for concealment of the income but also for furnishing of inaccurate particulars as per the observation made by the AO under para 6.3.5 of the impugned show-cause notice. From the said para it is also apparent that according to the AO the assessee was liable for penalty under s..271(l)(c) by the deeming provision under Expln. 1. In this regard, we may mention that Expln. 1 is a deeming provision for concealment of the particulars of income but is not applicable for furnishing of inaccurate particulars of income. Concealment of particulars of income and furnishing inaccurate particulars of income are two different charges for levy of penalty. In case of former, onus is on the assessee while in case of the latter, onus is on the Revenue to prove otherwise. The appeal is pending before this Tribunal against the said penalty order. In view of this background the AO came to the conclusion that the assessee company has made wilful attempt to evade tax as well as penalty and is liable to action under s. 276C(1) of the IT Act. It is not denied by the learned Departmental Representative that the appeal is pending before this Tribunal in respect of additions sustained by the CIT(A) as well as the penalty under s. 271(1)(c) sustained by the CIT(A) and about the validity of order passed under s. 263. Until and unless the additions as well as the penalty are sustained, in our opinion, 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 under s. 276C(1) depend on the outcome of the appeals pending before this Tribunal. We noted that sub-s. (2A) has been inserted under s. 254 by the Finance Act, 1999 w.e.f. 1st June, 1999 and subsequent thereto the power for granting stay was entrusted to this Tribunal. This proviso reads as under :

"Provided that the Tribunal may after considering the merits of the application made by the assessee, pass an order of stay in any proceedings relating to an appeal filed under sub-s. (1) of s. 253 for a period not exceeding 180 days from the date of such order and the Tribunal shall dispose of the appeal within the said period of stay specified in that order."

Subsequently, more provisions (provisos) were added. From the reading of this proviso it is apparent that "the Tribunal can pass an order of stay in any proceedings relating to an appeal filed under sub-s. (1) of s. 253". 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. This proviso does not restrict the power of the Tribunal only to grant stay in respect of recovery proceedings. The appeals pending before us relate to the additions made by the AO in the assessment order passed in consequence of an order passed under s. 263. The appeals pending before us relate to the validity of the order passed by the CIT under 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 before us in respect of the penalty imposed under s. 271(l)(c). The penalty has been imposed in consequence of the additions made in the assessment order passed as CIT has by invoking jurisdiction under s. 263 set aside the original assessment. If the jurisdiction invoked by the CIT under s. 263 is held invalid, the assessment order passed by the AO pricing the additions will also become invalid. This will have a bearing on the order passed under s. 271(1)(c). Even if additions are deleted by this Tribunal, the prosecution will not survive. The prosecution under s. 276C(1) can be launched if there is wilful attempt to evade tax or penalty or Interest. It is not denied that the levy of the interest is automatic and consequential in nature in case the additions are sustained and the tax demand is raised. Prior to the insertion of sub-s. (2A) in s. 254, the Hon'ble Supreme Court in the case of the M.K. Mohammed Kunhi(supra) explained the scope of the inherent/implied powers of the Tribunal in the following manner :

"Sec 255(5) of the Act does empower the Tribunal to regulate its own procedure, but it is very doubtful if the power of stay can be spelt out from that provision. In our opinion the Tribunal must be held to have the power to grant stay as incidental or ancillary to its appellate jurisdiction. This is particularly so when s. 220(6) deals expressly with a situation when an appeal is pending before the AAC, hut the Act is silent in that behalf when an appeal is pending before the Tribunal. It could well be said that when s. 254 confers appellate jurisdiction, it impliedly grants the power of doing all such acts, or employing such means, as are essentially necessary to its execution and that the statutory power carries with it the duty in proper cases to make such orders for staying proceeding as will prevent the appeal if successful from being rendered nugatory.

A certain apprehension may legitimately arise in the minds of the authorities administering the Act that, if the Tribunal proceed to stay .livery of taxes or penalties payable by or imposed on the assessees as a matter of course, the Revenue will be put to great loss because of the inordinate delay in the disposal of appeals by the Tribunal. It is needless to point out that 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."

Following the order of the Hon'ble Supreme Court, the Hon'ble Delhi High Court in ITAT (supra) in respect of stay of the assessment proceedings initiated to give effect to the order passed by the CIT under s. 263 made the following observations :

"21. So far as the order of the Tribunal passed on 21st May, 2010 is concerned, it is well-settled by the judgment of the Supreme Court in ITO v. M.K. Mohd. Kunhi [1969] 71 ITR 815 (SC) that the Tribunal, while exercising its appellate powers under the IT Act has also the power to ensure that the fruits of success are not rendered futile or nugatory and for this purpose it is empowered to pass appropriate orders including orders of stay. In ITO v. Khalid Mehandi Khan [1977] 110 ITR 79 (AP)the Andhra Pradesh High Court, applying the rule laid down in Mohd. Kunhi (supra), stayed the assessment proceedings pending before the AO consequent to the directions of the CIT given in orders passed under s. 263 of the Act. The stay order passed by the Tribunal on 21st May, 2010 is, therefore, supported by ample authority. It is part of the exercise of the appellate power of the Tribunal under s. 254(1). The object of the order is two-fold : the first is to prevent multiplicity of proceedings and harassment to the assessee, with the possibility of the proceedings before the AO becoming meaningless if ultimately the order passed by the CIT is found to be invalid on grounds of jurisdiction or on merits and, second, to ensure that the fruits of success in the appeals are not rendered meaningless or nugatory. It has not been shown before us by the petitioner as to what error was committed by the Tribunal in passing the stay orders, nor was it argued that the Tribunal did not exercise its discretion on the basis of settled parameters for granting stay of proceedings.

22. For the above reasons we dismiss the writ petition."

Similar view, was taken by the Hon'ble Bombay High Court in Wander (P.) Ltd. (supra). Having regard to the observations made by the Hon'ble Supreme Court in M.K. Mohammed Kunhi (supra) it appears to us that where the circumstances justify and if any of the provisos warrants it, the power can also be exercised over proceedings which are directly not in appeal before the Tribunal but are related to the appeal. The language of the proviso is in broad terms and takes in even proceedings relating to an appeal filed under s. 253(1). In the case before us, the orders pending before us in appeal will have a direct bearing on the question whether the prosecution has to be launched or not. In our opinion, the power to grant stay in related proceedings can only be exercised where the relevant proceedings are in the nature of consequential proceedings where no further conditions are required to be complied with. Even though both the parties have relied on a number of decisions but none of the parties adduced and produced before us any decision which is directly related to whether the Tribunal can grant stay before launching of the prosecution proceedings in respect of show-cause notice or not. We also could not find any direct decision which bars the Tribunal from staying the proceedings relating to the show-cause notice as has been issued by the AO in this case.

7. We have examined the case laws as has been vehemently relied on and explained to us exhaustively by the learned Departmental Representative. We noted that the first case relied on by the learned Departmental Representative is P. Jayappan v. S.K. Perumal, ITO [1984] 149 ITR 696/19 Taxman 1 (SC). We noted that in this case the AO had already filed a complaint against the assessee in the Court of Addl. Chief Judicial Magistrate, Madurai for taking action against him for offences punishable under ss. 276C and 277 of the Act and under ss. 193 and 196 of the IPC. The petitioner filed petition under s. 482 of the Code of Criminal Procedure before the Hon'ble High Court of Madras requesting to quash the said proceedings contending that the launching of the prosecution in each of the 4 cases was premature on the ground that the reassessment proceedings started against him under the Act had not been completed. The Hon'ble Supreme Court in this case has taken the view that the pendency of the reassessment proceedings cannot act as a bar to the institution of criminal prosecution for offences punishable under s. 276C or s. 277 of the Act. The institution of the criminal proceedings cannot in the circumstances also amount to abuse of the process of the Court. Ultimately the Hon'ble Supreme Court held that the Hon'ble High Court was Tight in refusing to quash the prosecution proceedings in the 4 cases instituted against the petitioner under s. 482 of the CrPC. This decision taken by the Hon'ble Supreme Court has been referred to by the Hon'ble Supreme Court in the case of CIT v. Bhupen Champak Lal Dalal [2001] 248 ITR 830/116 Taxman 746 (SC). In this case the Supreme Court held as under :

''The Prosecution in criminal law and proceedings arising under the IT Act, 1961, are undoubtedly independent proceedings and, therefore, there is no impediment in law for criminal proceedings to proceed even during the pendency of proceedings under the Act. However, a wholesome rule has to be adopted in matters where the Court takes the view that the conclusions arrived at by the appellate authorities under the Act have a relevance and bearing upon the conclusions to be reached by the criminal Court. In such a case the criminal Court will have necessarily to await the outcome of the appellate authority under the Act.

Where the criminal Court before whom cases were lodged against the respondents for offences punishable under the IT Act, 1961, passed an order that the work of recording evidence shall proceed but framing of the charge, discharge or acquittal shall be stayed during pendency of the appeals' by the accused before the IT appellate authorities and orders shall be passed after the appeals were finally decided, the High Court, on a writ petition, issued rule nisi and granted interim stay, and the Department preferred petitions for Special Leave to Appeal to the Supreme Court :

Held accordingly, dismissing the petitions, that when ultimately the result of the proceedings before the appellate authorities had a definite bearing on the cases alleged against the respondents, the High Court was justified in granting interim stay. Decision of the Bombay High Court in Bhupen Champaklal Dalai v. Sandeep Kapoor (2001) 167 CTR (Bom) 281 : (2001) 248 ITR 827 (Bom)affirmed."

In this decision the Hon'ble Supreme Court had a chance to examine the decision of the Hon'ble Supreme Court in the case of P. Jayappan v. S.K. Perumal (supra) as relied on by the learned Departmental Representative before us vehemently. In this case the Hon'ble Supreme Court categorically took the view that in the case of P. Jayappan (supra) there was claim of quashing of the proceedings whereas in the case before them there was no claim of quashing of the proceedings when ultimately the result to come out of the proceedings before the appellate authorities would have a definite bearing on the cases alleged against the respondents and therefore, it confirmed the order of the Hon'ble High Court holding that the Hon'ble High Court is justified in granting the interim order as it did and we do not think that such an interim order calls for interference at our hands. In the instant case, the Hon'ble Supreme Court also referred to the decision of G.L. Didwania v. ITO [1997] 224 ITR 687 (SC) and distinguished the decision on the fact that in that case also the question related to quashing of the criminal proceedings. The decision of the Hon'ble Supreme Court in the case of P. Jayappan (supra), in our opinion, will not help the Revenue as in the case of the assessee, the prosecution proceedings are not yet launched before the criminal Court and the question does not relate to quashing of the criminal proceedings, for which this Tribunal does not have any jurisdiction.

8. The second decision which was vehemently relied on by the learned Departmental Representative relates to Shankar & Co. v. ITO [1992] 193 ITR 172/59 Taxman 354 (Kar.). This decision also relates to the fact of filing of petition before the Hon'ble High Court for quashing of the criminal proceedings which were before the criminal Court. This decision, in our opinion, will also not help the Revenue as in this decision the decision of the Hon'ble Supreme Court in the case of P. Jayappan (supra) was followed which we have already held is not applicable in the case before us.

9. The third decision which has been relied on by the learned Departmental Representative relates to Hon'ble Delhi High Court in the case of Gulab Chand Sharma v. H.P. Sharma, CIT [1974] 95 ITR 117. In this case also we noted that the AO had already filed criminal complaint against the assessee before the Magistrate. In this case the assessee went before the Hon'ble High Court praying that the complainant be restrained from pursuing the said complaint before the Magistrate. The Hon'ble High Court took the view that the proceedings for imposition of penalty taken against the accused under the IT Act are distinct from the criminal complaint filed against him. They can, therefore, continue simultaneously. Imposition of penalty under the IT Act is neither prosecution nor punishment of an offence. In this decision, we noted that the complaint was already launched. In the case before us, the AO has not launched any complaint so far in the criminal Court. Therefore, before us the assessee is not challenging the criminal proceedings. Once the complaint is lodged before the criminal Court, in our opinion, this Tribunal does not have any jurisdiction. The Revenue has also by Instruction dt. 24th April, 2008 in File No. 285/90/2008 (Invst. 1/05) as earlier stated that, all the cases where penalty under s. 271(l)(c) exceeding Rs. 50,000 is imposed and confirmed by the Tribunal, filing of prosecution complaint has to be processed under s. 276C(1). These instructions have been clarified subsequently by the CBDT vide Circular dt. 20th Jan., 2011 in File No. 285/90/2008 (IT Invst.) in which the CBDT took the view that all the cases fulfilling the ingredients of s. 276C(1) must be processed for launching of the prosecution at the earliest without waiting for any other

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proceedings. This instruction itself requires that where all the ingredients of s. 276C(1) are fulfilled, launching of the prosecution must be carried out without waiting for any other proceedings. In view of this instruction also it is necessary that the ingredients of s. 276C(1) must be complied with. 10. Now, the question arises in our opinion when the order of the Tribunal will have a bearing for deciding whether the ingredients of s. 276C(1) have been complied with or not, how the prosecution can be launched without the order passed by the Tribunal. We noted that the Hon'ble Supreme Court in the case of K.C. Builders v. Asstt. CIT [2004] 265 ITR 562/135 Taxman 461 has clearly held that the proceedings under s. 271(1)(c) of the IT Act would have a bearing on the criminal proceedings launched against the assessee and the consequence will be that the prosecution proceedings will get automatically cancelled. In this case also tile Hon'ble Supreme Court referred to its decision on the case of G.L. Didwania (supra). 11. Hon'ble Delhi High Court in the case of ITO v. Giggles (P.) Ltd. [2008] 301 ITR 32/[2006] 157 Taxman 362 took the view that the proceedings under s. 271(l)(c) of the IT Act would have a clear and definite bearing on those under s. 276C. The Hon'ble Delhi High Court in the case of Spice Corpn. Ltd.v. Dy. CIT [2002] 257 ITR 766/123 Taxman 986 took the view that where the prosecution is launched on a matter pending appeal on merits, the finality in the matter of merits has to be awaited. In the case ofGauri Shankar Prasad v. Union of India [2003] 261 ITR 522/133 Taxman 463 (Pat), the Hon'ble Patna High Court pointed out that tax and prosecution proceedings are independent of each other but where tax proceedings have a bearing on the proceedings, the latter will have to await the outcome of the other. 12. We also noted that there is no mandatory requirement for issuing show-cause notice before launching of prosecution proceedings against the assessee in a criminal Court. We find from the provisions of s. 276C(1) that there is no mandatory requirement of issuing show-cause notice before launching the prosecution proceedings. We also noted that there is no limitation prescribed for launching the prosecution proceedings under the said provision. Therefore, when the order of the Tribunal will have a bearing on the prosecution proceedings, in our opinion, there will not be any loss to the Revenue if the prosecution proceedings are not launched immediately but kept pending till the outcome of the order of the Tribunal. It will also save the cost to be incurred by the Revenue by way of fees to advocate and other costs to be incurred, what to talk of the cost of time being devoted by the senior officers of Revenue. All will be a waste if the appeals pending before this Tribunal are decided in favour of the assessee. 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, this Tribunal, in our opinion, 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, therefore, in our opinion, this Tribunal has jurisdiction to stay the proceedings in view of proviso to s. 254(2A). 13. In view of our aforesaid discussion, we grant stay against the launching of prosecution proceedings till 18th May, 2015. The Registry is directed to fix the appeals relating to the impugned asst. yr. 2008-09 against the order passed under s. 143(3) in consequence of order under s. 263, appeal against the order passed under s. 263 and order passed against the penalty imposed under s. 271(l)(c) on 18th May, 2015. Both the parties assured that no adjournments will be sought on that date. 14. In the result, the stay petition filed by the assessee is allowed.
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