INCOME TAX OFFICER versus M. K. MOHAMMED KUNHI

Citation: [1969] 2 S.C.R. 65 · Decided: 11-09-1968 · Supreme Court of India · Bench: J.C. SHAH · Disposal: Dismissed

Cited by 3 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

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INCOME TAX OFFICER 
v. 
M. K. MOHAMMED KUNHI 
September 11, 1968 
[J. C. SHAH, V. RAMASWAMI AND A. N. GROVER, JJ.] 
Income-tax Act ( 43 of 1961), ss. 254 and 255-Amount imposed as 
penalty on assessee-Appeal to Appellate Tribunal-Tribunal's power to 
grant stay of recovery of penalty pending appeal. 
Certain amounts were imposed as penalty upon the assessee (respon· 
dent) under ss. 27l(l)(c) and 274(2) of the Income-tax Act, 1961, for 
concealment of particulars of income and for furnishing inaccurate parti .. 
culars. 
The assessee preferred appeals before the Appellate Tribunal and 
prayed for stay of recoV<ry of the penalties pending disposal of the ap-
peals, but the Tribunal declined to stay on the ground that it had no 
power to do so. The assessee. moved the High Court under Art. 226 
and the High Court held that the Tribunal had the power to stay and 
directed the Tribunal to dispose of the stay application in accordance 
with law. 
In appeal to this Court, 
HELD : The Tribunal has the power to order the stay of recovery 
of the penalty as an incidental and ancillary power to its appellate juris-
di1tion. [72 CJ 
Under s. 220(6) the Income-tax Officer has a power not to treat an 
assessee as being in default, when an appeal under 
s. 
246 before the 
Appellate Assistant Commissioner is pending. 
But neither the Income-
tax Officer nor any other departmental officer has the power to stay the 
recovery of penalty when an appeal is pending before the Tribunal. The 
Act is silent in that behalf, and there is no provision in the Act or the 
Income-tax Appellate Tribunal Rules, 1963, granting expressly such a 
power to the Tribunal. That is because, the Tribunal, though not 
a 
court, exercises in its appellate jurisdiction under s. 254 judicial powers 
of an appellate court of the widest ]l<Jssible amplitude and such a statutory 
power impliedly grants the power of doing all such acts, or employing 
such means as are essentially necessary to the execution of such jurisdiction 
and carries witb it . the power to stay proceedings in proper cases. 
In 
view of the special nature of taxation and re.venue laws, such power can 
be exercised after imposing conditions for safeguarding the revenue only 
in des'erving and appropriate cases where th·e appeal will be otherwi50 
frustrated or rendered nugatory. 
The general principle that in a taxing 
statute there is no room for what could be called equitable construction 
applies only to the taxing part of the statute and not to its procedural 
part. [68 C-E; 69 E; 70 D-E; 72 F-G] 
Burhanpur Tapti Mills Ltd. v. Board of Revenue, Madhya Pradesh, 
(1955) 6 S.T.C. 670, referred to. 
Observations 
in 
Vatcha Sree1v11na1nurthy 
v. 
l.T.0., Vizianagcran1, 
H 
(1956) 30 I.T.R. 252 at p. 271, disapproved. 
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 1164 of 
1966. 
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<66 
SUPREME COURT REPORTS 
(1969] 2 S.C.R. 
Appeal by special leave from the judgment a.rid order dated 
A 
September 27, 196.5 of the Kerala High Court in O.P. No. 688 
of 1965. 
D. Narsaraju, S. A. L. Narayana Rao, R. N. Sachthey and 
B. D. Sharma, for the appellant. 
The respondent did not appear. 
The Judgment of the Court was delivered by 
Grover, J. The short but important question which is invol-
ved in this appeal by special leave from a judgment of the Kerala 
High Court is whether the Appellate Income-tax Tribunal has 
the power, under the relevant provisions of the Income tax Act, 
1961, (hereinafter called the Act) to stay the recovery of the 
realization of the penalty imposed by the departmental authorities 
on an assessee during the pendency of an appeal before it. 
The assessee, who is the respondent, was imposed penalties 
in the sum of Rs. 18,000/-, 1,700/- and 14,000/- respectively in 
respect of the assessment years 1954-55, 1960-61 and 1961-62. 
These penalties were imposed under s. 27l{l)(c) read withs. 
274(2) of the Act for concealment of particular income and fur-
nishing inaccurate particulars. 
The assessee preferred appeals 
to the Income tax Appellate Tribunal and made an interim prayer 
for stay of collection of the penalties imposed. The Tribunal dec-
lined to order any stay holding that it had no power to grant such 
a prayer. 
The assessee then moved the High Court under Art. 
226 of the Constitution. 
The High Court held that the Tribunal 
had the power to stay the proceedings as also the collection of 
the penalties pending the appeal since that power 

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