JUDGMENT V. N. KHARE J. - The petitioner is engaged in the business of manufacture and sale of carpets. For the assessment year 1982-83, the petitioner was assessed towards income-tax by the Inspecting Assistant Commissioner of Income-tax, Varanasi. In the year 1986, the Assessing Officer reopened the assessment for the year 1982-83, and one of the grounds for reopening the assessment was that the bonus paid by the assessee to its workmen was in excess of the amount permissible under the Payment of Bonus Act, 1965. By the order dated March 22, 1987, the Inspecting Assistant Commissioner of Income-tax (Assessment) reassessed the income of the petitioner for the assessment year 1982-83. Aggrieved, the petitioner preferred an appeal before the Commissioner of Income-tax (Appeals), Varanasi. The Commissioner of Income-tax (Appeals) by order dated March 24, 1988, partly allowed the appeal. The Commissioner of Income-tax allowed the claim of the petitioner regarding payment of bonus at the rate of 20 per cent. Thereafter, the Revenue filed an appeal against the order of the Commissioner of Income-tax (Appeals) before the Income-tax Appellate Tribunal. The Tribunal, vide its order dated August 21, 1992, allowed the appeal of the Revenue and disallowed the claim of the petitioner for the deduction of Rs. 1,28,107 paid by it to its workmen as bonus. Thereupon, the petitioner, moved an application under section 254(2) of the Income-tax Act (hereinafter called as "the Act") for rectification of the order dated August 21, 1992. The Tribunal vide its order dated March 3, 1993, dismissed the said application. The petitioner thereafter filed an application under section 256(1) of the act before the Income-tax Appellate Tribunal for requiring the Appellate Tribunal to refer to the High Court the question of law arising out of the order dated August 21, 1992. After the said order a notice of demand was issued to the petitioner and subsequently on May 3, 1993, the Assistant Commissioner of Income-tax issued a notice under section 221 of the Act for showing cause as to why penalty be not imposed for non-payment of tax and interest. It is at this stage that the petitioner has come before this court by means of this petition under article 226 of the Constitution.
The prayer in the writ petition is that the order dated August 21, 1992, passed by the Income-tax Appellate Tribunal and consequential notice of demand and show-cause notice issued under section 221 of the Act be quashed.
We have heard Sri V. B. Upadhyay and Sri Shakeel Ahmed, learned counsel for the petitioner, and Sri Bharatji Agarwal for the Department. Admittedly, the petitioner is pursuing an alternative remedy available to it by moving an application under section 256(1) of the Act before the Income-tax Appellate Tribunal. It is an established view of law that where a person is pursuing an alternative remedy, the High Court would not interfere in writ proceedings, as the jurisdiction exercised in writ proceedings is an extraordinary one and the powers are to be exercised in rare and exceptional cases. In view of this, we decline to interfere with the order of the Income-tax Appellate Tribunal which is impugned in this petition.
It was then contended by learned counsel for the petitioner that the remedy inasmuch as the Income-tax Appellate Tribunal has no power to grant interim orders in a proceeding under sub-section (1) of section 256 of the act. This argument of learned counsel for the petitioner is not legally sound and correct. Section 256(1) of the Act provides that on an application moved by the assessee or the Commissioner, requiring the Appellate Tribunal to refer to the High Court any question of law arising out of its order, the Appellate Tribunal may draw up a statement of the case and refer it to the High Court. Sub-section (2) of section 256 of the Act further provides that, where the Appellate Tribunal declines to state the case, the assessee or the Commissioner may apply to the High Court and the High Court may require the Appellate Tribunal to state the case and to refer it and, on receipt of such requisition, the Appellate Tribunal shall state the case and refer it accordingly. Section 260 of the Act lays down that the High Court or the Supreme Court shall decide the question of law raised therein, and shall send a copy of the judgment of the Appellate Tribunal which shall pass such orders as are necessary to dispose of the case in conformity to such judgment. Thus, these provisions show that, while applications under section 256(1) or under section 256(2) of the Act are pending, the Appellate Tribunal retains the appellate power and it does become functus officio as, after the decision by the High Court or the Supreme Court, it has to pass necessary orders in conformity with those judgments. Once it is held that the Appellate Tribunal retains its appellate power during the pendency of an application under section 256(1) or (2) of the Act, the necessary consequence is that it possesses all the incidental or ancillary powers of appellate jurisdiction, It is a well-established view of law that the power to grant stay is incidental and ancillary to the appellate jurisdiction. In view of this, where an application has been moved under section 256(1) of the Act or an application is pending section 256(2) of the Act, the Tribunal has power to grant stay in appropriate cases. It is true that, where an application under section 256(2) of the Act is pending before the High Court, the High Court has no power to grant stay in that proceeding but the Tribunal still retains the power to grant interim orders. In the case of CIT v. Bansi Dhar and Sons [1980] 157 ITR 665 (SC), it was held thus (headnote) :
"In an appropriate case, if the assessee feels that a stay of recovery pending disposal of the reference is necessary or is in the interest of justice, then the assessee is entitled to apply before the appellate authority to grant a stay until disposal of the reference by the High Court or until such time as the appellate authority thought fit."
In view of this, it cannot be argued that the remedy available to the petitioner is not an equally efficacious remedy. Further, even if an application for interim relief is rejected by the Appellate Tribunal, the aggrieved assessee still has the remedy in an appropriate case to approach the High Court under articles 226 and 227 of the Constitution for issuing a proper writ, if the order passed by the Tribunal, refusing to grant stay has acted without jurisdiction or in excess of jurisdiction. In view of what has been state above, we decline to interfere with the impugned order dated August 21, 1992, passed by the Income-tax Appellate Tribunal on the ground that the petitioner has an alternative remedy available under law.
The petition is dismissed on the ground of alternative remedy available to the petitioner.