My appeal is pending before the Tribunal and recovery of the demand is going on. Can the Tribunal stay recovery when no section gives it that power?
Yes. The Supreme Court held that the Tribunal has the power to stay recovery as incidental or ancillary to its appellate jurisdiction. No provision confers it expressly, and the statutory stay in section 220(6) is available only while an appeal is pending before the first appellate authority, not the Tribunal. But an express grant of statutory power carries by necessary implication the authority to use all reasonable means to make the grant effective, and the wide powers in section 254(1) carry with them everything incidental and necessary to make their exercise fully effective - including, in proper cases, orders preventing a successful appeal from being rendered nugatory.
Decided by the Supreme Court (Supreme Court of India - J.C. Shah, V. Ramaswami and A.N. Grover JJ; judgment by Grover J) on 1968-09-11, reported as 1969 AIR 430; 1969 SCR (1) 65; 1969 KLT 392; Civil Appeal No 1164 of 1966. It bears on section 254(1), section 255, section 220(6), section 271(1)(c), section 254 of the Income Tax Act 1961, in Appeals and Demand, Recovery & Stay matters.
This is the foundation of the Tribunal's stay jurisdiction, and the reasoning has been carried into every tribunal and appellate authority whose statute is silent on interim relief. Three things in it are worth keeping. The gap in the statute is what drives the result: since section 220(6) covers only the earlier appeal, the assessee has no one to apply to while his Tribunal appeal is pending, and the legislature cannot have intended to leave the matter entirely to administrative discretion. The rule that the taxing part of a statute admits no equitable construction but the procedural part does, taken from Burhanpur Tapti Mills, is what lets the implication be made in a revenue statute at all. And Jessel MR's principle from Polini v Grey - that a successful party is to reap the fruits of the litigation and not obtain merely a barren success - is the reason such a power exists in any appellate forum.
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Penalties of Rs 18,000, Rs 1,700 and Rs 14,000 were imposed on the assessee for assessment years 1954-55, 1960-61 and 1961-62 under section 271(1)(c) read with section 274(2), for concealment of particulars of income and furnishing inaccurate particulars. He appealed to the Income-tax Appellate Tribunal and applied in the meantime for stay of collection of the penalties. The Tribunal refused, holding that it had no power to grant such a prayer. The assessee moved the Kerala High Court under Article 226. By its judgment of 27 September 1965 that Court held the Tribunal had power to stay the proceedings and the collection pending the appeal, the power being incidental and ancillary to its appellate jurisdiction, and directed the Tribunal to dispose of the stay application according to law. The Income Tax Officer appealed by special leave; the assessee did not appear.
The appeal was dismissed, the parties bearing their own costs. The Tribunal must be held to have the power to grant stay as incidental or ancillary to its appellate jurisdiction. Neither the Act nor the Income-tax Appellate Tribunal Rules 1963 expressly confers it, and although section 255(5) empowers the Tribunal to regulate its own procedure, it is very doubtful that a power of stay can be spelt out of that provision. The implication arises instead from section 254(1), which lets the Tribunal pass such orders as it thinks fit after hearing both parties. The power is not to be exercised in a routine way or as a matter of course, given the special nature of taxation and revenue laws. It is only when a strong prima facie case is made out that the Tribunal will consider whether to stay recovery and on what conditions, and stay will be granted in the most deserving and appropriate cases where the Tribunal is satisfied that the entire purpose of the appeal will be frustrated or rendered nugatory if recovery proceeds. The observations of Viswanatha Sastri J in Vetcha Sreeramamurthy, that neither the Appellate Assistant Commissioner nor the Tribunal is given power to stay collection and that liberalising the law was a matter for the legislature, were disapproved.
The Court began by mapping the recovery machinery. Section 156 requires a notice of demand for tax, interest, penalty, fine or other sum; section 220(1) requires payment within thirty-five days, failing which the assessee is deemed in default; section 221 provides for penalty on default; sections 222 to 224 provide for the certificate to the Tax Recovery Officer, and section 225 lets the officer grant time even after a certificate has issued, penalties being recoverable in the same manner as tax under section 229. Crucially, the statutory power in section 220(6) to treat the assessee as not in default operates only where an appeal has been presented under section 246 - that is, to the Appellate Assistant Commissioner - and there is no provision under which the officer or any superior may be moved for a stay while an appeal is pending before the Tribunal. The officer might in practice keep extending time under section 225, and the Commissioner or Inspecting Assistant Commissioner might give relief administratively, but that cannot be put on a par with a statutory power. That is the flaw in the Revenue's argument, which assumed that the officer could give the necessary relief. Against that background the Court applied the settled rule of construction that an express grant of statutory power carries with it by necessary implication the authority to use all reasonable means to make the grant effective, citing Sutherland, Domat's statement that judges must apply the laws to all cases where a just application may be made, and Maxwell's maxim that where an Act confers a jurisdiction it impliedly grants the power of doing all acts essentially necessary to its execution - illustrated by the inferior court empowered to grant an injunction, which must impliedly have the power to punish disobedience or the power would be useless. The right of appeal is a substantive right, questions of fact and law are at large before the Tribunal, and if very large demands could be recovered while the Tribunal was helpless, the entire purpose of the appeal could be defeated where the departmental orders are ultimately set aside. The Court drew support from the Motor Vehicles Act cases holding a power to stay or to remand to be a necessary corollary of the power to hear an appeal, and from Burhanpur Tapti Mills, which held that the rule against equitable construction of a taxing statute applies to its taxing part and not to its procedural part, and that where the legislature invests an appellate tribunal with power to prevent injustice it impliedly empowers it to stay proceedings which may cause further mischief. Although the Tribunal is not a court it exercises judicial powers of the widest amplitude, in some cases held identical with those of an appellate court under the Civil Procedure Code, and Polini v Grey supplies the principle underlying all orders preserving the position pending litigation - that the successful party is to reap the fruits of the litigation and not obtain merely a barren success.
The statutory power carries with it the duty in proper cases to make such orders for staying proceedings as will prevent the appeal if successful from being rendered nugatory.
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Handle my notice → Ask a CA on WhatsAppYes. The Supreme Court held that the Tribunal has the power to stay recovery as incidental or ancillary to its appellate jurisdiction. No provision confers it expressly, and the statutory stay in section 220(6) is available only while an appeal is pending before the first appellate authority, not the Tribunal. But an express grant of statutory power carries by necessary implication the authority to use all reasonable means to make the grant effective, and the wide powers in section 254(1) carry with them everything incidental and necessary to make their exercise fully effective - including, in proper cases, orders preventing a successful appeal from being rendered nugatory. This was decided by the Supreme Court (Supreme Court of India - J.C. Shah, V. Ramaswami and A.N. Grover JJ; judgment by Grover J) and bears on section 254(1), section 255, section 220(6), section 271(1)(c), section 254 of the Income Tax Act 1961. It is reported as 1969 AIR 430; 1969 SCR (1) 65; 1969 KLT 392; Civil Appeal No 1164 of 1966. This is the foundation of the Tribunal's stay jurisdiction, and the reasoning has been carried into every tribunal and appellate authority whose statute is silent on interim relief. Three things in it are worth keeping. The gap in the statute is what drives the result: since section 220(6) covers only the earlier appeal, the assessee has no one to apply to while his Tribunal appeal is pending, and the legislature cannot have intended to leave the matter entirely to administrative discretion. The rule that the taxing part of a statute admits no equitable construction but the procedural part does, taken from Burhanpur Tapti Mills, is what lets the implication be made in a revenue statute at all. And Jessel MR's principle from Polini v Grey - that a successful party is to reap the fruits of the litigation and not obtain merely a barren success - is the reason such a power exists in any appellate forum. If it applies to you, the first step is this: Make out a strong prima facie case before asking for a stay. The Court was explicit that the power is not to be exercised routinely and is for the most deserving cases where the appeal would otherwise be frustrated.
Penalties of Rs 18,000, Rs 1,700 and Rs 14,000 were imposed on the assessee for assessment years 1954-55, 1960-61 and 1961-62 under section 271(1)(c) read with section 274(2), for concealment of particulars of income and furnishing inaccurate particulars. He appealed to the Income-tax Appellate Tribunal and applied in the meantime for stay of collection of the penalties. The Tribunal refused, holding that it had no power to grant such a prayer. The assessee moved the Kerala High Court under Article 226. By its judgment of 27 September 1965 that Court held the Tribunal had power to stay the proceedings and the collection pending the appeal, the power being incidental and ancillary to its appellate jurisdiction, and directed the Tribunal to dispose of the stay application according to law. The Income Tax Officer appealed by special leave; the assessee did not appear. The matter was decided on 1968-09-11 by the Supreme Court (Supreme Court of India - J.C. Shah, V. Ramaswami and A.N. Grover JJ; judgment by Grover J). On those facts the Supreme Court held as follows. The appeal was dismissed, the parties bearing their own costs. The Tribunal must be held to have the power to grant stay as incidental or ancillary to its appellate jurisdiction. Neither the Act nor the Income-tax Appellate Tribunal Rules 1963 expressly confers it, and although section 255(5) empowers the Tribunal to regulate its own procedure, it is very doubtful that a power of stay can be spelt out of that provision. The implication arises instead from section 254(1), which lets the Tribunal pass such orders as it thinks fit after hearing both parties. The power is not to be exercised in a routine way or as a matter of course, given the special nature of taxation and revenue laws. It is only when a strong prima facie case is made out that the Tribunal will consider whether to stay recovery and on what conditions, and stay will be granted in the most deserving and appropriate cases where the Tribunal is satisfied that the entire purpose of the appeal will be frustrated or rendered nugatory if recovery proceeds. The observations of Viswanatha Sastri J in Vetcha Sreeramamurthy, that neither the Appellate Assistant Commissioner nor the Tribunal is given power to stay collection and that liberalising the law was a matter for the legislature, were disapproved.
The Court began by mapping the recovery machinery. Section 156 requires a notice of demand for tax, interest, penalty, fine or other sum; section 220(1) requires payment within thirty-five days, failing which the assessee is deemed in default; section 221 provides for penalty on default; sections 222 to 224 provide for the certificate to the Tax Recovery Officer, and section 225 lets the officer grant time even after a certificate has issued, penalties being recoverable in the same manner as tax under section 229. Crucially, the statutory power in section 220(6) to treat the assessee as not in default operates only where an appeal has been presented under section 246 - that is, to the Appellate Assistant Commissioner - and there is no provision under which the officer or any superior may be moved for a stay while an appeal is pending before the Tribunal. The officer might in practice keep extending time under section 225, and the Commissioner or Inspecting Assistant Commissioner might give relief administratively, but that cannot be put on a par with a statutory power. That is the flaw in the Revenue's argument, which assumed that the officer could give the necessary relief. Against that background the Court applied the settled rule of construction that an express grant of statutory power carries with it by necessary implication the authority to use all reasonable means to make the grant effective, citing Sutherland, Domat's statement that judges must apply the laws to all cases where a just application may be made, and Maxwell's maxim that where an Act confers a jurisdiction it impliedly grants the power of doing all acts essentially necessary to its execution - illustrated by the inferior court empowered to grant an injunction, which must impliedly have the power to punish disobedience or the power would be useless. The right of appeal is a substantive right, questions of fact and law are at large before the Tribunal, and if very large demands could be recovered while the Tribunal was helpless, the entire purpose of the appeal could be defeated where the departmental orders are ultimately set aside. The Court drew support from the Motor Vehicles Act cases holding a power to stay or to remand to be a necessary corollary of the power to hear an appeal, and from Burhanpur Tapti Mills, which held that the rule against equitable construction of a taxing statute applies to its taxing part and not to its procedural part, and that where the legislature invests an appellate tribunal with power to prevent injustice it impliedly empowers it to stay proceedings which may cause further mischief. Although the Tribunal is not a court it exercises judicial powers of the widest amplitude, in some cases held identical with those of an appellate court under the Civil Procedure Code, and Polini v Grey supplies the principle underlying all orders preserving the position pending litigation - that the successful party is to reap the fruits of the litigation and not obtain merely a barren success. In the words reproduced by the source cited on this page: "The statutory power carries with it the duty in proper cases to make such orders for staying proceedings as will prevent the appeal if successful from being rendered nugatory."
It was decided by the Supreme Court on 1968-09-11 and is reported as 1969 AIR 430; 1969 SCR (1) 65; 1969 KLT 392; Civil Appeal No 1164 of 1966. Binding on every court and authority in India. A Supreme Court decision binds every assessing officer, every Commissioner (Appeals), every bench of the Income Tax Appellate Tribunal and every High Court in India. An officer who declines to follow it is acting contrary to law, and that refusal is itself a ground of appeal. On section 254(1), section 255, section 220(6), section 271(1)(c), section 254, the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It helps the taxpayer. The appeal was dismissed, the parties bearing their own costs. The Tribunal must be held to have the power to grant stay as incidental or ancillary to its appellate jurisdiction. Neither the Act nor the Income-tax Appellate Tribunal Rules 1963 expressly confers it, and although section 255(5) empowers the Tribunal to regulate its own procedure, it is very doubtful that a power of stay can be spelt out of that provision. The implication arises instead from section 254(1), which lets the Tribunal pass such orders as it thinks fit after hearing both parties. The power is not to be exercised in a routine way or as a matter of course, given the special nature of taxation and revenue laws. It is only when a strong prima facie case is made out that the Tribunal will consider whether to stay recovery and on what conditions, and stay will be granted in the most deserving and appropriate cases where the Tribunal is satisfied that the entire purpose of the appeal will be frustrated or rendered nugatory if recovery proceeds. The observations of Viswanatha Sastri J in Vetcha Sreeramamurthy, that neither the Appellate Assistant Commissioner nor the Tribunal is given power to stay collection and that liberalising the law was a matter for the legislature, were disapproved. It arises in Appeals and Demand, Recovery & Stay matters, on section 254(1), section 255, section 220(6), section 271(1)(c), section 254 of the Income Tax Act 1961, and was decided by Supreme Court of India - J.C. Shah, V. Ramaswami and A.N. Grover JJ; judgment by Grover J. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Be ready with conditions to safeguard the revenue - part payment or security - because the Court contemplated stay on terms, not stay at large. Do not assume the officer can help you once the appeal is before the Tribunal; the statutory power to treat you as not in default is tied to the earlier appeal, and any relief the Commissioner gives at that stage is administrative. Check the time limits and conditions now attached to a Tribunal stay before assuming an open-ended order is available.
Still good law. I read the full judgment to its dismissal of the appeal. I checked no later authority or statutory history in this session; the harvested page's citator note records later Supreme Court decisions explaining and relying on it. The existence of the Tribunal's stay power is no longer in doubt and the reasoning is applied to other tribunals. What has changed is the framework around it. Section 254(2A) now limits a stay granted by the Tribunal to a first period not exceeding one hundred and eighty days, and to an aggregate not exceeding three hundred and sixty-five days, after which the order of stay stands vacated even where the delay in disposing of the appeal is not attributable to the assessee; and it conditions the stay on the assessee depositing not less than twenty per cent of the amount of tax, interest, fee, penalty or any other sum payable, or furnishing security of that amount. That deposit condition was inserted, and the proviso fixing the aggregate period was substituted, by the Finance Act, 2020 with effect from 1 April 2020. A reader must find and apply those provisions before assuming the power is unfettered. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
The Court decided only that the power exists; it did not decide whether a stay should be granted on these facts, the High Court having directed the Tribunal to dispose of the application according to law. It gives no guidance on what conditions are appropriate beyond saying that stay should follow a strong prima facie case and be granted on such conditions as the Tribunal thinks fit. It also does not decide whether the Appellate Assistant Commissioner has a similar implied power, mentioning that authority only through section 220(6). The respondent did not appear, so the Court heard argument on one side only. The source page's citation list is short and does not include an ITR reference for this judgment. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
The appeal was dismissed, the parties bearing their own costs. The Tribunal must be held to have the power to grant stay as incidental or ancillary to its appellate jurisdiction. Neither the Act nor the Income-tax Appellate Tribunal Rules 1963 expressly confers it, and although section 255(5) empowers the Tribunal to regulate its own procedure, it is very doubtful that a power of stay can be spelt out of that provision. The implication arises instead from section 254(1), which lets the Tribunal pass such orders as it thinks fit after hearing both parties. The power is not to be exercised in a routine way or as a matter of course, given the special nature of taxation and revenue laws. It is only when a strong prima facie case is made out that the Tribunal will consider whether to stay recovery and on what conditions, and stay will be granted in the most deserving and appropriate cases where the Tribunal is satisfied that the entire purpose of the appeal will be frustrated or rendered nugatory if recovery proceeds. The observations of Viswanatha Sastri J in Vetcha Sreeramamurthy, that neither the Appellate Assistant Commissioner nor the Tribunal is given power to stay collection and that liberalising the law was a matter for the legislature, were disapproved.
TaxSphere, “ITO v M.K. Mohammed Kunhi”, https://taxnotice.vittsphere.com/caselaw/case/ito-v-m-k-mohammed-kunhi-tribunal-power-to-stay-recovery/ (validity last checked 2026-08-29)
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