2016 (2) TMI 900 - AT - Income Tax

Extension of stay - Held that - On a consideration of the peculiar facts and circumstances of the case and the position of law as considered including the arguments of the parties before us on the issues involved we find that non-disposal of the appeal in the facts of the present case is solely on the grounds of adjournments sought by the Revenue on each of the dates the appeal came up for hearing; Where no arguments assailing the assessee s claim that prima facie the issue is covered in assessee s favour having been advanced by the Revenue. Nothing has been placed before us by the Revenue disputing the assessee s claim of irreparable loss to the running of the business has been placed before us nor there is any rebuttal on the plea of Liquidity crunch faced by the assessee. In these above peculiar facts we are of the view that the present case is a fit case for extending stay for a further period of 3 months or disposal of appeal whichever is earlier. We find that the appeal is listed for hearing on 16th Feb. 2016. The Revenue is directed to file Paper Books if any well in advance. Needless to state that no adjournment on any reasonable ground shall be sought by the assessee.

Issues Involved:
1. Extension of Stay beyond 365 days.
2. Prima facie case in favor of the assessee.
3. Irreparable loss and liquidity crunch faced by the assessee.
4. Legal precedents and statutory interpretation of Section 254(2A) of the Income Tax Act.
5. Arguments and objections raised by the Revenue.

Issue-wise Detailed Analysis:

1. Extension of Stay beyond 365 days:
The assessee filed a stay petition seeking an extension of stay beyond 365 days, which was initially granted by the Tribunal and extended due to delays not attributable to the assessee. The Tribunal considered the precedent set by the Hon'ble Delhi High Court in Pepsi Foods Pvt. Ltd. vs. ACIT, which allowed for the extension of stay beyond 365 days if the delay was not attributable to the assessee. The Tribunal noted that the delay in hearing the appeal was due to adjournments sought by the Revenue and thus, the extension of stay was justified.

2. Prima facie case in favor of the assessee:
The assessee argued that the issue in the present appeal pertained to the 80IA deduction, which had been decided in its favor in previous assessment years (2009-10 and 2010-11). The Tribunal found that the assessee had a strong prima facie case as the issue had been consistently decided in its favor, and additional evidence (an auditor's certificate) supporting the assessee's claim had not been admitted by the CIT(A).

3. Irreparable loss and liquidity crunch faced by the assessee:
The assessee contended that it was facing a liquidity crunch and irreparable loss if the stay was not extended. The Tribunal accepted this contention, noting that the assessee was a widely held listed company with substantial outstanding loans and overdue interest payable. The Tribunal found that the assessee's financial condition justified the extension of the stay to prevent irreparable loss.

4. Legal precedents and statutory interpretation of Section 254(2A) of the Income Tax Act:
The Tribunal analyzed the relevant provisions of Section 254(2A) and the legal precedents, including the decisions in Pepsi Foods Pvt. Ltd., Narang Overseas P. Ltd., and Maruti Suzuki India. The Tribunal concluded that the third proviso to Section 254(2A), which barred the extension of stay beyond 365 days, had been struck down as unconstitutional by the Delhi High Court. Consequently, the Tribunal had the power to extend the stay beyond 365 days in deserving cases where the delay was not attributable to the assessee.

5. Arguments and objections raised by the Revenue:
The Revenue objected to the extension of stay beyond 365 days, arguing that the decision in Pepsi Foods Pvt. Ltd. was specific to that case and did not set a precedent. The Revenue also contended that the Tribunal did not have the power to extend the stay beyond 365 days and that the assessee could approach the High Court for relief. The Tribunal rejected these arguments, noting that the decision in Pepsi Foods Pvt. Ltd. struck down the third proviso to Section 254(2A) as unconstitutional, and thus, the Tribunal had the power to extend the stay. The Tribunal also found that the Revenue's reliance on the decision in Maruti Suzuki India was misplaced as the constitutional validity of the third proviso had not been examined in that case.

Conclusion:
The Tribunal allowed the stay petition, extending the stay for a further period of three months or until the disposal of the appeal, whichever was earlier. The Tribunal directed the Revenue to file its paper books well in advance and stated that no adjournments on unreasonable grounds would be entertained. The decision was pronounced in the open court on February 1, 2016.

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