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2014 (2) TMI 1037 - HC - Income TaxPower to grant stay u/s 254(2A) of the Act Stay to be granted beyond 365 days Held that - The legislative mandate has to be respected and the courts do not legislate but interpret the statute as a legislative edict - The third proviso after amendment, undoubtedly bars and prohibits the tribunal from extending interim stay order beyond 365 days - It stipulates deemed vacation and imposes no fault consequences in strict terms - The language is clear and therefore has to be respected - However, the provision does not bar or prohibit an assessee from approaching the High Court by way of writ petition for continuation, extension or grant of stay. The High Court in appropriate matters can grant or extend stay even when the tribunal has not been able to dispose of an appeal within 365 days from the date of grant of initial stay - This perhaps appears to be and apparently is the intention of the Parliament - Relying upon Jethmal Faujimal Soni vs. Income Tax Appellate Tribunal 2010 (4) TMI 747 - Bombay High Court - Grant of stay by the tribunal is not a matter of right, but is decided by a speaking order, recording prima facie view on merits - In case there is an error or the tribunal has erred in granting stay, Revenue is not without remedy and can approach the High Court in accordance with law the Revenue is the appellant before the High Court in disproportionately large percentage of cases, being aggrieved by the finding/adjudication by the tribunal on the question of law and fact - Appeals are preferred by the Revenue mostly in cases where the tax demand is ₹ 10 lakhs or above - The figures/data does indicate that in substantial number of matters, Revenue may not have succeeded before the tribunal in sustaining the tax demand. In view of the third proviso to Section 254(2A) of the Act substituted by Finance Act, 2008 with effect from 1st October, 2008, tribunal cannot extend stay beyond the period of 365 days from the date of first order of stay - In case default and delay is due to lapse on the part of the Revenue, the tribunal is at liberty to conclude hearing and decide the appeal, if there is likelihood that the third proviso to Section 254 (2A) would come into operation. Third proviso to Section 254 (2A) does not bar or prohibit the Revenue or departmental representative from making a statement that they would not take coercive steps to recover the impugned demand and on such statement being made, it will be open to the tribunal to adjourn the matter at the request of the Revenue - An assessee can file a writ petition in the High Court pleading and asking for stay and the High Court has power and jurisdiction to grant stay and issue directions to the tribunal as may be required - Section 254(2A) does not prohibit/bar the High Court from issuing appropriate directions, including granting stay of recovery. Determination of Arm s length price Held that - Determination of arm s length pricing on international transactions and the tax amount involved which includes interest under Section 234B of the Act - By the order dated 4th January, 2013, stay was extended by 180 days or till the disposal of the appeal, whichever occurs first.
Issues Involved:
1. Power of the Income Tax Appellate Tribunal to extend stay beyond 365 days. 2. Interpretation of Section 254(2A) of the Income Tax Act, 1961. 3. Legislative intent and amendments to Section 254(2A). 4. Judicial precedents and their applicability. 5. Role of the High Court in granting stay beyond 365 days. 6. Conduct of parties and responsibility for delays. Detailed Analysis: 1. Power of the Income Tax Appellate Tribunal to Extend Stay Beyond 365 Days: The primary issue revolves around whether the Income Tax Appellate Tribunal (ITAT) has the authority to extend the stay of demand beyond a period of 365 days. The Revenue contends that Section 254(2A) of the Income Tax Act explicitly limits the Tribunal's power to extend a stay beyond 365 days. The Tribunal, being a statutory body, must adhere strictly to this provision. Conversely, the respondents argue that the Tribunal can extend the stay if the delay is not attributable to the assessee, drawing parallels to similar provisions under the Central Excise Act, 1944. 2. Interpretation of Section 254(2A) of the Income Tax Act, 1961: Section 254(2A) stipulates that the ITAT should ideally decide appeals within four years. The first proviso allows the Tribunal to grant a stay for up to 180 days, extendable if the delay is not due to the assessee, but the total period should not exceed 365 days. The third proviso mandates that if the appeal is not disposed of within this period, the stay stands vacated automatically, irrespective of the fault. 3. Legislative Intent and Amendments to Section 254(2A): The legislative history shows that Section 254(2A) was inserted by the Finance Act, 1999, and amended by the Finance Act, 2001, and later by the Finance Act, 2007, and 2008. The amendments aimed to curb delays in disposing of appeals where interim relief was obtained. The 2008 amendment added the phrase "not attributable to the assessee" to emphasize that the stay should not be extended beyond 365 days, regardless of who is at fault. 4. Judicial Precedents and Their Applicability: The judgment references several precedents, including the Supreme Court's decision in ITO vs. M.K. Mohammed Kunhi, which recognized the Tribunal's power to grant interim relief. The Bombay High Court in Narang Overseas P. Ltd. vs. ITAT held that the Tribunal could extend relief beyond 180 days if the delay was not due to the assessee. However, the Karnataka High Court in CIT vs. Ecom Gill Coffee Trading (P) Ltd. took a contrary view post the 2008 amendment. The Supreme Court in Kumar Cotton Mills Pvt. Ltd. upheld that the Tribunal could extend the stay if the delay was not attributable to the assessee, but this was before the 2008 amendment. 5. Role of the High Court in Granting Stay Beyond 365 Days: The judgment clarifies that while the Tribunal is barred from extending the stay beyond 365 days, the High Court retains the power to grant or extend stay under Articles 226 and 227 of the Constitution. This power remains unaffected by Section 254(2A) and forms part of the basic structure of the Constitution. The High Court can issue directions to ensure that the Tribunal disposes of appeals expeditiously and can grant stay if justified. 6. Conduct of Parties and Responsibility for Delays: The judgment highlights that delays in disposing of appeals may occur due to various reasons, including the conduct of the Revenue or the Tribunal's administrative constraints. It emphasizes that the Tribunal should not grant adjournments lightly and should proceed to decide appeals if the Revenue causes delays. The judgment also suggests that the Revenue should refrain from coercive recovery actions if the delay is due to their fault. Conclusion: The High Court concluded that: (i) The Tribunal cannot extend stay beyond 365 days from the first stay order. (ii) If the delay is due to the Revenue, the Tribunal should decide the appeal within 365 days. (iii) The Revenue can state before the Tribunal that they will not take coercive steps, allowing adjournments. (iv) Assessees can approach the High Court for stay extension, and the High Court can grant it. The judgment did not address the constitutional validity of the provisos to Section 254(2A) and left it open for future consideration. The High Court directed expeditious disposal of the specific appeals involved and maintained the stay on the impugned demands during this period.
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