2014 (3) TMI 729 - HC - Income Tax

Extension of stay of outstanding demand - Prima facie merits not considered Held that - The order of the Tribunal has refused to extend the stay not on the ground that it has no power to do so under Section 254 of the Act but only on the ground that the petitioner has no financial difficulty - the stay has been granted by the Tribunal from 27 July 2012 onwards and the petitioner has not in any manner contributed in the delay in disposing of the appeal by the Tribunal - when there is no change in circumstances which first led to granting of stay and continuing of the same by the Tribunal and accepted by the revenue, there is no reason as to why the stay should not be extended - it would be in the interest of justice if demands are stayed for assessment year 2006-07 and 2008-09 till the disposal of the appeal by the Tribunal Decided in favour of Assessee.

Summary

Issues:
Challenge to order of Income Tax Appellate Tribunal dismissing stay extension for demand recovery pending appeal.

Analysis:
The petitioner challenged a common order passed by the Income Tax Appellate Tribunal (the Tribunal) regarding the extension of stay for the recovery of demand for assessment years 2006-07 and 2008-09. The Tribunal had dismissed the petitioner's application for extending the stay, despite an earlier grant of stay, without any change in circumstances warranting a rejection of the stay application.

The petitioner had filed appeals to the Tribunal for assessment years 2006-07 and 2008-09 from the orders of the Assessing Officer. The tax demands for these years amounted to significant sums. Initially, the Tribunal had granted a stay on payment of specified amounts for each appeal. The petitioner complied with these directions, and the appeals were adjourned multiple times at the revenue's instance.

Subsequently, the petitioner filed applications for renewal of stay before the Tribunal. However, the Tribunal refused to extend the stay on the grounds that the petitioner did not face financial difficulty. The petitioner contended that the stay was not extended despite the merits of the case and the impending appeal hearings. The petitioner had already deposited a substantial amount towards the tax demands, and the issues in the appeals pertained to the quantum of tax payable on royalty payment.

The Revenue argued that the Tribunal could not extend the stay beyond 365 days as per Section 254 of the Act. They insisted that the petitioner, not facing financial difficulty, should pay the entire tax demand pending appeal results. The High Court noted that the impugned order did not cite lack of jurisdiction under Section 254 but based the refusal solely on the petitioner's financial status. The Court found no reason to deny the stay extension since the circumstances leading to the initial grant of stay remained unchanged, and the petitioner had not caused any delay in the appeal process.

Consequently, the High Court directed the Tribunal to expedite the disposal of the pending appeals within four months. Until then, no coercive action for recovery of tax demand for the relevant assessment years was to be taken against the petitioner. The petitions were disposed of with no order as to costs, ensuring justice by maintaining the stay on demands until the appeal resolution.