2014 (5) TMI 438 - HC - Income Tax

Extension of period of stay Held that - The assessee had duly applied for an interim stay which was granted by the Tribunal subject to an order of deposit of Rs. two crores which amount has been deposited non-disposal of the appeal has not been occasioned by any default on the part of the assessee - the Tribunal had finally heard the appeal in September 2013 after which the appeal was placed for re-hearing and was finally heard on 28 March 2014 when the judgment was reserved it will be appropriate to grant the stay till the disposal Decided in favour of Assessee.

Summary

Issues involved:
1. Extension of stay period under section 254(2-A) of the Income Tax Act, 1961.
2. Applicability of the judgment of the Delhi High Court in Commissioner of Income Tax Vs. M/s. Maruti Suzuki (India) Limited.
3. Judicial discretion in granting stay orders and directions.
4. Writ jurisdiction of the High Court under Article 226 of the Constitution.

Detailed Analysis:
1. Extension of Stay Period: The petitioner was assessed under section 143(3) and section 144(C) of the Income Tax Act, 1961, with a total addition of Rs. 25.89 crores. The Income Tax Appellate Tribunal granted an interim stay for 180 days or until the appeal's disposal, subject to a deposit of Rs. two crores. Subsequently, the Tribunal extended the stay for a further six months. Despite multiple adjournments, the Tribunal finally heard the appeal in September 2013, with the judgment reserved in March 2014. The Tribunal then granted a further extension of stay, which expired in April 2014. The issue arises regarding the Tribunal's power to extend the stay beyond 365 days as per section 254(2-A).

2. Applicability of Delhi High Court Judgment: The judgment referred to the Delhi High Court's decision in Commissioner of Income Tax Vs. M/s. Maruti Suzuki (India) Limited, which clarified the limitations on extending stay periods under section 254(2-A). The Delhi High Court held that the Tribunal cannot extend stay beyond 365 days from the date of the first order of stay. However, if the delay is due to the Revenue's lapse, the Tribunal can decide the appeal. The judgment also highlighted that the Revenue can undertake not to take coercive steps for recovery, allowing the Tribunal to adjourn the matter. Additionally, the High Court has the power to grant stay and issue directions, despite the restrictions in section 254(2-A).

3. Judicial Discretion in Granting Stay Orders: Considering the circumstances of the case, the High Court exercised its writ jurisdiction under Article 226 of the Constitution to direct that the stay order granted by the Tribunal should continue until the appeal's final disposal. The Court noted that the delay in appeal disposal was not due to any fault of the petitioner. Emphasizing the need for expeditious disposal, the High Court requested the Tribunal to finalize the appeal within three months from the receipt of the order.

4. Writ Jurisdiction of the High Court: In concluding the judgment, the High Court disposed of the writ petition without any costs. The Court's decision to maintain the stay order until the appeal's final disposal exemplifies the exercise of its writ jurisdiction to ensure justice and timely resolution of tax matters.

In summary, the judgment addressed the extension of stay period, the application of the Delhi High Court's ruling, the judicial discretion in granting stay orders, and the High Court's exercise of writ jurisdiction to expedite the appeal process.