2018 (6) TMI 1641 - AT - Income Tax

Extension of the stay originally granted - stay beyond the aggregate period of 365 days - section 254(2A) validity - HELD THAT - The Hon ble Delhi High Court in Pepsi Foods Pvt. Ltd vs. ACIT 2015 (5) TMI 655 - DELHI HIGH COURT has held that the third proviso to section 254(2A) is constitutionally invalid. The net effect of this judgment is that if the appeal could not be disposed of by the Tribunal for no fault of the assessee, then the power vests with the Tribunal to extend the stay beyond the aggregate period of 365 days. On merits, it is indisputably found that the terms of stay originally granted have been duly complied with. The appeal could not be finally heard for one reason or the other, but, for no fault of the assessee. Considering the entirety of the facts and circumstances of the instant case, we are inclined to grant extension of stay for a further period of six months from today or till the disposal of the appeal, whichever is earlier. The appeal is stated to be fixed for hearing on 19.7.2018. Stay application is allowed.

Summary

Issues:
Extension of stay granted by the Tribunal for assessment year 2010-11.
Validity of third proviso to section 254(2A) in light of the judgment in Pepsi Foods Pvt. Ltd vs. ACIT (2015) 376 ITR 87 (Del).
Compliance with the terms of stay originally granted.
Granting extension of stay based on compliance and circumstances.

Extension of Stay:
The assessee sought an extension of the stay granted by the Tribunal for the assessment year 2010-11. The conditions stipulated during the original grant of stay were claimed to have been complied with by the assessee. The delay in appeal disposal was attributed to reasons not related to the assessee. The Tribunal noted the judgment in Pepsi Foods Pvt. Ltd vs. ACIT (2015) 376 ITR 87 (Del), declaring the third proviso to section 254(2A) as constitutionally invalid. This judgment allowed the Tribunal to extend the stay beyond 365 days if the delay in disposal was not the assessee's fault. Considering the compliance with the original stay terms and the circumstances, the Tribunal granted an extension of stay for a further six months or until the appeal's disposal, whichever is earlier.

Validity of Third Proviso:
The judgment in Pepsi Foods Pvt. Ltd vs. ACIT (2015) 376 ITR 87 (Del) was crucial in determining the validity of the third proviso to section 254(2A). The High Court held the proviso as constitutionally invalid, granting the Tribunal the authority to extend stay beyond 365 days if the delay in appeal disposal was not due to the assessee's fault. This judgment played a significant role in the decision to grant the extension of stay in the present case.

Compliance with Stay Terms:
The Tribunal found that the terms of stay originally granted had been duly complied with by the assessee. Despite the appeal not being finally heard due to reasons unrelated to the assessee, compliance with the stay conditions was acknowledged. The Tribunal considered the entirety of the facts and circumstances, leading to the decision to grant the extension of stay for a further period of six months or until the appeal's disposal, whichever is earlier.

Granting Extension of Stay:
Based on the compliance with the original stay terms and the circumstances of the case, the Tribunal allowed the stay application, extending the stay for a further period. The decision was made considering the facts presented and in line with the judgment regarding the extension of stay beyond the stipulated period. The order was pronounced in open court on 22.06.2018, with the appeal set for hearing on 19.7.2018.

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