2016 (4) TMI 253 - HC - Income Tax

Extension stay of demand in favour of the assessee beyond the period prescribed under the third proviso to subsection (2A) of section 254 - Held that - Extension of stay of the demand beyond the total period of 365 days from the date of grant of initial stay would always be subject to subjective satisfaction of the Tribunal; on an application made by the petitioner to extend the stay; and on being satisfied that the delay in disposing of the appeal within a period of 365 days from the date of grant of initial stay is not attributable to the assessee. In the facts of the present case, the Tribunal while extending the stay beyond the period of 365 days from the date of initial stay, has recorded satisfaction as regards compliance of the conditions of payment of the disputed tax as stipulated under the stay order and has also recorded a finding that non-disposal of the appeal is not attributable to the assessee. The learned counsel for the respondent assessee has produced copies of the record and proceedings of the Tribunal to further point out that the appeals have not yet been heard as the Departmental Representative had prayed for an adjournment because the necessary case papers were not available to submit that even further delay is not attributable to the assessee. Applying the decision of this court in the case of Deputy Commissioner of Income Tax v. Vodafone Essar Gujarat Ltd. (2015 (7) TMI 15 - GUJARAT HIGH COURT), to the facts of the present case, it cannot be said that the impugned order passed by the Tribunal suffers from any legal infirmity warranting interference.

Issues Involved: Extension of stay of demand beyond 365 days, compliance with Section 254(2A) of the Income Tax Act, Tribunal's power to extend stay, and attributability of delay.

Issue-wise Detailed Analysis:

1. Extension of Stay Beyond 365 Days:

The petitions challenge the Income Tax Appellate Tribunal's order extending the stay of demands beyond 365 days. The Tribunal had initially granted a stay on the outstanding demand subject to certain payments by the assessee. Since the appeals were not disposed of within the stipulated period, the Tribunal extended the stay multiple times, with the latest extension being challenged here.

2. Compliance with Section 254(2A) of the Income Tax Act:

The petitioner argued that the third proviso to Section 254(2A) of the Income Tax Act mandates that the stay order shall stand vacated after 365 days, even if the delay is not attributable to the assessee. The petitioner contended that extending the stay beyond this period is illegal and without jurisdiction.

3. Tribunal's Power to Extend Stay:

The respondent countered by citing the decision in Deputy Commissioner of Income Tax v. Vodafone Essar Gujarat Ltd., where it was held that the Tribunal has the power to extend the stay beyond 365 days. The court emphasized that this extension is subject to the Tribunal's satisfaction that the delay is not attributable to the assessee and that the Tribunal must make efforts to dispose of such appeals promptly.

4. Attributability of Delay:

The Tribunal noted that the assessee complied with the payment conditions and that the delay in disposing of the appeal was not attributable to the assessee. The respondent further pointed out that adjournments were requested by the Departmental Representative due to unavailability of case records, thus attributing the delay to the petitioner.

Conclusion:

The court upheld the Tribunal's decision to extend the stay beyond 365 days, applying the precedent set in the Vodafone Essar case. The Tribunal's satisfaction regarding the assessee's compliance and non-attributability of the delay was deemed sufficient. The petitions were dismissed, and the Tribunal was requested to expedite the disposal of the appeals within three months.

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