2016 (4) TMI 387 - AT - Income Tax

Stay of demand - Held that - Delay in deciding the appeal cannot be attributed to the assessee. The stay is extended for a period of six months or disposal of appeal whichever is earlier. It goes without saying that no adjournment on any unreasonable ground shall be sought by the assessee on the next date of hearing

Summary

Issues Involved:
1. Extension of Stay Beyond 365 Days
2. Interpretation of Section 254(2A) of the Income Tax Act, 1961
3. Application of Judicial Precedents

Detailed Analysis:

1. Extension of Stay Beyond 365 Days:
The primary issue in this case was whether the Income Tax Appellate Tribunal (ITAT) could extend the stay beyond 365 days. The assessee had originally been granted a stay for six months, which was subsequently extended for another six months. The hearing of the appeal had concluded within the stipulated period, but the final decision was delayed due to no fault of the assessee. The Tribunal found that the delay in disposing of the appeal was not attributable to the assessee and thus decided to extend the stay.

2. Interpretation of Section 254(2A) of the Income Tax Act, 1961:
The Tribunal examined the relevant provisions of Section 254(2A) of the Income Tax Act, 1961, which allows the ITAT to grant a stay initially for a period of six months and extend it for another six months if the delay is not attributable to the assessee. The third proviso to this section, which limits the total stay period to 365 days, was scrutinized. The Tribunal referred to the judgment of the Jurisdictional High Court in Pepsi Foods Pvt. Ltd., which held that the third proviso created "hostile discrimination" against law-abiding assessees by treating them the same as those who delay proceedings. The High Court had struck down this proviso as violative of Article 14 of the Constitution of India, allowing the ITAT to extend the stay beyond 365 days in deserving cases.

3. Application of Judicial Precedents:
The Tribunal relied on several judicial precedents to support its decision. It referred to the case of Maruti Suzuki India, where the High Court had not examined the constitutional validity of the third proviso to Section 254(2A). The Tribunal also cited the case of M/s Sun Life India Service Centre Pvt. Ltd. vs DCIT, where it was held that there is no impediment to extending the stay beyond 365 days in deserving cases. Additionally, the Tribunal referred to the decision of the Punjab & Haryana High Court in PML Industries Ltd., which held that the automatic vacation of stay after a specified period is unreasonable if the delay is not attributable to the assessee.

Conclusion:
The Tribunal concluded that in deserving cases, it is empowered to extend the stay beyond 365 days. The facts of the present case showed that the delay in disposing of the appeal was not attributable to the assessee. Therefore, the stay was extended for a further period of six months or until the disposal of the appeal, whichever is earlier. The Tribunal emphasized that no adjournment on unreasonable grounds should be sought by the assessee in the future.

The order was pronounced in the open court on April 7, 2016.