2016 (5) TMI 1232 - HC - Income Tax

Stay of demand extended beyond 365 days - Held that - The matter is no longer res integra. While interpreting the provisions of Section 35C(2A) of the Central Excise Act, 1944 which is pari materia to section 254(2A) of the I.T. Act, this Court in Commissioner of Central Excise, Rohtak vs. M/s Voice Telesystem (2016 (1) TMI 1101 - PUNJAB & HARYANA HIGH COURT ) after considering the relevant case law on the point concluded that wherever the appeal could not be decided by the Tribunal due to pressure of pendency of cases and delay in the disposal of the appeal is not attributable to the assessee in any manner, the interim protection can continue beyond 365 days in deserving cases. Reference was made to the judgment of the Apex Court in Commissioner of Customs & Central Excise, Ahmedabad vs. Kumar Cotton Mills Pvt. Limited, (2005 (1) TMI 114 - SUPREME COURT OF INDIA ). Thus ITAT has not acted in contravention of the Second Proviso of Section 254(2A) of the Income Tax Act, 1961 as the combined period of stay has exceeded 365 days - Decided against revenue

Summary

Issues:
1. Interpretation of Section 254(2A) of the Income Tax Act, 1961 regarding the duration of stay of demand.
2. Validity of the Tribunal's decision to extend the stay of demand beyond 365 days.

Analysis:

Issue 1:
The appeal was filed by the revenue under section 260A of the Income Tax Act, 1961, challenging the order of the Income Tax Appellate Tribunal (ITAT) regarding the stay of demand for the assessment year 2008-09. The Tribunal had extended the stay of demand based on the decision of the Delhi High Court in Pepsi Foods Pvt. Limited vs. ACIT. The revenue contended that the Tribunal's decision was contrary to the provisions of section 254(2A) of the Act, specifically the second and third provisos. The Tribunal had granted multiple extensions of the stay of demand, leading to the revenue's appeal.

Issue 2:
The High Court referred to previous judgments to analyze the interpretation of Section 254(2A) of the Act. Citing the case of Commissioner of Central Excise vs. M/s Voice Telesystem and Principal Commissioner of Income Tax vs. Carrier Air Conditioning and Refrigeration Limited, the Court concluded that in cases where the delay in appeal disposal is not attributable to the assessee, the interim protection can continue beyond 365 days. The Court highlighted that the delay in disposal of appeals due to the pressure of pending cases should not penalize the assessee. Based on these precedents, the Court found no error in the Tribunal's decision to extend the stay of demand and dismissed the appeal by the revenue.

In conclusion, the High Court upheld the Tribunal's decision to extend the stay of demand beyond 365 days, emphasizing that in deserving cases where delay in appeal disposal is not the fault of the assessee, interim protection can continue. The Court's analysis was based on previous judgments interpreting similar provisions in other Acts, ensuring fairness in the application of the law.