2002 (8) TMI 269 - AT - Income Tax

Summary

Issues involved:
The issues involved in this legal judgment include the extension of stay against recovery of tax amount, interpretation of the provisions of s. 254 of the IT Act regarding the Tribunal's power to grant further stay, and the impact of sub-s. (2A) of s. 254 on the Tribunal's authority to extend stay beyond six months.

Extension of Stay Against Recovery of Tax Amount:
The assessee, a charitable institution, sought a further stay against the recovery of tax amounting to Rs. 40,45,368. The Tribunal had earlier granted a stay till a specified date subject to a payment of Rs. 5 lakhs. The assessee moved a fresh application for stay due to the expiry of the previous stay, emphasizing cooperation during the appeal process and requesting an extension for six months or until the appeal's disposal.

Interpretation of Tribunal's Power to Grant Further Stay:
The Revenue contended that the Tribunal lacks the authority to extend stay beyond six months as per the newly inserted sub-s. (2A) of s. 254 of the IT Act. The assessee argued that the legislative intent was to expedite appeal disposal and prevent delays, not to restrict the Tribunal's power to grant stay. Citing the Supreme Court's judgment in ITO vs. M.K. Mohd. Kunhi, the assessee asserted that the Tribunal has inherent powers to grant stay as necessary for justice.

Impact of Sub-s. (2A) of s. 254 on Tribunal's Authority:
The Tribunal examined the provisions of s. 254, explanatory notes on clauses of Finance Bill 1999, and relevant Board Circulars. It was noted that the insertion of sub-s. (2A) aimed to ensure timely appeal disposal. However, the Tribunal concluded that there was no intention to curtail the Tribunal's power to grant a further stay beyond six months. Relying on judicial precedents, including Ritz Ltd. vs. D.D. Vyas, Agra Beverages Corpn. (P) Ltd. vs. ITAT, and CIT vs. Smt. S. Vijayalakshmi, the Tribunal held that it retains the authority to grant a further stay based on the facts and circumstances of the case.

Separate Judgement:
In a separate stay application, the Tribunal extended the stay granted earlier until the final order of the Tribunal or 31st Jan., 2003, whichever is earlier. The extension was deemed necessary to prevent injustice to the assessee pending the final order of the Tribunal.