2024 (6) TMI 1029 - HC - Income Tax

Extension of stay beyond 365 days by ITAT - interpretation of the provisions of the third proviso to Section 254 (2A) and the amendment incorporated to the said provision by Finance Act, 2008 (with effect from 1 August 2008) by the words even if delay in disposing of appeal is not attributable to assessee were added HELD THAT - The constitutional validity of such amendment was challenged by Pepsi Foods (P) Ltd. The Delhi High Court considering the rival contentions, had struck down the impugned part of the third proviso to Section 254 (2A), which did not permit extension of stay of the said order beyond 365 days, even if the assessee was not responsible for delay in appeal. Such decision of the Delhi High Court was assailed by the revenue before the Supreme Court in the case of Pepsi Foods Ltd. 2021 (4) TMI 369 - SUPREME COURT In view of the authoritative pronouncement of Supreme Court interpreting the third proviso to Section 254 (2A) inserted by the Finance Act, 2008, we find that the question of law as urged for consideration, stands squarely answered by such decision of the Supreme Court. The appeal, therefore, cannot be entertained. It is accordingly disposed of upholding the orders passed by the tribunal.

Summary

Issues involved:
The appeal of the revenue assails an order granting extension of stay beyond 365 days by the Income Tax Appellate Tribunal.

Comprehensive details:
The respondent-assessee's application for extension of stay was allowed by the tribunal due to the revenue seeking adjournments on various occasions, while the assessee sought adjournment only once. The tribunal found the application fit for extension as the conditions of the stay order were complied with and the appeal was fixed for final hearing. The revenue challenged this decision, questioning the correctness of extending the stay beyond 365 days.

Legal Interpretation:
The counsel for the revenue acknowledged that the issue raised was settled by the Supreme Court in the case "Deputy Commissioner of Income Tax Vs. Pepsi Foods Ltd." The Delhi High Court had initially struck down the provision limiting the extension of stay to 365 days, even if the delay was not attributable to the assessee. The Supreme Court upheld this decision, clarifying that the delay in disposing of the appeal must be attributable to the assessee for the stay to be vacated after the specified period.

Conclusion:
Considering the authoritative pronouncement of the Supreme Court on the interpretation of the relevant provision, the High Court found that the question of law raised was conclusively answered. The appeal was disposed of, upholding the tribunal's orders. Another appeal by the revenue, related to a similar order, was also disposed of in line with the earlier decision.

Note:
No costs were awarded in either appeal.