2012 (12) TMI 372 - AT - Income Tax

Extension of stay of demand - stay beyond 365 days - T.P adjustment and disallowance u/s 40(a)(i) - held that - inherent jurisdiction of the Tribunal to grant Interim relief so as to make the ultimate relief effective cannot be curtailed indirectly by Sub-section (2A) of sec. 254 of the Act. At the end of the period of 365 days when the appellant makes an application for extension of the stay, the Tribunal can always consider whether there is any change in the circumstances which would justify extension or modification of the stay The Revenue gets an opportunity to bring to the notice of the Tribunal such changed circumstances - when there is nothing to suggest that delay in disposal of appeal is attributable to the assessee, we extend the period of stay of demand until 31st March, 2012 or until disposal of appeal, whichever earlier - assessee shall not seek adjournment on the date of hearing of the appeal, now fixed for 8.11.2012 and in case of breach of this condition, the stay granted shall be vacated forthwith unless directed otherwise by the Bench. Decided in the case of Hon ble Bombay High Court in CIT vs.Ronuk Industries Ltd 2010 (11) TMI 461 - BOMBAY HIGH COURT followed.

Summary

Issues:
Extension of period of stay of demand beyond 365 days.

Analysis:
The judgment involves the issue of extending the period of stay of demand beyond 365 days. The assessee filed an application seeking an extension of the stay of demand of Rs.75,61,09,588 for the AY 2007-08, which was initially granted until 30.04.2012 and subsequently extended until 3rd October, 2012 or till the disposal of appeal. The delay in the disposal of the appeal was not attributable to the assessee. The Tribunal referred to the decision in Tata Communication Limited vs. ACIT and the decision of the Hon'ble Bombay High Court in CIT vs. Ronuk Industries Ltd., which allowed the Tribunal to extend the stay of demand beyond 365 days if the delay was not due to the assessee.

The ld. DR opposed the extension, citing the decision of the Hon'ble Karnataka High Court in CIT Vs. M/s Ecom Gill Coffee Trading Pvt. Ltd., which held that the Tribunal did not have the power to grant stay beyond 365 days. The Tribunal noted the conflicting views of different High Courts on this issue. The Tribunal referred to the decision in Kanel Oil & Export Industries Ltd. vs. JCIT, which stated that in the absence of a decision from the jurisdictional High Court, the Tribunal is free to adopt the view that appeals to it, favoring the assessee.

The Tribunal also cited the decision of the Hon'ble Supreme Court in ITO v. M. K. Mohammed Kunhi, emphasizing that the power of the appellate authority to grant stay was essential to render justice and prevent injustice during the pendency of an appeal. The Tribunal held that the third proviso to Section 254 (2A) of the Act did not curtail the inherent power of the Tribunal to grant stay in appropriate cases. The Tribunal concluded that the Tribunal had the power to grant a further stay on the expiry of six months if the facts and circumstances warranted it.

In light of the above analysis, the Tribunal allowed the stay petition and extended the period of stay of demand until 31st March, 2012 or until the disposal of the appeal, whichever was earlier. The assessee was directed not to seek adjournment on the date of the appeal hearing, and failure to comply would result in the vacation of the stay granted unless directed otherwise by the Bench.