2015 (4) TMI 683 - HC - Income Tax

Stay of recovery - Held that - The learned counsel for the petitioner has placed before us several orders passed by this court, whereby this Court has extended the stay initially granted by the Tribunal till the disposal of the appeal by the Tribunal in exercise of its jurisdiction under Article 226 of the Constitution. In fact, it is settled law that there is no bar for grant of such a relief if the Court is of the opinion that the circumstances and the ends of justice so warrant. This has also been stated clearly in Maruti Suzuki (2014 (2) TMI 1037 - DELHI HIGH COURT). We feel that since the petitioner had already been granted conditional stay by the Tribunal in respect of the said appeal and that the Tribunal is in the midst of hearing the appeal, it would be in the interest of justice that the stay order granted by the Tribunal is continued till the disposal of the appeal by the Tribunal. It is ordered accordingly.

Summary

Issues:
1. Extension of stay of recovery of balance amount in an income tax appeal.
2. Authority of the Tribunal to extend the period of stay beyond 365 days.
3. Jurisdiction of the High Court to grant stay under Article 226 of the Constitution.

Analysis:

Issue 1: Extension of stay of recovery of balance amount
The petitioner filed an appeal before the Income Tax Appellate Tribunal challenging an order by the Dispute Resolution Panel. The Tribunal initially granted a stay of demand on the condition of the petitioner depositing a sum of Rs. 3 crore. Subsequently, the Tribunal extended the interim stay. However, due to a decision by a Division Bench of the High Court limiting the Tribunal's authority to extend stay beyond 365 days, the petitioner could not seek further extension from the Tribunal. The appeal was listed for hearing, but due to reasons beyond the petitioner's control, it could not be taken up. The petitioner approached the High Court seeking a stay of recovery of the balance amount until the appeal is disposed of by the Tribunal.

Issue 2: Authority of the Tribunal to extend the period of stay
The Tribunal's authority to extend the period of stay beyond 365 days was questioned based on a decision by a Division Bench of the High Court. The High Court clarified that the Tribunal cannot extend the stay period beyond 365 days from the initial grant of stay. As the petitioner's appeal was pending and the 365-day period had elapsed, the Tribunal could not grant any further extension of stay. The High Court emphasized the importance of adhering to the legal limitations set forth by the Division Bench's decision.

Issue 3: Jurisdiction of the High Court to grant stay under Article 226
The High Court, in exercise of its jurisdiction under Article 226 of the Constitution, considered the circumstances and the ends of justice in granting a stay of recovery of the balance amount. The petitioner relied on previous orders where the High Court had extended stays granted by the Tribunal until the disposal of appeals. The High Court reiterated that it has the authority to grant such relief if deemed necessary for the interests of justice. In this case, considering that the Tribunal was in the process of hearing the appeal and had previously granted conditional stay, the High Court decided to continue the stay order until the appeal is disposed of by the Tribunal, thereby disposing of the writ petition.