2016 (5) TMI 396 - HC - Income Tax

Stay of demand exceeding 365 days - Held that - Wherever the appeal could not be decided by the Tribunal due to pressure of pendency of cases and the delay in disposal of the appeal is not attributable to the assessee in any manner, the interim protection can continue beyond 365 days in deserving cases

Summary

Issues:
Appeal by revenue under section 260A of the Income Tax Act against ITAT order for assessment year 2009-10. Interpretation of Section 254(2A) of the Act regarding stay of demand exceeding 365 days.

Analysis:
The appeal was filed by the revenue against the ITAT order for the assessment year 2009-10, raising substantial questions of law regarding the contravention of Section 254(2A) of the Income Tax Act. The appellant contended that the Tribunal's decision to extend the stay beyond 365 days was contrary to the provisions of the Act. The relevant statutory provision, Section 254(2A), was examined, which provides for the extension of stay for a maximum of 365 days, after which the order of stay shall stand vacated even if the delay in disposal of the appeal is not attributable to the assessee.

The facts of the case revealed that the assessee had filed an appeal before the Tribunal against the assessment order, and the stay was initially granted for a period that expired on a specified date. Subsequently, the Tribunal extended the stay further, leading to the revenue's challenge. The Court referred to a similar provision under the Central Excise Act and a relevant case law, emphasizing that in cases where delay in disposal of appeal is not due to the assessee, interim protection can continue beyond 365 days. The Court highlighted the importance of not punishing assessees for matters beyond their control and allowing extensions based on genuine reasons.

The Court further cited a judgment that struck down a provision limiting the extension of stay beyond 365 days, emphasizing the need for a fair and non-discriminatory approach towards assessees. It was concluded that the Tribunal has the power to grant extensions of stay beyond 365 days in deserving cases where delay is not attributable to the assessee. The decision was supported by legal precedents and the interpretation of relevant statutory provisions.

In light of the legal position and precedents, the Court found no error in the Tribunal's decision to extend the stay and dismissed the appeal by the revenue. It was held that no substantial question of law arose from the case, affirming the Tribunal's order in favor of the assessee.