2017 (1) TMI 881 - HC - Income Tax

Stay of demand - Non-disposal of appeal - appeal non attributable to the assessee - extension of stay for a further period of 180 days or till the disposal of appeal - stay has exceeded 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:
1. Interpretation of Section 254(2A) of the Income Tax Act, 1961 regarding the extension of stay beyond 365 days.
2. Application of relevant case law and statutory provisions to determine if delay in disposal of appeal is attributable to the assessee.
3. Consideration of the constitutional validity of the third proviso to Section 254(2A) of the Income Tax Act, 1961.

Analysis:
1. The appellant-Revenue filed an appeal under Section 260A of the Income Tax Act against the order of the Income Tax Appellate Tribunal (ITAT) extending the stay for a further 180 days or until the disposal of the appeal. The substantial questions of law raised included contravention of the Second Proviso of Section 254(2A) and the treatment of the ITAT order as void-abinitio under the Third Proviso.

2. The court referred to various decisions, including one involving M/s Carrier Air Conditioning and Refrigeration Limited, to determine that the delay in disposing of the appeal not attributable to the assessee could lead to an extension of stay beyond 365 days. The court also cited a case involving M/s Voice Telesystem to support the view that interim protection can continue beyond 365 days if the delay is not the fault of the assessee.

3. The court examined the constitutional validity of the third proviso to Section 254(2A) in light of Article 14 of the Constitution of India. It held that the provision, which mandated the vacation of stay after 365 days regardless of the reason for delay, was discriminatory and violated the rights of the assessee. The court emphasized that the Tribunal has the power to grant an extension of stay beyond 365 days in deserving cases where the delay is not attributable to the assessee.

4. Ultimately, the court found no error in the Tribunal's order and dismissed the appeal. It emphasized the need for expeditious disposal of appeals in accordance with the law, highlighting the importance of considering the circumstances leading to delays in the disposal of appeals.

This detailed analysis of the judgment highlights the key legal issues addressed by the court, including the interpretation of statutory provisions, application of case law, and the constitutional validity of provisions affecting the rights of the parties involved.