2018 (8) TMI 722 - HC - Income Tax

Power of ITAT to extend the stay of demand - combined period of stay has exceeded 365 days - Whether the order of the ITAT be treated as void ab initio in light of Third Proviso to Section 254 (2A) of the Income Tax Act, 1961, which provides that stay of demand stands vacated after expiry of a period of 365 days, even if delay in disposal of appeal is not attributable to the assessee? Held that - The matter is no longer res integra. While interpreting the provisions of Section 35C(2A) of the Central Excise Act, 1944 which is pari materia to section 254(2A) of the Act, this Court in 2016 (1) TMI 1101 - PUNJAB & HARYANA HIGH COURT after considering the relevant case law on the point concluded that wherever the appeal could not be decided by the Tribunal due to pressure of pendency of cases and delay in the disposal of the appeal is not attributable to the assessee in any manner, the interim protection can continue beyond 365 days in deserving cases. Accordingly, we do not find any error in the impugned order passed by the Tribunal. Thus, no substantial question of law arises. - Decided against the revenue.

Summary

Issues:
1. Interpretation of Section 254(2A) of the Income Tax Act, 1961 regarding the duration of stay of demand.
2. Whether delay in disposal of appeal attributable to the assessee affects the continuation of stay beyond 365 days.

Analysis:
1. The appeal was filed by the revenue challenging the order of the Income Tax Appellate Tribunal (ITAT) regarding the duration of stay of demand under Section 260A of the Income Tax Act, 1961. The main contention was whether the Tribunal contravened the Second Proviso of Section 254(2A) by exceeding the combined period of stay beyond 365 days. The assessee's income was initially assessed at ?17,60,17,290, with subsequent adjustments leading to a demand of ?7,43,96,230. The Tribunal granted stay extensions, ultimately allowing the stay until the disposal of the appeal on 8.9.2017. The appellant argued that the Tribunal's decision was contrary to the provisions of Section 254(2A).

2. The High Court referred to similar cases under the Central Excise Act, 1944, and previous judgments to interpret the provisions of Section 254(2A) of the Income Tax Act. It was noted that if the delay in appeal disposal is not attributable to the assessee and due to the pressure of pending cases, the interim protection can continue beyond 365 days in deserving cases. Citing relevant case law, the Court emphasized that the duration of stay can be extended if the delay is not caused by the assessee. Relying on precedents, the Court found that the Tribunal's decision was in line with the legal principles and dismissed the appeal, stating that no substantial question of law arose.

This comprehensive analysis of the judgment highlights the interpretation of Section 254(2A) of the Income Tax Act, 1961, and the application of legal principles regarding the duration of stay of demand and its extension beyond 365 days when the delay in appeal disposal is not attributable to the assessee.