2021 (2) TMI 283 - HC - Income Tax

Validity of order of Tribunal extending the stay beyond a period of 185 days - delay in disposing of the appeal is attributable to the assessee - Scope of Section 254(2A) - whether the Appellate Tribunal was right in law in extending stay of collection of demands beyond six months? - assessee has not made out the case before the first appellate authority and also not paid any tax dues beyond 20% of confirmed demand - HELD THAT - We find from the order that there is no discussion as to how the Tribunal was satisfied in directing the Revenue not to initiate coercive action against the assessee for recovery of outstanding demand. The power to be exercised by the Tribunal should be in accordance with Section 254(2A) read with the proviso thereunder. We find the order to be devoid of reasons though the order is a four page order, substantial part of the order is only the submissions made by the assessee, which are touching upon the merits of the matter and while holding that the order is devoid of reasons, we find that the Tribunal was justified in observing that they are not commenting upon the merits of the matter involved in the main appeal We are at a loss to understand as to how the Tribunal exercised its power in issuing a suo motu Corrigendum, that too by an undated order without hearing the Revenue or the Assessing Officer. As mentioned above, the appeal was not taken up for hearing on 13.01.2020 and obviously, the protection granted by the Tribunal in its interim order dated 20.12.2019 enured in favour of the assessee and the Revenue is right in its argument that the order of stay was in force beyond the period provided in the proviso to Section 254(2A) of the Act Tribunal, while issuing directions to the Departmental representative, not to exercise its jurisdiction against the assessee, should be traceable to the statutory provisions. We find that no such power has been conferred on the Tribunal under Section 254 of the Act. Tribunal has no such power to issue directions, but has got power to grant an interim order under Section 254, subject to the conditions stipulated therein. Therefore, we are compelled to answer the substantial questions of law in favour of the Revenue and against the assessee.

Summary

Issues Involved:
1. Extension of stay beyond 185 days.
2. Legality of extending stay of collection of demands beyond six months without considering jurisdictional High Court and Supreme Court rulings.
3. Direction to Revenue from taking coercive action despite the assessee not making out a case before the first appellate authority or paying tax dues beyond 20% of confirmed demand.

Issue-wise Detailed Analysis:

1. Extension of Stay Beyond 185 Days:
The Revenue questioned whether the Appellate Tribunal was correct in extending the stay beyond 185 days when the delay in disposing of the appeal was attributable to the assessee, contrary to Section 254(2A) of the Income Tax Act. The Tribunal initially directed the Revenue not to initiate coercive action against the assessee for recovery of the outstanding demand, but the order was found devoid of reasons. The Tribunal's practice of issuing a suo motu Corrigendum to an already signed order was criticized, as it was beyond its jurisdiction and not in accordance with Section 254(2A). The Tribunal's actions resulted in an unfair advantage to the assessee, as the interim protection continued beyond the statutory period due to procedural delays.

2. Legality of Extending Stay Beyond Six Months:
The Tribunal extended the stay of collection of demands beyond six months without adequately considering relevant jurisdictional High Court and Supreme Court rulings. The Tribunal's direction to the Departmental representative to inform the Assessing Officer not to initiate coercive measures was deemed beyond its jurisdiction. The Tribunal's power to issue such directions was not traceable to the statutory provisions under Section 254 of the Act. The Tribunal's order was thus considered non-est in the eye of law, and the Departmental representative had no jurisdiction to consent to such directions without written approval from the competent authority.

3. Direction to Revenue from Taking Coercive Action:
The Tribunal directed the Revenue not to take coercive action despite the assessee not making out a case before the first appellate authority or paying tax dues beyond 20% of the confirmed demand. The Tribunal's directions were issued without establishing the assessee's financial difficulties and were primarily based on the pandemic situation. The Tribunal's power to grant interim orders under Section 254 was subject to specific conditions, which were not adequately considered in this case. The Tribunal's actions were beyond its jurisdiction, and the substantial questions of law were answered in favor of the Revenue.

Conclusion:
The Tribunal's actions in extending the stay and issuing directions to the Revenue were beyond its jurisdiction and not in accordance with Section 254(2A) of the Income Tax Act. The substantial questions of law were answered in favor of the Revenue. However, the court declined to interfere with the impugned order as the main appeal was already heard and reserved for orders, making the issue academic. The appeal was disposed of accordingly, with no costs.