2024 (7) TMI 434 - AT - Income Tax

Application for extension of stay of demand - proceedings going on with grant of extension of stay has exceeded 365 days - non-disposal of rectification application by DRP - HELD THAT - As examined the assessee has all throughout acted in a bonafide manner and has cooperated with the department but has not got any relief by way of disposal of its rectification application which is pending before the department. The assessee has also taken reasonable efforts to pursue the matter for a speedy disposal from the department as had been evidenced on record. Considering the totality of facts and circumstances of the case, specifically the delay caused by the department in not disposing the rectification application filed by the assessee dated 31.12.2020, we are of the considered view that DRP shall pass order within a period of two months from the date of receipt of this order and the ld. DR is directed to make all efforts and communications with the DRP so that the said pending proceedings are completed within the said time frame. The assessee is also directed to ensure requisite compliance with any notices of the DRP, if any, and make reasonable efforts so that the proceedings before the DRP are completed within the time limit specified in this order. There is also an appeal pending before the ITAT filed by the assessee. Therefore, this stay is granted for a period of 180 days or till the disposal of the appeal, whichever is earlier. The stay is granted as per the above terms and conditions

Summary

Issues:
Extension of stay of demand exceeding 365 days, non-disposal of rectification application by DRP, inherent power of Tribunal to grant interim relief, legal provisions regarding vacation of stay of demand, bonafide conduct of the assessee, direction for timely disposal of rectification application.

Analysis:
The judgment pertains to an application for the extension of stay of demand amounting to Rs. 7,34,33,297/- filed by the assessee. The Tribunal noted that the stay had been previously extended multiple times due to the bonafide conduct of the assessee and the delay in final disposal of the matter not being attributable to any deliberate or malafide conduct on the part of the assessee. It was highlighted that the assessee had filed a rectification application before the DRP, which remained pending, and the delay in disposal of the application was not due to any malafide conduct of the assessee.

The Tribunal acknowledged the power vested in it to grant interim relief, citing legal precedents such as the case of ITO Vs. N.K. Mohammed Kunhi. It was emphasized that the Tribunal could continue the interim relief even if the delay in disposal of the appeal exceeded 365 days, as per the recent legal developments striking down the provision for automatic vacation of stay of demand in such cases. The judgment clarified that if the delay was not attributable to the assessee and the assessee acted bonafide, the stay of demand could be extended beyond 365 days.

In the present case, the Tribunal found that the assessee had acted in a bonafide manner, cooperated with the department, and made reasonable efforts to pursue the disposal of the rectification application pending before the DRP. In light of the delay caused by the department in disposing of the rectification application, the Tribunal directed the DRP to pass an order within two months and instructed the assessee to ensure compliance with any notices from the DRP. The stay of demand was granted for 180 days or until the disposal of the appeal, whichever occurred earlier, with specific terms and conditions.

Ultimately, the Tribunal allowed the stay application of the assessee, emphasizing the importance of timely disposal of pending proceedings and compliance with directives issued in the judgment.