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TMI Blog2014 (2) TMI 1037X X X X Extracts X X X X X X X X Extracts X X X X ..... he appeal but the said right is circumscribed and has to be exercised within the four corners of Section 254(2A) of the Income tax Act, 1961 (Act for short). The said section reads:- "254. Orders of Appellate Tribunal.- (1) The Appellate Tribunal may, after giving both the parties to the appeal an opportunity of being heard, pass such orders thereon as it thinks fit. xxxxx (2A) In every appeal, the Appellate Tribunal, where it is possible, may hear and decide such appeal within a period of four years from the end of the financial year in which such appeal is filed under sub-section (1) or subsection (2) of section 253 : Provided that the Appellate Tribunal may, after considering the merits of the application made by the assessee, pass an order of stay in any proceedings relating to an appeal filed under sub-section (1) of section 253, for a period not exceeding one hundred and eighty days from the date of such order and the Appellate Tribunal shall dispose of the appeal within the said period of stay specified in that order: Provided further that where such appeal is not so disposed of within the said period of stay as specified in the order of stay, the Appellate Tribunal may, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... make such grant effective. Power to the tribunal under Section 254 of the Act, was/is of widest amplitude and, therefore, carried with it by necessary implication all powers and duties incidental and necessary to make the exercise of power fully effective. Reference was made to the powers of the court of appeal to grant stay in Polini vs.Gray [1879] 12 Ch.D 438, wherein it has been observed as under:- "It appears to me on principle that the Court ought to possess that jurisdiction, because the principle which underlies all orders for the preservation of property pending litigation is this, that the successful party in the litigation, that is, the ultimately successful party, is to reap the fruits of that litigation, and not obtain merely a barren success. That principle, as it appears to me, applies as much to the Court of first instance before the first trial, and to the Court of appeal before the second trial, as to the Court of last instance before the hearing of the final appeal." 5. The aforesaid incidental powers are subject to and can be circumscribed by the statute. Tribunals have statutory power under Rule 35A of the Appellate Tribunals Rules 1963 to grant stay of deman ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll stand vacated after the expiry of such period or periods." 7. The effect of the added provisos as they then existed was considered by the Bombay High Court in Narang Overseas P. Ltd.v. ITAT and others (2007) 295 ITR 22 (Bom) and it was held that the provisos and the Section did not exclude or negate the power of the tribunal to grant relief after the period of 180 days. The intent of the Parliament was not to denude the tribunal of its incidental power to continue the interim reliefs and the mischief which the amendment sought to curtail was long delay and disposal of the proceedings where interim relief was obtained by the assessee. The second proviso read in a reasonable manner was to avoid and check this mischief and not an arbitrary mandate to deny an assessee continuation of interim relief beyond 180 days, when he was not at fault. Amendment of 2007 had extended the period of interim relief to 365 days with the intent that the tribunal should take note of the delay and it was not with the objective to defeat the rights of the assessee when the appeal could not be disposed of even when there was no omission or failure on the assessee's part but either for failure of the tri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ative intent consequent to the amendment. At this stage, we would like to take notice of the decision of Punjab and Haryana High court in PML Industries Ltd. vs. Commissioner of Central Excise 2013 (30) STR 113 (P&H), relating to provisions of Section 35(2A) of the CE Act. In the said decision after extensively referring to the case law on the subject and applying the doctrine of reading down, the High Court has held that the circular in question, which stipulated that the demand if not stayed by the tribunal within 30 days would be recovered, should be struck down. It was observed:- "52. The assessee having preferred appeal and that Tribunal being satisfied that condition for dispensing with the pre-deposit of duty demanded and penalty levied is made out, is compelled to pay the duty demanded and penalty levied, if the appeal is not decided within 180 days. The assessee has no control in respect of matters pending before the Tribunal; in the matter of availability of infrastructure; the members of the Tribunal and the workload. Therefore, for the reason that the Tribunal is not able to decide appeal within 180 days, the vacation of stay is a harsh and onerous and unreasonable con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inconsequential and in fact have been added in view of the ratio and the reasoning given in the aforesaid two decisions. This clearly underscores and highlights the intention of the Legislature. 12. Learned counsel for the assessees have submitted that the provision after amendment is unduly harsh, if not draconian as the assessee will now suffer for no fault or even when faults or delay are directly attributable to the Revenue. There could be faults and delay because the Bench of the tribunal may not be able to hear the appeal or the upper time limit specified comes to an end even when the judgment is reserved or judgment of the High Court or of special Bench is awaited. 13. Indeed there can be numerous reasons and causes why appeals, after grant of stay, may not get finally decided within 365 days. There is also merit in the contention of the counsel for the assessees that when an assessee is at fault and delay is attributable to him, invariably a stay granted is vacated or should be vacated by the tribunal. Stay is granted or extended only when prima facie case is made out and the assessee does not delay the proceedings. The provisions are clear that the tribunal can vacate or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rim stay order beyond 365 days. It stipulates deemed vacation and imposes no fault consequences in strict terms. The language is clear and therefore has to be respected. However, the provision does not bar or prohibit an assessee from approaching the High Court by way of writ petition for continuation, extension or grant of stay. Fairly, the standing counsel for Revenue accepts and admits that in spite of Section 254(2A), the High Court has power to grant and extend stay where the appeal is pending before the tribunal. The constitutional power and right is available and has not and cannot be curtailed. The powers of the High Court under Articles 226 and 227 form a part and parcel of the basic structure of the Constitution and cannot be over written and nullified as held by the Constitutional Bench in L. Chandra Kumar versus Union of India, (1997) 3 SCC 261. Thus, the High Court in appropriate matters can grant or extend stay even when the tribunal has not been able to dispose of an appeal within 365 days from the date of grant of initial stay. This perhaps appears to be and apparently is the intention of the Parliament. High Court while granting or rejecting the writ petition will ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that in the case of Maruti Suzuki Ltd., the tribunal had stayed the demand for a period of 6 months or till disposal of the appeal whichever was earlier by order dated 3rd February, 2012. The stay was extended vide order dated 28th August, 2012 for 5 months, which came to an end on 28th January, 2013. The stay was further extended by the tribunal vide order dated 8th February, 2013 for another period of 4 months. Similarly, in the case of Bose Corporation India Private Limited stay was granted for the first time on 9th December, 2011 for a period of 6 months, second time on 15th June, 2012 for a period of 180 days and third time on 4th January, 2013 for a period of 6 months. In spite of objections of the Revenue, for the fourth time stay was granted on 12th July, 2013 for another period of 180 days. 20. In light of the said submissions, while reserving the judgment on 7th November, 2013, we had asked Mr. Rajeeve Mehra, Additional Solicitor General of India to furnish information/details from the tribunal. The relevant portion of the order dated 7th November, 2013 reads as under:- "We feel it appropriate and proper to get data from the Tribunal for last three years with regard ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5 days of grant of stay, have come down sharply in the year 2013. Grant of stay by the tribunal is not a matter of right, but is decided by a speaking order, recording prima facie view on merits. In case there is an error or the tribunal has erred in granting stay, Revenue is not without remedy and can approach the High Court in accordance with law. 23. We do not have figures or data on whether the demands raised, which was subject matter of stay, was sustained/upheld or were deleted by the tribunal. Merits and justification of additions is examined by the appellate forums and demands raised have relevance when they are sustained by the tribunal/High Court and the Supreme Court. 24. Registry of this Court has made available to us following data:- A B C D E Year TOTAL NUMBER OF INCOME TAX APPEALS APPEALS FILED BYCIT APPEALS FILED BY ASSESSEE % OF APPEALS FILED BY ASSESSEE 2009 1367 1128 239 18 2010 2063 1790 273 13 2011 1303 1121 182 14 2012 711 578 133 19 2013 584 464 120 21 (The data/figures in columns C and D have been manually calculated and thus subject to marginal calculation error). 25. The aforesaid data reveals that Revenue is the appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er Section 234B of the Act. By the impugned order dated 4th January, 2013, stay was extended by 180 days or till the disposal of the appeal, whichever occurs first. The impugned order records that after 15th June, 2012, the appeal was listed thrice for hearing on 3rd July, 2012, 13th August, 2012 and 8th November, 2012, but adjournments were taken by the departmental representative. Earlier also on 16th February, 2012, the departmental representative had taken an adjournment. However, the assessee had taken adjournment on 11th April, 2012 on the ground of change in counsel. 30. The aforesaid facts have not been denied in the writ petition, but reference is made to the statutory provisions. W.P.(C) 5086/2013 (CIT versus M/s Maruti Suzuki (India) Ltd.) 31. The writ petition relates to assessment year 2007-08 and the impugned order granting stay or extending stay beyond 365 days is dated 8th February, 2013. The impugned order records submission of the assessee that additional demand raised by the Assessing Officer including interest stands at Rs. 359 crores. As per the impugned order, demand of Rs.184 crores is already concluded or covered by issues which have been decided in favou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent continued. Adjourned to 08.05.2013. 22 08.05.2013 15.05.2013 23. 05.2013 Special counsel's argument continued.23 23.05.2013 04.06.2013 Member on leave 24 04.06.2013 02.07.2013 Member on leave and Adjourned by both parties. " 33. It is apparent that the department had engaged special counsel in the present case. 34. It is noticeable that in the writ petition the Revenue has not stated or averred that the assessee is responsible for the delay or was adopting dilatory tactics to prevent adjudication of the appeal. 35. Keeping in view the aforesaid facts, we direct that in case appeals filed by the two assessees have not been disposed of, the same should be disposed of expeditiously and preferably within a period of two months. The impugned demand shall remain stayed during the said period in case appeals have not yet been disposed of. However, in case the appeals are not disposed of within the said period, it will be open to the assessee to file a writ petition in the High Court for grant of stay of the impugned demand. It will be also open to the tribunal to proceed in accordance with the law as indicated above. 36. The writ petitions are accordingly disposed of, witho ..... X X X X Extracts X X X X X X X X Extracts X X X X
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