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TMI Blog2016 (2) TMI 398X X X X Extracts X X X X X X X X Extracts X X X X ..... er dated 31.8.2012 was pleased to grant an order of stay of recovery of outstanding demand subject to the Assessee paying outstanding demand to the extent of Rs. 4 Crores in instalments as set out in the said order. The order of stay was granted only for a period of 180 days or till disposal of the appeal by the Tribunal, whichever was earlier. There is no dispute that the Assessee had complied with the aforesaid order of the Tribunal. The Appeal was fixed out of turn for hearing by the aforesaid order on 27.11.2012. The appeal could not be heard within the period of 180 days for which the order of stay was to remain in force. Since the period of operation of order of stay of recovery of outstanding demand had come to an end on 27.1.2013, the Assessee filed an application viz., S.P.No.72/Bang/2013 on 23.4.2013 praying for an order extending the order of stay of recovery of outstanding demand for another period of 180 days. This Tribunal by an order dated 23.8.2013 was pleased to extend the order of stay of recovery of outstanding demand for a period of 180 days from 23.8.2013 or till disposal of the appeal of the Assessee whichever was earlier. The period of stay as per this order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was fixed for hearing on 1 July, 2015. 01-Jul-15 The matter was adjourned due to conflict of interest with the Hon'ble Accountant Member and the matter was fixed for hearing on 8 December, 2015 08-Dec-15 The Departmental Representative sought an adjournment and the matter was fixed for hearing on 24 May, 2016. 24-May-16 Next date of hearing 4. The Assessee has filed the present petition on 17.2.2014 praying for an order extending the order of stay already granted on 23.8.2013. 5. Prior to insertion of Provisions of Sec.254(2A) by the Finance Act, 1999 w.e.f. 1-4-2000, there was no express provision in the Income Tax Act, 1961 (Act) for stay of proceedings by the Assessing Officer relating to recovery of penalty and tax when a first appeal or appeal before Tribunal was pending. Despite the absence of such express provision for grant of stay, the implied power of the Tribunal to grant stay has been recognised on the principle that where an Act confers a jurisdiction, it impliedly also grants the power of doing all such acts, or employing such means, as are essentially necessary to its execution. 6. In ITO Vs. M.K.Mohammed Kunhi 71 ITR 815 (SC), the question befor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8. By the Finance Act, 2001, in section 254, in sub-section (2A), the following provisos were inserted with effect from the 1st day of June, 2001, namely:- "Provided that where an order of stay is made in any proceedings relating to an appeal filed under subsection (1) of section 253, the Appellate Tribunal shall dispose of the appeal within a period of one hundred and eighty days from the date of such order: Provided further that if such appeal is not so disposed of within the period specified in the first proviso, the stay order shall stand vacated after the expiry of the said period.". 9. Amendment effected by the Finance Act, 2000 In sub-s. (2A), after the words, brackets and figure "under sub-s. (1)", the words, brackets and figure "or sub-s. (2)" by the Finance Act, 2000 w.e.f. 1st June, 2000. 10. By the Finance Act, 2007, in section 254, in sub-section (2A), for the provisos, the following provisos were substituted with effect from the 1st day of June, 2007, namely:- "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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under sub-section (1) or sub-section (2) or sub-section (2A) 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, on an application made in this behalf by the assessee and on being satisfied that the delay in disposing of the appeal is not attributable to the assessee, extend the period of stay, or pass an order of stay for a further period or periods as it thinks fit; so, however, that the aggregate of the period originally allowed and the period or periods so extended or allowed shall not, in any case, exceed three hundred and sixty-five days and the Appellate Tribunal shall dispose of the appeal within the period or periods of stay so extended or all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and submitted that in a later decision rendered by the Hon'ble Delhi High Court in the case of Pepsi Foods (P) Ltd. Vs. ACIT 376 ITR 87 (Del) the Hon'ble Delhi High Court has held the insertion of the expression - 'even if the delay in disposing of the appeal is not attributable to the assessee'- by virtue of the Finance Act, 2008, violates the non- discrimination clause of Article 14 of the Constitution of India. The object that appeals should be heard expeditiously and that assesses should not misuse the stay orders granted in their favour by adopting delaying tactics is not at all achieved by the provision as it stands. On the contrary, the clubbing together of 'well behaved' assesses and those who cause delay in the appeal proceedings is itself violative of Article 14 of the Constitution and has no nexus or connection with the object sought to be achieved. The said expression introduced by the Finance Act, 2008 is, therefore, struck down as being violative of Article 14 of the Constitution of India. This would revert us to the position of law as interpreted by the Bombay High Court in Narang Overseas (supra), with which we are in full agreement. Consequently, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10-A of the Indian Divorce Act, 1869 (for short 'the Act') prescribing a period of 'two years' as the separation period before filing a petition for divorce by mutual consent is discriminatory and violative of Articles 14 and 21 of the Constitution. An alternative prayer was also sought by requesting the Court to read down the expression 'two years' in Section 10-A of the Act as 'one year'. The Hon'ble Kerala High Court in Saumya Ann Thomas vs. The Union of India & others [2010 (1) KLT 869] ; ILR 2010 (1) Kerala 805, had already held that Section 10A(1) of the Act has been read down and the expression 'two years' is to be read as 'one year'. The Kerala High Court having held that the period of 'two years' in Section 10A(1) being violative of Articles 14 and 21 of the Constitution further held that the period must be read down as a period of 'one year'. It is based on this decision that the alternate prayer was made by the petitioner. The Hon'ble Karnataka High Court held as follows: "7. Having heard learned counsel and on perusal of the judgment of the Kerala High Court in Soumya Ann Thomas, as well as the judgment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lty of Rs. 800. In a second appeal before the Tribunal, the attention of the Tribunal was drawn to the decision of the Madras High Court in the case of A. M. Sali Maricar 90 ITR 116 (Mad), wherein that High Court held that s. 140A(3) was violative of the provisions of Art. 19(1)(f) of the Constitution and the said section was struck down by that High Court as being unconstitutional. The Tribunal held that it had no jurisdiction to go into the question of vires of particular provisions under the Act but nevertheless proceeded on the footing that s. 140A(3) was non-existent in view of the decision of the Madras High Court and cancelled the order of penalty. On further appeal by the revenue, the Hon'ble Bombay High Court had to consider the following substantial question of law: "Whether, on the facts and in the circumstances of the case and in view of the decision in the case of A. M. Sali Maricar (1973) 90 ITR 116 (Mad), the penalty imposed on the assessee under s. 140A(3) was legal?" 19. The Hon'ble Bombay High Court held as follows: "It is the settled position in law, in view of the decision of the Supreme Court in K. S. Venkataraman and Co. (P.) Ltd. vs. State of Madras (196 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... statute. It should not be overlooked that the IT Act is an All-India statute and if an Tribunal in Madras, in view of the decision of the Madras High Court, has to proceed on the footing that s. 140A(3) was non-existent, the order of penalty thereunder cannot be imposed by the authority under the Act. Until a contrary decision is given by any other competent High Court, which is binding on a Tribunal in the State of Bombay, it has to proceed on the footing that the law declared by the High Court, though of another State, is the final law of the land. When the Tribunal set aside the order of penalty it did not go into the question of intra vires or ultra vires. It did not go into the question of constitutionality of s. 140A(3). That section was already declared ultra vires by a competent High Court in the country and an authority like an Tribunal acting anywhere in the country has to respect the law laid down by the High Court, though of a different State, so long as there is no contrary decision of any other High Court on that question. It is admitted before us that at the time when the Tribunal decided the question, no other High Court in the country had taken a contrary view on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... demand can be refused. He also submitted that all these aspects were already considered by the Tribunal while passing the original order of stay. 23. We have given a very careful consideration to the rival submissions. We are of the view that the Hon'ble Karnataka High Court in the case of Ecom Gill Coffee (supra) has not dealt with the constitutional validity of the 3rd proviso to Sec. 254(2A) of the Act. The Hon'ble Court only held that Tribunal has no power to extend stay beyond a period of 365 days in view of the clear language of 3rd proviso to Sec.254(2A) of the Act and that statutory tribunals have to follow the statutory provisions as it is. As rightly contended on behalf of the Assessee when once the 3rd proviso has been held to be unconstitutional by the Hon'ble Delhi High Court (the decision of Delhi High Court is later in point of time to that of the Hon'ble Karnataka High Court) then the 3rd proviso to the extent that it lays that extension of order of stay cannot be granted beyond 365 days "even if the delay in disposing of the appeal is not attributable to the assessee", has to be considered as not existing in the statute book, in a case where such default is not a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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