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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 ..... T(DR) ORDER Per N.V.VASUDEVAN, JM: This is an application filed by the Assessee praying for an order extending the order dated 23.8.2013 of stay of recovery of outstanding demand already granted by this Tribunal in SP No.72/BNG/2013 till disposal of the appeal of the Assessee by this Tribunal. 2. The Assessee has filed appeal IT (TP)A.No.1006/Bang/2011 against order dated 7.9.2011 of the ACIT, Range-12, Bangalore u/s.143(3) r.w.s.144C(13) of the Income Tax Act, 1961 (Act). The Assessee filed a petition S.P.No.117/Bang/12 for an order of grant of stay of recovery of outstanding demand arising out of the order of assessment dated 7.9.2011 which is impugned in the appeal filed before the Tribunal by the Assessee. This Tribunal by an order 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 ₹ 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 Tribu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 08-Apr-14 The matter was suo moto adjourned by the Registry in the Cause List and was fixed on 16 May, 2014. 16-May-14 The matter was adjourned due to conflict of interest with the Hon'ble Accountant Member and the matter was fixed for hearing on 14 July, 2014. 14-Jul-14 The Bench was not functioning and the matter was fixed for hearing on 25 August, 2014. 25-Aug-14 The Bench was not functioning and the matter was fixed for hearing on 14 October, 2014. 14-Oct-14 The Departmental Representative sought an adjournment and the matter was fixed for hearing on 4 December, 2014. 04-Dec-14 The matter was adjourned due to conflict of interest with the Hon'ble Accountant Member and the matter was fixed for hearing on 14 January, 2015. 14-Jan-15 The Bench was not functioning on account of Makarsankranti and the matter was fixed for hearing on 3 March, 2015. 03-Mar-15 The Hon'ble Tribunal adjourned the ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... left the entire matter to the administrative authorities to make such orders as they choose to pass in exercise of unfettered discretion. The Supreme Court summed up the ultimate conclusion on the above question in the following passage: Section 255(6)of the Act does empowers the Tribunal to regulate its own procedure, but it is very doubtful if the power of stay can be spelt out from that provision. In our opinion the Tribunal must be held to have the power to grant stay as incidental or ancillary to its appellate jurisdiction. This is particularly so when Section 220(6) deals expressly with a situation when an appeal is pending before the AAC but the Act is silent in that behalf when the appeal is pending before the Tribunal. It could well be said that when section 254 confers appellate jurisdiction, it impliedly grants the power of doing all such acts, or employing such means, as are essentially necessary to its execution and that the statutory power carries with it the duty in proper cases to make such orders for staying proceedings as will prevent the appeal if successful from being rendered nugatory. 7. By the Finance Act, 1999, Sub-Section (2A), was inserted : ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h appeal is not so disposed of within the period allowed under the first proviso or the period or periods extended or allowed under the second proviso, the order of stay shall stand vacated after the expiry of such period or periods. . 11. By the Finance Act, 2008 in sub-section (2A), for the third proviso, the following proviso was substituted with effect from the 1st day of October, 2008, namely : Provided also that if such appeal is not so disposed of within the period allowed under the first proviso or the period or periods extended or allowed under the second proviso, which shall not, in any case, exceed three hundred and sixty-five days, the order of stay shall stand vacated after the expiry of such period or periods, even if the delay in disposing of the appeal is not attributable to the assessee. 12. By the Finance Act, 2012 in section 254 of the Income-tax Act, in sub-section (2A), after the words, brackets and figures under sub-section (1) or sub-section (2) , the words, brackets, figure and letter or sub-section (2A) shall be inserted with effect from the 1st day of July, 2012. 13. After the aforesaid statutory Amendments, the provisions of Sec.254(2A) now ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s nature had been passed, such an order of stay shall stand vacated after the expiry of outer limit of 365 days and, in the first instance, the Tribunal which is the creature of statute should abide by these statutory provisions in letter and spirit and the introduction of the third proviso to Finance Act 2008 makes it abundantly clear that the purpose of putting the outer limits is only for curtailing the period an order of stay can operate and to ensure that it has no effect after the period of 365 days from the date of initial order. The Hon ble Court further held that the interpretation of provision of this nature particularly to interpret in a manner so as to enable or confer power on the Tribunal to extend a stay order beyond 365 days, would be to understand contrary to such statutory provision. The language of the Section cannot be ignored and intended amendment brought about by the Finance Act, 2008 and the language of the legislature being quite clear about the outer time limit stipulated for the duration of the operation of stay and if the legislature has stipulated the outer time limit of 365 days within which the stay order granted by the Tribunal can operate, the Tribu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... did not deal with the constitutional validity of Sec.254(2A) of the Act and was a decision rendered on the question of Tribunal s powers to extend stay beyond a period of 365 days after the insertion of the third proviso to Sec.254(2A) of the Act by the Finance Act, 2008. According to him therefore the decision of the Hon ble Karnataka High Court will no longer be applicable in view of the third proviso being declared unconstitutional by the Hon ble Delhi High Court. The leanred counsel for the Assessee drew our attention to the decision of the Hon ble Supreme Court in the case of Kusum Ingots and Alloys Ltd. Vs. Union of India and another AIR 2004 SC 2321, wherein it was held that an order passed on writ petition questioning the constitutionality of a Parliamentary Act whether interim or final, in the light of Article 226(2) of the Constitutiona of India, will have effect throughout the territory of India. Further reference was also made to a decision of the Hon ble Karnataka High Court in the case of Mr.Shiv Kumar Vs. Union of India and others W.P.No.13112/2012 (GM-RES-PIL) wherein the Hon ble Karnataka High Court following the ruling in the case of Kusum Ingots (supra) held tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lity of the Act. In that view of the matter, this Writ Petition would not call for any specific orders with regard to holding constitutionality or otherwise of sub-section(1) of Section 10A of the Act. Keeping in mind the pronouncement of the Division Bench of the Kerala High Court and reading the same in the context of Kusum Ingots and Alloys Ltd, the position of law with regard to sub-section (1) of Section 10A of the Act is now been made clear, particularly, insofar as State of Karnataka is concerned. (emphasis supplied) 18. Further reference was made to the decision of the Hon ble Bombay High Court in the case of CIT Vs. Godavaridevi Saraf 113 ITR 589(Bom) wherein the Hon ble Bombay High Court. In the aforesaid decision the facts were that the assessee submitted a return of income for the asst. yr. 1968- 69 declaring therein income of ₹ 29,038 on August 30, 1969. Having regard to the provision of s. 140A(1) of the Act, she was required to make selfassessment by September 29, 1969. The amount of tax payable by way of assessment was ₹ 4,342. The assessee did not pay the said tax till the ITO made assessment for the asst. yr. 1968- 69 by his order dated August 31, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Tribunal cannot ignore the law declared by the highest Court in the State. Taking into consideration the provisions of Arts. 215, 226 and 227 of the Constitution of India, it would be anomalous to suggest that a Tribunal over which the High Court has superintendence can ignore the law declared by that Court and start proceeding in direct violation of it. If a Tribunal can do so, all the subordinate Courts can equally do so, for there is no specific provision, just like in the case of the Supreme Court making the law declared by the High Court binding on subordinate Courts. It is implicit in the power of supervision conferred on a superior Tribunal that all the Tribunals subject to its supervision should conform to the law laid down by it. Such obedience would also be conducive to their smooth working ; otherwise, there would be confusion in the administration of law and respect for law would irretrievably suffer. 6. In view of this clear pronouncement of the Supreme Court, it is not controverted by Mr. Joshi on behalf, of the Revenue that an Tribunal sitting at Madras is bound to proceed on the footing that s. 140A(3) of the Act is non-existent in view of the pronouncement of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a prima facie case, balance of convenience and relative hardship and has thought it fit to grant an order of stay, the same should be continued in the interest of justice. 21. The learned DR pointed out that Hon ble Karnataka High Court in the case of Ecom Gill Coffee Tradomg (P) Ltd. (supra) has not followed the decision in the case of Narang Overseas (P) Ltd. (supra) whereas the Hon ble Delhi High Court in the case of Pepsi Foods (P) Ltd. (supra) has followed the ratio laid down in the case of Naranga Overseas (P) Ltd. He therefore submitted that the decision of the Hon ble Karnataka High Court should be followed and the extension of stay should not be granted. He also submitted that the Assessee has no financial hardship and therefore should be directed to pay the outstanding demand. 22. The learned counsel for the Assessee in his rejoinder pointed out that the decision rendered in the case of Narang Overseas (supra) was prior to insertion of 3rd proviso and Hon ble Delhi High Court only referred to the said decision to emphasis the point that extension of stay should not be refused if the delay in the appeal not being heard is owing to delay on the part of the Assessee. W ..... X X X X Extracts X X X X X X X X Extracts X X X X
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