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TMI Blog2016 (2) TMI 900X X X X Extracts X X X X X X X X Extracts X X X X ..... y well in advance. Needless to state that no adjournment on any reasonable ground shall be sought by the assessee. - S.A.-18/Del/2016, In I.T.A .No.414/Del/2015 - - - Dated:- 1-2-2016 - SMT DIVA SINGH, JUDICIAL MEMBER AND SH. L.P.SAHU, ACCOUNTANT MEMBER For The Appellant : Sh.Anil Chopra, CA For The Respondent : Ms. Sulekha Verma, CIT, DR PER DIVA SINGH, JM The present stay petition in ITA No. 414/Del/2015 pertaining to 2011- 12 assessment year has been filed by the assessee praying for further extension of stay granted in SA 408/Del/2015 dated 31.7.2015. 2. Referring to the record the ld. AR submitted that originally stay for 180 days was granted by the Tribunal which was extended by the aforesaid order dated 31.07.2011 by another period of 180 days as the hearing could not conclude for no fault of the assessee. The facts and circumstances as considered originally by the ITAT in S.A.No.43/Del/2015 vide order dated 30th January, 2015 and S.A.No.408/Del/2015 order dated 31.07.2015 continued to remain the same. Accordingly it was his prayer that the stay may be extended for a period beyond 365 days as the hearing could not take place for no fault of the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not been admitted by the CIT(A) i.e. an auditor s certificate supporting the assessee s claim. The issue it was submitted would constitute a procedural lapse in the proceedings and when coupled with the fact that in 2009-10 the ITAT in ITA no. 3339/Del/2014 by order dated 13.04.2015 has decided identical and similar issue in favour of the assessee accordingly it was submitted the issue can be considered to be prima facie in favour of the assessee. 2.6. In order to support its claim of irreparable loss if stay is not extended, it was submitted that the assessee is facing a liquidity crunch. Both the orders of the ITAT in the stay petitions have accepted the fact. For the said purpose, attention was invited to specific para 2 at page 30 and 31 of the petition filed. The same is extracted hereunder for any reference : That the assessment has been made on a total income of ₹ 17,92,96,91,790/- to a demand of tax ₹ 7,10,08,01,091/- along with interest thereon as against a returned income under the provisions of the Act not considering MAT of Nil. The assessment involved is a huge over pitched assessment leading to an exorbitant huge demand. The appellant is a reput ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s only a decision if it decides a question of law and if it is factual then it cannot be relied upon as a precedent. 3.2. In the alternative it was her submission that even if it is considered that it is a precedent even then in Pepsi Food Pvt.Ltd. the challenge is only made to the third proviso to section 254 (2A) i.e to the amendment introduced therein by the Finance Act, 2008 with effect from 01.04.2008 in the context of the words even if the delay in disposing of the appeal is not attributable to the assessee . Thus since the second proviso barring the Tribunal to extend stay beyond 365 days still stands on the Statute it was argued stay could not be extended. Reliance was placed upon the decision of Maruti Suzuki India (2014) 44 taxman.com 166 [Delhi] which has been considered by the High Court in Pepsi Food Pvt. Ltd. Also. Accordingly relying on Maruti Suzuki s case it was argued that the Tribunal does not have the power to extend period of stay beyond 365 days. 3.3. It was further her argument that even otherwise the alternate Remedy of approaching the High Court was available under law. Thus, in view of the second proviso to section 254(2A) still standing on the Stat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... within a period of four years from the end of the financial year in which such appeal is filed under subsection (1) or sub-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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act and left the issue open. It is only on a plain reading of the provisos, as they existed, that the Division Bench came to the conclusion that the Tribunal had no power to extend stay beyond a period of 365 days from the date of the first order of stay but that an assessee could file a writ petition in the High Court asking for stay even beyond the said period of 365 days and the High Court had the power and jurisdiction to grant stay and issue directions to the Tribunal and that Section 254(2A) did not prohibit/bar the High Court from issuing appropriate directions, including grant of stay of recovery. A similar view was taken by the Bombay High Court in Jethmal Faujimal Soni case (supra). But that decision was also rendered on a plain meaning of the provisos, as they stood. There was no challenge to the constitutional validity of the third proviso to Section 254(2A) of the said Act after the amendment introduced by the Finance Act, 2008. No decision of any High Court has been brought to our notice by the learned counsel for the parties, wherein the constitutional validity of the third proviso to Section 254(2A) of the said Act has been examined. (emphasis provided) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be heard and disposed of for reason not attributable to the assessee. 5.4. It is seen that to overcome the impact of the above decision, the Parliament w.e.f 1.4.2008 introduced the following words by way of the amendment in the third proviso even if the delay in disposing of the appeal is not attributable to the assessee . The issue thereafter came up for consideration before the Jurisdictional High Court in Pepsi Foods Pvt.Ltd. wherein the vires of the third proviso was struck as being unconstitutional and violative of article 14 of the constitution as the legislature was found to have placed both sets of classes of assesses i.e. the ones who delay the hearings; and those who are not responsible for delay in the same category. The Division Bench proceeded to examine the interim relief of stay after tracing the historical perspective of the issue when there was no explicit statutory provision empowering the tribunal to grant stay as considered by the Apex Court in the celebrated decision of M.Kunhi s case (cited supra) in the following words:- 17. It would now be relevant to examine the decision of the Supreme Court in M. K. Mohammed Kunhi (supra). The question before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eed to stay recovery of taxes or penalties payable by or imposed on the Assessees as a matter of course the revenue will be put to great loss because of the inordinate delay in the disposal of appeals by the Appellate Tribunals. It is needless to point out that the power of stay by the Tribunal is not likely to be exercised in a routine way or as a matter of course in view of the special nature of taxation and revenue laws. It will only be when a strong prima facie case is made out that the tribunal will consider whether to stay the recovery proceedings and on what conditions, and the stay will be granted in most deserving and appropriate cases where the tribunal is satisfied that the entire purpose of the appeal will be frustrated or rendered nugatory by allowing the recovery proceedings to continue during the pendency of the appeal. (underlining added) 18. From this decision, it is evident that the power to grant a stay is incidental or ancillary to the appellate jurisdiction of the Tribunal. It is also clear that the power of stay exercised by the Tribunal is not likely to be exercised in a routine way or as a matter of course in view of the special nature of taxation and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oned in the Regulations may not be violative of Article 14 on the ground of discrimination but if it is proved that the conditions laid down are entirely unreasonable and absolutely arbitrary, then the provisions will have to be struck down. With regard to due process clause in the American Constitution and Article 14 of our Constitution, this Court referred to State of West Bengal v. Anwar Ali Sarkar : [1952] SCR 284, and observed that the due process clause in the American Constitution could not apply to our Constitution. The Court also referred to A.S. Krishna v. State of Madras: 1957 S.C.R. 399 wherein Venkatarama Ayyar, J. observed: 13. .The law would thus appear to be based on the due process clause, and it is extremely doubtful whether it can have application under our Constitution. 47. In D.S. Nakara v. Union of India: [1983] 1 SCC 305, the Constitution Bench of this Court had an occasion to consider the scope, content and meaning of Article 14. The Court referred to earlier decisions of this Court and in para 15, the Court observed: 15. Thus the fundamental principle is that Article 14 forbids class legislation but permits reasonable classification fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and these are - (i) discrimination, based on an impermissible or an invalid classification and (ii) excessive delegation of powers; conferment of uncanalised and unguided powers on the executive, whether in the form of delegated legislation or by way of conferment of authority to pass administrative orders. The Constitution Bench also cautioned that the Courts need to be mindful that a legislation does not become unconstitutional merely because there is another view or because another method may be considered to be as good or even more effective, like any issue of social, or even economic policy. 23. Keeping in mind the principles set out by the Supreme Court in Dr. Subramanian Swamy (supra), we need to examine whether the present challenge to the validity of the third proviso to Section 254(2A) can be sustained. This is not a case of excessive delegation of powers and, therefore, we need not bother about the second dimension of Article 14 in its application to legislation. We are here concerned with the question of discrimination, based on an impermissible or invalid classification. It is abundantly clear that the power granted to the Tribunal to hear and entertain an appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a reasoned order. (emphasis provided) 5.6. A careful reading of the said decision would show that after agreeing with the interpretation of the Bombay High Court in Narang Overseas that where the delay was not attributable to the assessee the Tribunal had the power to extend stay beyond 365 days, the issue on facts was restored to the ITAT vide para 25 for considering the merits of extension of stay beyond 365 days: 24. Furthermore, the petitioners are correct in their submission that unequals have been treated equally. Assessees who, after having obtained stay orders and by their conduct delay the appeal proceedings, have been treated in the same manner in which assessees, who have not, in any way, delayed the proceedings in the appeal. The two classes of assessees are distinct and cannot be clubbed together. This clubbing together has led to hostile discrimination against the assessees to whom the delay is not attributable. It is for this reason that we find that 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eriod of six months or the earlier disposal of the Appeals. These were in line with its earlier order dated 27 February 2015. 2. The grievance of the petitioner with the impugned order is that in terms of the third proviso to section 254(2A) of the Act, the Tribunal has no power under the Act to extend the stay of demand in the appeals pending before it beyond the period of 365 days. (emphasis provided) 5.8.1. Considering the amendment to the Statute the position taken in Narang Overseas was followed taking note of the fact that the decision rendered in Pepsi Food Pvt. Ltd. to extend stay beyond 365 days was arrived at reading down the second proviso was upheld as would be evident from the following extract : 8. It may be pointed out that the only substantial difference in the pre-substituted third proviso and substituted third proviso to Section 254(2A) of the Act is the addition of the words even if delay in disposing of the appeal is not attributable to the assessee These additional words added in the substituted third proviso to Section 254(2A) of the Act has been struck down by the Delhi High Court in Pepsi Foods (P) Ltd. Vs. Asstt. Commissioner of Income Tax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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