Time-bound disposal of pending tax appeal or stay application may justify staying penalty proceedings until the ITAT acts.

Where an income-tax appeal or stay application remains pending before the ITAT, the High Court may direct time-bound disposal to prevent prejudice to the assessee. In this article, the Court required the respondent-authority to decide either the pending stay application or the appeal within one month of production of a certified copy of the order, and directed the petitioner to intimate the assessing authority about the result. Pending such disposal, penalty proceedings under section 271(1)(c) for the relevant assessment years were stayed, so the penalty action could not continue independently until the appellate or stay matter was resolved.

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Issues: Whether directions could be issued to the appellate tribunal to decide the pending stay application or the appeal within a fixed time, and whether penalty proceedings pending under section 271(1)(c) could be stayed till such disposal.

Analysis: The writ petition sought a mandamus for early disposal of the pending stay application or the appeal before the Income-tax Appellate Tribunal and for suspension of the penalty proceedings. The Court directed the respondent-authority to decide either the stay application dated 23 May 1991 or the appeal itself within one month of production of a certified copy of the order. It further directed the petitioner to file the certified copy and intimate the assessing authority about the result of the appeal or stay application. Till such disposal, the penalty proceedings for the relevant assessment years were ordered to remain stayed.

Conclusion: The petitioner succeeded in obtaining time-bound directions for disposal of the pending appeal or stay application and an order staying the penalty proceedings until such disposal.

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