High Court's Jurisdiction to Extend Stay Beyond 365 Days under Article 226

The High Court held that despite the Tribunal's inability to extend the stay beyond 365 days, it had jurisdiction under Article 226 to grant a stay until appeal disposal. Citing precedent and considering the circumstances, the High Court allowed the stay on recovery of the balance amount until the appeal's finalization, in favor of the petitioner.

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Issues:
1. Extension of stay of recovery by the Tribunal beyond 365 days.
2. Jurisdiction of the High Court to grant stay under Article 226 of the Constitution.

Issue 1: Extension of stay of recovery by the Tribunal beyond 365 days
The petitioner filed an appeal before the Income Tax Appellate Tribunal against an order by the Dispute Resolution Panel. The Tribunal initially granted a stay of demand on the condition of depositing a sum of Rs. 25 lacs. Subsequently, the Tribunal extended the interim stay multiple times. However, a Division Bench decision clarified that the Tribunal cannot extend the stay beyond 365 days from the initial grant. As the 365-day period had lapsed, the petitioner could not seek further extension from the Tribunal. Despite the appeal being heard and orders reserved, the petitioner approached the High Court seeking a stay on the recovery of the balance amount till the appeal's disposal.

Issue 2: Jurisdiction of the High Court to grant stay under Article 226 of the Constitution
The High Court considered previous orders where it extended stays granted by the Tribunal till the appeal's disposal under Article 226 of the Constitution. It was noted that if circumstances and justice warrant, the High Court has the authority to grant such relief. Referring to the Maruti Suzuki case, the High Court reiterated that there is no bar to extending the stay if deemed necessary. In this case, since the Tribunal had already granted conditional stay, heard the matter, and reserved orders, the High Court deemed it just to continue the stay until the appeal's disposal, thereby disposing of the writ petition in favor of the petitioner.

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