Tribunal cannot extend stay beyond 365 days; High Court grants stay on recovery pending appeal.

The High Court clarified that the Tribunal cannot extend the stay period beyond 365 days from the initial grant of stay. As the petitioner's appeal was pending and the 365-day period had elapsed, the Tribunal could not grant any further extension of stay. The High Court, in exercise of its jurisdiction under Article 226 of the Constitution, granted a stay of recovery of the balance amount until the appeal is disposed of by the Tribunal, emphasizing the importance of adhering to legal limitations.

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Issues:
1. Extension of stay of recovery of balance amount in an income tax appeal.
2. Authority of the Tribunal to extend the period of stay beyond 365 days.
3. Jurisdiction of the High Court to grant stay under Article 226 of the Constitution.

Analysis:

Issue 1: Extension of stay of recovery of balance amount
The petitioner filed an appeal before the Income Tax Appellate Tribunal challenging an order by the Dispute Resolution Panel. The Tribunal initially granted a stay of demand on the condition of the petitioner depositing a sum of Rs. 3 crore. Subsequently, the Tribunal extended the interim stay. However, due to a decision by a Division Bench of the High Court limiting the Tribunal's authority to extend stay beyond 365 days, the petitioner could not seek further extension from the Tribunal. The appeal was listed for hearing, but due to reasons beyond the petitioner's control, it could not be taken up. The petitioner approached the High Court seeking a stay of recovery of the balance amount until the appeal is disposed of by the Tribunal.

Issue 2: Authority of the Tribunal to extend the period of stay
The Tribunal's authority to extend the period of stay beyond 365 days was questioned based on a decision by a Division Bench of the High Court. The High Court clarified that the Tribunal cannot extend the stay period beyond 365 days from the initial grant of stay. As the petitioner's appeal was pending and the 365-day period had elapsed, the Tribunal could not grant any further extension of stay. The High Court emphasized the importance of adhering to the legal limitations set forth by the Division Bench's decision.

Issue 3: Jurisdiction of the High Court to grant stay under Article 226
The High Court, in exercise of its jurisdiction under Article 226 of the Constitution, considered the circumstances and the ends of justice in granting a stay of recovery of the balance amount. The petitioner relied on previous orders where the High Court had extended stays granted by the Tribunal until the disposal of appeals. The High Court reiterated that it has the authority to grant such relief if deemed necessary for the interests of justice. In this case, considering that the Tribunal was in the process of hearing the appeal and had previously granted conditional stay, the High Court decided to continue the stay order until the appeal is disposed of by the Tribunal, thereby disposing of the writ petition.

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