Revenue's Petition Dismissed: Tribunal Can Extend Tax Stay Beyond 365 Days; Court Cites Legal Precedents.

The HC of Bombay dismissed the Revenue's petitions challenging the Tribunal's orders that extended the stay on recovery of disputed demand beyond 365 days under Section 254(2A) of the Income Tax Act, 1961. The Court ruled that the Tribunal retained jurisdiction to extend such stays, citing established legal precedents. The challenge was deemed academic due to the expiration of the impugned orders, affirming the Tribunal's authority to extend stays beyond the statutory period.

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Issues:
1. Jurisdiction of the Tribunal to extend stay on recovery of disputed demand beyond 365 days under Section 254(2A) of the Income Tax Act, 1961.

Analysis:
The High Court of Bombay heard two Petitions under Article 226 of the Constitution of India where the Revenue challenged orders passed by the Income Tax Appellate Tribunal (the Tribunal) extending the stay on recovery of disputed demand beyond 365 days. The Revenue contended that such extension was without jurisdiction and in violation of the third proviso to Section 254(2A) of the Act. The impugned orders were for a period of six months from their respective dates, which had already expired by the time of the hearing. The Court deemed the challenge to the orders as academic due to their expiration, leading to the dismissal of the Petitions.

The Court acknowledged that the issue of extending stay beyond 365 days was settled law based on previous decisions. Citing the case of CIT v/s. Tata Teleservices (Maharashtra) Ltd., the Court held that even after the substitution of the third proviso to Section 254(2A) of the Act, the Tribunal retained the authority to extend the stay beyond the stipulated 365 days. The Court referred to earlier decisions in Narang Overseas (P) Ltd. v/s. ITAT and CIT v/s. Ronak Industries to support this interpretation. Consequently, the Court dismissed both Petitions, emphasizing that the Tribunal possessed the power to extend the stay period beyond 365 days as per the law.

In conclusion, the High Court of Bombay upheld the Tribunal's authority to extend the stay on recovery of disputed demand beyond 365 days under Section 254(2A) of the Income Tax Act, 1961. The Court relied on established legal precedents to support its decision and dismissed the Revenue's challenge, emphasizing that the Tribunal's actions were within the scope of its jurisdiction.

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