2002 (3) TMI 223 - AT - Income Tax

Tribunal: Amendment to Income-tax Act Section 254(2A) is Prospective, Validates Pre-2001 Stay Orders

The Tribunal held that the amendment to section 254(2A) of the Income-tax Act is prospective, not retrospective, thus validating stay orders granted ... Appellate Tribunal Issues Involved:1. Whether the stay granted by the Tribunal prior to the amendment of section 254(2A) of the Income-tax Act has expired due to retrospective interpretation by the Department.2. Whether the assessee deserves a fresh stay for all the assessment years in question, particularly for the assessment year 1997-98, after the amendment.Detailed Analysis:Issue 1: Retrospective or Prospective Application of Amendment to Section 254(2A)The core issue is whether the amendment to section 254(2A) of the Income-tax Act, introduced by the Finance Act, 2001, with effect from 1-6-2001, applies retrospectively or prospectively. The Tribunal examined the language of the amendment and noted that the Parliament did not explicitly state that the amendment would apply retrospectively. The Tribunal emphasized that the Judiciary cannot interpret the statute to mean retrospective application unless explicitly stated by the Legislature. The Tribunal cited several case laws, including the Supreme Court's decision in R. Rajagopal Reddy v. Padmini Chandrasekharan, which held that a statutory provision that affects vested rights cannot be applied retrospectively unless explicitly stated. Consequently, the Tribunal held that the amendment to section 254(2A) is prospective, not retrospective. Therefore, the stay orders granted by the Tribunal before 1-6-2001 remain valid and in force.Issue 2: Fresh Stay for Assessment Years Including 1997-98The Tribunal then addressed whether a fresh stay should be granted for all the assessment years in question, particularly for the assessment year 1997-98. For assessment years prior to 1997-98, the Tribunal concluded that the stay orders granted before the amendment remain valid, rendering the stay petitions for these years infructuous. However, for the assessment year 1997-98, the stay order granted on 15-6-2001 was impacted by the amendment. The Tribunal considered the facts and circumstances and, in line with its earlier order, granted a stay against recovery proceedings for the assessment year 1997-98, pending the disposal of the appeal.Conclusion:The Tribunal dismissed the stay petitions for all assessment years except 1997-98 as infructuous, reaffirming that the amendment to section 254(2A) is prospective. The stay petition for the assessment year 1997-98 was allowed, granting a stay against recovery proceedings pending the appeal's disposal.