TaxTMI 
TaxTMI 
2016 (2) TMI 900
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.... 365 days as the hearing could not take place for no fault of the assessee. 2.1. Relying upon the precedent as laid down by the Hon'ble Delhi High Court it was submitted that 365 days have elapsed on account of the specific adjournments sought by the Revenue. The prayer it was submitted is based on the decision of the Hon'ble Delhi High Court in the case of Pepsi Foods Pvt. Ltd. vs. ACIT [2015]376 ITR 0087 (Delhi). Reliance was also placed on DCIT (TDS) Vs. Vodafone Essar Gujarat Ltd., 376 ITR 323 (Guj.) and Narang Overseas P. Ltd. vs. CIT vs. ITAT [2007] 295 ITR 0022 Bom. And CIT vs. M/s. Tata Teleservices (Maharashtra) Ltd. dated 16.12.2015 in W.P.(Lodg.) No. 3437 of 2015. It was also his submission that various Benches of the ITAT have consistently being granting stay beyond the period of 365 days wherever the assessee is able to establish that the hearing could not conclude for no fault on the part of the assessee. 2.2. In order to demonstrate that the hearing could not conclude for no fault of the assessee attention was invited to the assertions made in paper book page no. 30 and 31 which is part of the Annexure D of the Stay Petition running from page 28 to 35. 2.3. ....
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....ment leading to an exorbitant huge demand. The appellant is a reputed widely listed company and does have immoveable assets, but it does not have the liquid funds required to pay this unlawful demand. The appellant has outstanding loans exceeding Rs. 8,897 crores. It also has overdue interest payable exceeding Rs. 162.78 crores. The bank balances and some FDs had been cleaned out pursuant to attachment of bank as aforesaid." (emphasis provided) 2.7. In the said background inviting attention to the Boards instruction no. 1914 dated 2.12.1993 it was his submission that extension of stay may be granted as not only its a case of "unlawful demand" and a case of acute loss and hardship which aspects have already been considered by the ITAT in its orders in the two petitions filed but also in terms of the precedent available in the case of the assessee itself prime facie the issue is in assessee's favour. Further relying upon Instruction no. 96 and the recent CBDT Instruction dated 7.11.2014 which in fact re-iterates Instruction towards 1914 of 1993 where the department makes it clear that it shall take "steps towards non adversarial tax regime" the stay it was submitted may be exte....
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.... to section 254(2A) still standing on the Statute it was submitted the Tribunal was barred from extending stay. 4. The ld. AR Mr. Anil Chopra, in reply addressing the first issue first submitted that whereas in column no. (iii) the assessee has reflected the exact position of the outstanding demand as understood by it after adjustments offered and the recovery made by the department by way of bank attachment etc. are given effect to. In column no. (viii) of the stay petition the amount mentioned in the prayer has been faithfully picked up by the assessee as the exact amount found mentioned by the department in the notice issued under section 220(1) of the Act. It was his categoric stand that the assessee stands by the adjustments offered of the tax paid under MAT for the earlier two assessment years. The prayer for stay of demand is made of whatever amount is outstanding as per the calculation of the department. 4.1. Addressing the point of law it was again submitted that in the facts of the present case the assessee has all along been ready to argue the appeal on each of the dates. The adjournments have been sought by the department. It was re-iterated that the adjournments ....
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....sixty-five days and the Appellate Tribunal shall dispose of the appeal within the period or periods of stay so extended or allowed: Provided also that if such appeal is not so disposed of within the period allowed under the first proviso or the period or periods extended or allowed under the second proviso, which shall not, if any case, exceed three hundred and sixty-five days, the order of stay shall stand vacated after the expiry of such period or periods, even if the delay in disposing of the appeal is not attributable to the assessee." 5.1. Considering the above provision, read along with the decision in Pepsi Food Pvt.Ltd., we find that the arguments of the Ld. CIT DR relying on the decision of the Apex Court in State of Punjab & Others vs Surender Kumar (cited supra) are completely out of context. The issue under consideration there and the decision has been misunderstood. Even otherwise on a perusal of the decision in Pepsi Food Pvt.Ltd. there is no debate that it strikes down the third proviso to section 254(2A) as ultra vires. The consequence is that the said provision to that extent ceases to exist on the Statute unless it is upset or stayed by the Apex Court.....
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....f the said Act has been examined." (emphasis provided) 5.2. The position was again re-iterated as would be evident from the following extract of the decision in Pepsi Foods Pvt.Ltd.:- 16. At this juncture itself, we may reiterate that the decision of the Division Bench in Maruti Suzuki (India) Ltd. (supra) was based on an interpretation of the third proviso to Section 254(2A) as it stands. The constitutional validity of the same had not been examined. It only spelt out the legislative intent and that was more than clear that no stay could be granted by the Tribunal beyond the period of 365 days under any circumstances. The question that we have to examine is whether this intention of the legislature is not hit by Article 14 of the Constitution of India. We may also point out that the fact that judicial review was available to an assessee under Article 226 of the Constitution, would not, in any way, add to or subtract from the issue of constitutional validity of the third proviso to Section 254(2A). (emphasis provided) 5.3. At this stage it may not be out of place to go a little back in time and trace the position in the context of the third proviso to section 254(....
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.... Supreme Court in M. K. Mohammed Kunhi (supra). The question before the Supreme Court was whether the Income Tax Appellate Tribunal had power under the relevant provisions of the said Act to stay the recovery of the realization of the penalty imposed by the departmental authorities on an assessee during the pendency of an appeal before it. In that case, the Tribunal had declined to order any stay holding that it had no power to grant such a prayer. We must be mindful of the fact that at that point of time Section 254(2A) was not there in the said Act. The said provision was introduced with effect from 01.06.1999 by the Finance Act, 1999. In the absence of any specific provision, permitting the Tribunal to grant stay, the question arose as to whether the Tribunal had the power to stay the proceedings as also the collection of penalties pending the appeal. The High Court of Kerala held that the Tribunal had such power and that the power was incidental and ancillary to its appellate jurisdiction. The Supreme Court observed that the powers, which had been conferred by Section 254 on the Appellate Tribunal, were of the widest possible amplitude and, therefore, must carry with them, by n....
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....ne way or as a matter of course in view of the special nature of taxation and revenue laws and it is only when a strong prima facie case is made out that the Tribunal would consider whether to stay the recovery proceedings and on what conditions. The stay is also granted in deserving and appropriate cases where the Tribunal is satisfied that the entire purpose of the appeal would be frustrated or rendered nugatory by allowing the recovery proceedings to continue during the pendency of the appeal. These words of the Supreme Court were indeed prophetic, as can be discerned from the data which has been referred to by a Division Bench of this Court in Maruti Suzuki (India) Ltd. (supra), which shows that in less than 10% of the appeals filed by assessees, the Tribunal has granted stay orders and in a very few of such cases, the appeals are pending beyond the period of 365 days stipulated under the provisions, as they now stand. (emphasis provided) 5.5. It is also seen that the Division Bench also had the occasion to consider the argument of availability of Alternate Remedy as has been canvassed by the Ld. CIT DR before us where she has argued that the tax payer could always approa....
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....ple is that Article 14 forbids class legislation but permits reasonable classification for the purpose of legislation which classification must satisfy the twin tests of classification being founded on an intelligible differentia which distinguishes persons or things that are grouped together from those that are left out of the group and that differentia must have a rational nexus to the object sought to be achieved by the statute in question."" ** ** ** "Court's approach 49. Where there is challenge to the constitutional validity of a law enacted by the legislature, the Court must keep in view that there is always a presumption of constitutionality of an enactment, and a clear transgression of constitutional principles must be shown. The fundamental nature and importance of the legislative process needs to be recognized by the Court and due regard and deference must be accorded to the legislative process. Where the legislation is sought to be challenged as being unconstitutional and violative of Article 14 of the Constitution, the Court must remind itself to the principles relating to the applicability of Article 14 in relation to invalidation of leg....
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....ification. It is abundantly clear that the power granted to the Tribunal to hear and entertain an appeal and to pass orders would include the ancillary power of the Tribunal to grant a stay. Of course, the exercise of that power can be subjected to certain conditions. In the present case, we find that there are several conditions which have been stipulated. First of all, as per the first proviso to Section 254(2A), a stay order could be passed for a period not exceeding 180 days and the Tribunal should dispose of the appeal within that period. The second proviso stipulates that in case the appeal is not disposed of within the period of 180 days, if the delay in disposing of the appeal is not attributable to the assessee, the Tribunal has the power to extend the stay for a period not exceeding 365 days in aggregate. Once again, the Tribunal is directed to dispose of the appeal within the said period of stay. The third proviso, as it stands today, stipulates that if the appeal is not disposed of within the period of 365 days, then the order of stay shall stand vacated, even if the delay in disposing of the appeal is not attributable to the assessee. While it could be argued that the ....
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....tributable to the assessee'- by virtue of the Finance Act, 2008, violates the non-discrimination clause of Article 14 of the Constitution of India. The object that appeals should be heard expeditiously and that assessees should not misuse the stay orders granted in their favour by adopting delaying tactics is not at all achieved by the provision as it stands. On the contrary, the clubbing together of 'well behaved' assessees and those who cause delay in the appeal proceedings is itself violative of Article 14 of the Constitution and has no nexus or connection with the object sought to be achieved. The said expression introduced by the Finance Act, 2008 is, therefore, struck down as being violative of Article 14 of the Constitution of India. This would revert us to the position of law as interpreted by the Bombay High Court in Narang Overseas (supra), with which we are in full agreement. Consequently, we hold that, where the delay in disposing of the appeal is not attributable to the assessee, the Tribunal has the power to grant extension of stay beyond 365 days in deserving cases. The writ petitions are allowed as above. 25. Consequently, the petitioners may ap....
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....Act has been struck down by the Delhi High Court in "Pepsi Foods (P) Ltd. Vs. Asstt. Commissioner of Income Tax, (232 Taxmann 78.) 9. In the above view, we see no reason to entertain the petitions. Accordingly, petitions dismissed. No order as to costs." 5.9. Accordingly on considering the chequered history of the provision, we find that the Courts having struck the third proviso to section 254(2A) as being unconstitutional have read down the second proviso in certain deserving cases where the delay is not attributable to the assessee. Accordingly the point of law is in favour of the assessee. 5.10. Examining the facts, we find that the appeal came up for hearing on 03rd Sept. 2015 and again on 27th Nov. 2015 and on both these dates it was adjourned on the department's written request seeking time to appoint a special counsel. Thereafter it again came up for hearing on 11th Jan. 2016 seeking time on the following grounds:- "MAY IT PLEASE YOUR HONOURS Reg : Appeal in the case of : Jaypee Infratech Ltd. ITA No. : 414/Del/2015 A.Y. : 2011-12 The above mentioned case is fixed for hearing on 11.01.2016. ....