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Jaypee Infratech Ltd. Versus ACIT Circle –2, Noida

2016 (2) TMI 900 - ITAT DELHI

Extension of stay - Held that:- On a consideration of the peculiar facts and circumstances of the case and the position of law as considered including the arguments of the parties before us on the issues involved we find that non-disposal of the appeal in the facts of the present case is solely on the grounds of adjournments sought by the Revenue on each of the dates the appeal came up for hearing; - Where no arguments assailing the assessee’s claim that prima facie the issue is covered in a .....

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al is listed for hearing on 16th Feb. 2016. The Revenue is directed to file Paper Books if any well in advance. Needless to state that no adjournment on any reasonable ground shall be sought by the assessee. - S.A.-18/Del/2016, In I.T.A .No.414/Del/2015 - Dated:- 1-2-2016 - SMT DIVA SINGH, JUDICIAL MEMBER AND SH. L.P.SAHU, ACCOUNTANT MEMBER For The Appellant : Sh.Anil Chopra, CA For The Respondent : Ms. Sulekha Verma, CIT, DR PER DIVA SINGH, JM The present stay petition in ITA No. 414/Del/2015 p .....

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vide order dated 30th January, 2015 and S.A.No.408/Del/2015 order dated 31.07.2015 continued to remain the same. Accordingly it was his prayer that the stay may be extended for a period beyond 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 dec .....

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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. For the sake of completeness it was his submission that he would be relying upon the facts as argued and considered .....

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1 assessment years are available for adjustment and if these amounts are adjusted then it could be considered that the assessee had paid / discharged more than 72 % of the outstanding tax demand and only 28% of the tax demand could be considered to be outstanding. 2.5. It was further submitted by him that the issue in the present appeal pertains to 80IA deduction and the assessing officer after scrutinising identical claims of the assessee in 2009-10 and 2010-11 has decided issue in assessee s f .....

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accordingly it was submitted the issue can be considered to be prima facie in favour of the assessee. 2.6. In order to support its claim of irreparable loss if stay is not extended, it was submitted that the assessee is facing a liquidity crunch. Both the orders of the ITAT in the stay petitions have accepted the fact. For the said purpose, attention was invited to specific para 2 at page 30 and 31 of the petition filed. The same is extracted hereunder for any reference : That the assessment has .....

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ng loans exceeding ₹ 8,897 crores. It also has overdue interest payable exceeding ₹ 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 co .....

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rma filed a paper book consisting of copies of the stay petitions moved by the assessee along with orders passed on the petitions. It was her submission that the amounts as referred to in column (iii) of the present Stay petition refers to outstanding demand of ₹ 1,90,42,68,955/- after adjusting the amounts paid under MAT in AY of 2009-10 and AY 2010-11 offered by the assessee and recorded in para 6 of S.A. No. 43/Del/2015. However, in column (viii) in the present stay petition the assesse .....

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vt. Ltd. is a decision in a writ petition and is assessee specific and factual and thus lays down no precedence. Relying on State of Punjab and Others vs Surinder Kumar 194 ITR 434 (SC) it was argued that a decision is only a decision if it decides a question of law and if it is factual then it cannot be relied upon as a precedent. 3.2. In the alternative it was her submission that even if it is considered that it is a precedent even then in Pepsi Food Pvt.Ltd. the challenge is only made to the .....

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onsidered by the High Court in Pepsi Food Pvt. Ltd. Also. Accordingly relying on Maruti Suzuki s case it was argued that the Tribunal does not have the power to extend period of stay beyond 365 days. 3.3. It was further her argument that even otherwise the alternate Remedy of approaching the High Court was available under law. Thus, in view of the second proviso 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 C .....

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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 .....

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llection of outstanding demand which accordingly to the assessee is an unlawful demand. 4.2. The decision of the Apex court relied upon by the revenue in its paper book it was submitted is not relevant to the case at hand as the issue considered therein was purely factual and could not have been a precedent. 5. We have heard the rival submissions and perused the material available on record. At the outset, we propose to set out the relevant provision of the Act which we are required to consider: .....

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e application made by the assessee, pass an order of stay in any proceedings relating to an appeal filed under sub-section (1) of section 253, for a period not exceeding one hundred and eighty days from the date of such order and the Appellate Tribunal shall dispose of the appeal within the said period of stay specified in that order : Provided further that where such appeal is not so disposed of within the said period of stay as specified in the order of stay, the Appellate Tribunal may, on an .....

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iod 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, re .....

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id provision to that extent ceases to exist on the Statute unless it is upset or stayed by the Apex Court. The argument that it is assessee specific or factual is an incorrect appreciation of the law. The third provision to Section 254 (2A) has been held to be violative of Article 14 of the Constitution of India and we shall deliberate on this conclusion hereinafter. At this stage we would first address the arguments of the Ld. CIT DR that the law as laid down in Maruti Suzuki s decision should .....

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roviso made a hostile discrimination against those assessee s who are law abiding and did not cause any delay. The following para of the said decision makes it abundantly clear:- 12. From the above extract, it is evident that the Division Bench was not called upon and did not examine the constitutional validity of the provisos to Section 254(2A) of the said Act and left the issue open. It is only on a plain reading of the provisos, as they existed, that the Division Bench came to the conclusion .....

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the Bombay High Court in Jethmal Faujimal Soni case (supra). But that decision was also rendered on a plain meaning of the provisos, as they stood. There was no challenge to the constitutional validity of the third proviso to Section 254(2A) of the said Act after the amendment introduced by the Finance Act, 2008. No decision of any High Court has been brought to our notice by the learned counsel for the parties, wherein the constitutional validity of the third proviso to Section 254(2A) of the .....

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as 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 25 .....

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mmissioner of Customs and Central Excise Cotton Mills [2006] 6 RC 82 had an occasion to consider the interim relief of stay in the following words:- The power to grant stay or interim relief being inherent or incidental is not defeated by the provisos to section 254(2A). The third proviso to section 254(2A) has to be read as a limitation on the power of the Tribunal to continue interim relief in a case where the hearing of the appeal has been delayed for acts attributable to the assessee. It can .....

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.4. It is seen that to overcome the impact of the above decision, the Parliament w.e.f 1.4.2008 introduced the following words by way of the amendment in the third proviso even if the delay in disposing of the appeal is not attributable to the assessee . The issue thereafter came up for consideration before the Jurisdictional High Court in Pepsi Foods Pvt.Ltd. wherein the vires of the third proviso was struck as being unconstitutional and violative of article 14 of the constitution as the legisl .....

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ld now be relevant to examine the decision of the 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 .....

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s 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 necessary implication, all powers and duties incidental and necessary to make the exercise of those fully effective. Finally, the Supreme Court concluded by holding:- "13. Section 255(5) of the Act does empower the Appellate Tribunal to regulate i .....

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said that when Section 254 confers appellate jurisdiction, it impliedly grants the power of doing all such acts, or employing such means, as are essentially necessary to its execution and that the statutory power carries with it the duty in proper cases to make such orders for staying proceedings as will prevent the appeal if successful from being rendered nugatory. 14. A certain apprehension may legitimately arise in the minds of the authorities administering the Act that if the Appellate Trib .....

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t the tribunal will consider whether to stay the recovery proceedings and on what conditions, and the stay will be granted in most deserving and appropriate cases where the tribunal is satisfied that the entire purpose of the appeal will be frustrated or rendered nugatory by allowing the recovery proceedings to continue during the pendency of the appeal." (underlining added) 18. From this decision, it is evident that the power to grant a stay is incidental or ancillary to the appellate juri .....

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e 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 pe .....

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n Wire Netting Store, Delhi (supra) was relied upon by the learned counsel for the petitioners for the proposition that the availability of a constitutional remedy would not remove the lacuna of a provision which was inherently unconstitutional. There can be no dispute with this proposition. The provision which is challenged, as being violative of Article 14 of the Constitution, would have to be tested on its own without recourse to the availability of the remedy of judicial review under Article .....

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Regulations (referred to as 'A.I. Regulations') held that certain conditions mentioned in the Regulations may not be violative of Article 14 on the ground of discrimination but if it is proved that the conditions laid down are entirely unreasonable and absolutely arbitrary, then the provisions will have to be struck down. With regard to due process clause in the American Constitution and Article 14 of our Constitution, this Court referred to State of West Bengal v. Anwar Ali Sarkar : [1 .....

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ourt had an occasion to consider the scope, content and meaning of Article 14. The Court referred to earlier decisions of this Court and in para 15, the Court observed: "15. Thus the fundamental principle 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 .....

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ortance 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 legislation. The two dimensions of Article 14 in its application to legislation and rendering legislation inv .....

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does not become unconstitutional merely because there is another view or because another method may be considered to be as good or even more effective, like any issue of social, or even economic policy. It is well settled that the courts do not substitute their views on what the policy is." It is clear that where a legislation is sought to be challenged, as being unconstitutional or violative of Article 14 of the Constitution, the Court must keep in mind the principles relating to the appli .....

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The Constitution Bench also cautioned that the Courts need to be mindful that a legislation does not become unconstitutional merely because there is another view or because another method may be considered to be as good or even more effective, like any issue of social, or even economic policy. 23. Keeping in mind the principles set out by the Supreme Court in Dr. Subramanian Swamy (supra), we need to examine whether the present challenge to the validity of the third proviso to Section 254(2A) ca .....

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hat 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 th .....

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stay order could be extended beyond a period of 180 days only if the delay in disposing of the appeal was not attributable to the assessee was a reasonable condition on the power of the Tribunal to the grant an order of stay, it can, by no stretch of imagination, be argued that where the assessee is not responsible for the delay in the disposal of the appeal, yet the Tribunal has no power to extend the stay beyond the period of 365 days. The intention of the legislature, which has been made expl .....

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d in the disposal of the appeal on the part of the revenue. Even in that case, the stay would stand vacated on the expiry of 365 days. This is despite the fact that the stay was granted by the Tribunal, in the first instance, upon considering the prima facie merits of the case through a reasoned order. (emphasis provided) 5.6. A careful reading of the said decision would show that after agreeing with the interpretation of the Bombay High Court in Narang Overseas that where the delay was not attr .....

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ed the proceedings in the appeal. The two classes of assessees are distinct and cannot be clubbed together. This clubbing together has led to hostile discrimination against the assessees to whom the delay is not attributable. It is for this reason that we find that the insertion of the expression - 'even if the delay in disposing of the appeal is not attributable to the assessee'- by virtue of the Finance Act, 2008, violates the non-discrimination clause of Article 14 of the Constitution .....

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oduced 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 .....

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own the second proviso of section 254(2A) of the Income Tax Act, 1961. 5.8. The view taken is further fortified by the latest decision dated 16th December, 2015 of the Bombay High Court in CIT vs. M/s. Tata Tele Services vs. In WP (LODG.) 3437 of 2015. The Division Bench vide paras 1 & 2 of the said decision has summed up the facts of the case and the grievance of the Revenue in the following manner:- 1. In these appeals under Section 260-A of the Income Tax Act, 1961 (the Act), the challeng .....

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itioner with the impugned order is that in terms of the third proviso to section 254(2A) of the Act, the Tribunal has no power under the Act to extend the stay of demand in the appeals pending before it beyond the period of 365 days. (emphasis provided) 5.8.1. Considering the amendment to the Statute the position taken in Narang Overseas was followed taking note of the fact that the decision rendered in Pepsi Food Pvt. Ltd. to extend stay beyond 365 days was arrived at reading down the second pr .....

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t. 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 .....

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ixed for hearing on 11.01.2016. The applicant most respectfully submits that earlier in this case special counsel had to represent this case and the matter of appointment of special counsel was pending. Recently I have been instructed by the field authorities to appear in this case on behalf of revenue. A paper book is required to be filed in this case which has been asked from the field authorities to submit, and considering the complexity of the case I require some time to defend the case of r .....

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