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Principal Commissioner of Income Tax, Gurgaon Versus M/s Carrier Air Conditioning and Refrigeration Limited

2016 (5) TMI 396 - PUNJAB AND HARYANA HIGH COURT

Stay of demand exceeding 365 days - Held that:- Wherever the appeal could not be decided by the Tribunal due to pressure of pendency of cases and the delay in disposal of the appeal is not attributable to the assessee in any manner, the interim protection can continue beyond 365 days in deserving cases - ITA No.5 of 2016 (O&M) - Dated:- 25-4-2016 - MR. AJAY KUMAR MITTAL AND MR. DARSHAN SINGH, JJ. FOR THE APPELLANT : Mr. Tajender K.Joshi, Advocate Ajay Kumar Mittal,J. 1. This appeal has been pref .....

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the combined period of stay has exceeded 365 days? 2. Whether the order of the ITAT be treated as void ab initio in the light of third proviso to section 254(2A) of the Income Tax Act, 1961, which provides that stay of demand stands vacated after expiry of a period of 365 days even if delay in disposal of appeal is not attributable to the assessee? 2. A few facts relevant for the decision of the controversy involved as narrated in the appeal may be noticed. The assessee furnished its return of .....

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n of ₹ 8,50,26,705/- on account of transfer pricing adjustments and disallowance of ₹ 5,51,000/- on account of amount spent towards lease hold improvement. Against the draft order, the assessee moved before the Dispute Resolution Panel III, New Delhi. On 26.11.2013, the Dispute Resolution Panel had given directions under section 144C(5) of the Act and accordingly, final assessment order under section 143(3) of the Act read with section 144C(13) of the Act was passed by the Assessing .....

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ally granted on 6.6.2014 and further this stay was extended vide order dated 27.11.2014 upto 5.6.2015 or till the disposal of the appeal. Thus, period of 365 days of stay expired on 5.6.2015. The Tribunal vide order dated 12.6.2015, Annexure A.II further extended the stay for another period of six months or till the disposal of the appeal relying upon the judgment of the Delhi High Court in Pepsi Foods Pvt. Limited vs. ACIT and another, 2015-TIOL-1306 HC-DEL-IT. According to the appellant-revenu .....

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within a period of four years from the end of the financial year in which such appeal is filed under sub-section (1) or sub-section (2) or sub-section (2A) of section 253 : Provided that the Appellate Tribunal may, after considering the merits of the 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 Tribuna .....

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so, however, that the aggregate of the period originally allowed and the period or periods so extended or allowed shall not, in any case, exceed three hundred and 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, in any case .....

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ase law on the point concluded that wherever the appeal could not be decided by the Tribunal due to pressure of pendency of cases and delay in the disposal of the appeal is not attributable to the assessee in any manner, the interim protection can continue beyond 365 days in deserving cases and recorded as under:- 15. In Pepsi Foods Pvt. Limited now merged with Pepsico India Holding Pvt. Limited vs. Assistant Commissioner of Income Tax and another, 2015-TIOL-1306 HC-DEL-IT, the challenge was to .....

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he Tribunal has the power to grant extension of stay beyond 365 days in deserving cases. The relevant observations recorded read thus:- 23.Keeping in mind the principles set out by the Supreme Court in Dr Subramanian Swamy (supra), [(2014) 8 SCC 682 (SC)] we need to examine whether the present challenge to the validity of the third proviso to Section 254(2A) can be sustained. This is not a case of excessive delegation of powers and, therefore, we need not bother about the second dimension of Art .....

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ed. 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 d .....

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e 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 explicit by insertion of the words - even if the delay in disposing of the appeal is not attributable to the assessee - renders the right of .....

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pite 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. 24. Furthermore, the petitioners are correct in their submission that unequals have been treated equally. Assessees who, after having obtained stay orders and by their conduct delay the appeal proceedings, have been treated in the same manner in which assessees, who have not, in any way, delayed the proceedings in the appeal. The two classe .....

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tiously and that assesses 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 assesses 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 v .....

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