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2016 DIGILAW 601 (GUJ)

Income Tax Officer v. Anil Girishbhai Darji

2016-03-15

G.R.UDHWANI, HARSHA DEVANI

body2016
ORDER Harsha Devani, J. 1. These petitions under Articles 226 and 227 of the Constitution of India are directed against the common order dated 18.09.2015 passed by the Income Tax Appellate Tribunal, Ahmedabad in SA No. 97/Ahd/2015, SA No. 98/Ahd/2015 and SA No. 99/Ahd/2015 filed in the respective appeals for the assessment years 2007-08, 2008-09 and 2010-11 respectively, whereby the Tribunal has extended the stay of demands in favour of the respondent - assessee beyond a period of 365 days. 2. Since all these petitions arise out of a common order of the Tribunal, and the parties are also common, the same were taken up for hearing together and are disposed of by this common judgment. 3. For the sake of convenience, reference is made to the facts as appearing in Special Civil Application No. 2577 of 2016. The respondent - assessee filed his return of income for assessment year 2007-08 declaring total income of Rs. 96,910/-. The Assessing Officer framed assessment under section 143(3) read with section 153C of the Income Tax Act, 1961 (hereinafter referred to as "the Act") on 28.12.2011 assessing the total income of the assessee at Rs. 57,58,111/- as against the returned income. The assessee carried the matter in appeal before the Commissioner of Income Tax (Appeals), who by order dated 19.04.2013, confirmed the demand. Being aggrieved, the assessee carried the matter in further appeal before the Tribunal in ITA (SS) A No. 258/Ahd/2013. The assessee also preferred Stay Petition No. 64/Ahd/2014 in the said tax appeal before the Tribunal. In the other two petitions, the respondent-assessee filed identical tax appeals for assessment years 2008-09 and 2010-11 and all the three stay petitions were decided by a common order dated 13.08.2014 of the Tribunal whereby, the stay against the demand was granted in favour of the assessee. While granting stay of the outstanding demand of Rs. 1,80,50,640/-, the Tribunal imposed a condition that the assessee should deposit an amount of Rs. 2,00,000/- in the Government account by 31.08.2014 and make payment of Rs. 50,000/- every month till the disposal of assessee's appeals in IT (SS) A No. 258, 259 and 260/Ahd/2013 for assessment years 2007-08, 2008-09 and 2010-11 respectively, or the expiry of six months from the date of the order, whichever is earlier. 2,00,000/- in the Government account by 31.08.2014 and make payment of Rs. 50,000/- every month till the disposal of assessee's appeals in IT (SS) A No. 258, 259 and 260/Ahd/2013 for assessment years 2007-08, 2008-09 and 2010-11 respectively, or the expiry of six months from the date of the order, whichever is earlier. In terms of the said order, the stay was limited till the disposal of the assessee's appeals or the expiry of six months from the date of the order, whichever was earlier. Since the appeals were not decided within such period, the respondent - assessee moved other applications being Application No. 21 to 23/Ahd/2015 before the Tribunal seeking extension of the stay granted vide order dated 13.08.2014. By an order dated 13.03.2015, the stay granted by earlier order dated 13.08.2014 was extended subject to further payment of Rs. 50,000/- per month till the disposal of assessee's appeal or the expiry of six months, whichever is earlier. Since the appeals were not disposed of within the time stipulated in the stay order, the assessee, after the expiry of six months, moved stay applications for the third time being SA No. 97, 98 and 99/Ahd/2015 seeking further extension of the stay of demand. By the impugned order dated 18.09.2015, the Tribunal extended the stay of demand in favour of the assessee subject to payment of Rs. 50,000/- per month (as stipulated in its earlier order) till the disposal of appeal or the expiry of six months, whichever is earlier. Being aggrieved, the petitioner filed the present petitions. 4. Mr. Varun Patel, learned standing counsel for the petitioner, invited the attention of the court to the provisions of section 254 of the Act, and more particularly, to the third proviso to section 254(2A) thereof, which provides 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 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. It was submitted that in view of the clear language of the third proviso to sub-section (2A) of section 254 of the Act, in case the appeal is not heard within 365 days, it is not permissible for the Tribunal to extend the stay after the expiry of such period even if the delay is not attributable to the assessee. It was submitted that the impugned order passed by the Tribunal extending the stay beyond a period of 365 days is, therefore, in clear contravention of the mandatory provisions of the third proviso to sub-section (2A) of section 254 of the Act inasmuch as the Tribunal has no power to stay the demand beyond a period of 365 days even if the delay is not attributable to the assessee. It was, accordingly, urged that the impugned order being erroneous, illegal and without jurisdiction, deserves to be quashed and set aside. 5. Opposing the petitions, Mr. S.N. Divatia, learned advocate for the respondent - assessee submitted that the controversy involved in the present case is no longer res integra, inasmuch as, the same stands concluded by a decision of this court in the case of Deputy Commissioner of Income Tax v. Vodafone Essar Gujarat Ltd., 376 ITR 23 (Guj.), wherein the court has, while interpreting the provisions of sub-section (2A) of section 254 of the Act, held that it is true that as per the third proviso to section 254(2A) of the Act, if such appeal is not so disposed of within the period allowed under the first proviso i.e. within 180 days from the date of the stay order of the period or periods extended or allowed under the second proviso, which shall not, in 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 the appeal is not attributable to the assessee. Therefore, as such, the legislative intent seems to be very clear. However, the purpose and object of providing such time limit is required to be considered. The purpose and object of providing time limit as provided in section 254(2A) of the Act seems to be that after obtaining stay order, the assessee may not indulge in delaying tactics and misuse the grant of stay of demand. However, the purpose and object of providing such time limit is required to be considered. The purpose and object of providing time limit as provided in section 254(2A) of the Act seems to be that after obtaining stay order, the assessee may not indulge in delaying tactics and misuse the grant of stay of demand. At the same time, a duty is also cast upon the Tribunal to decide and dispose of such appeals in which there is a stay of demand, as early as possible and within the period prescribed under the first proviso and second proviso to section 254(2A) of the Act, i.e. within a maximum period of 365 days. However, one cannot lose sight of the fact that there may be a number of reasons due to which, the Tribunal despite its best efforts may not be in a position to decide and dispose of the appeals. The court held that the object and purpose of section 254(2A) of the Act, is to see that in a case where there is a stay of demand, the appeals are heard at the earliest by the Tribunal and within the stipulated time mentioned therein and all efforts should be made by the Tribunal to see that in case where there is stay of demand, such appeals are heard, decided and disposed of at the earliest and that the stay is not extended mechanically. The court, accordingly, held that the Tribunal has power to extend the stay of demand beyond a period of 365 days; however, the extension of stay beyond a period of total 365 days from the date of grant of initial stay would always be subject to the subjective satisfaction by the Tribunal; and on an application made by the assessee to extend the stay; and on being satisfied that the delay in disposing of the appeal within a period of 365 days from the date of grant of initial stay is not attributable to the assessee. Inviting the attention of the court to the impugned order, Mr. Divatia pointed out that the Tribunal has noted that the assessee had complied with the condition precedent for payment of the disputed tax demand as directed by it and further that the appeal of the assessee had not been disposed of and the non-disposal of appeal is not attributable to the assessee. Divatia pointed out that the Tribunal has noted that the assessee had complied with the condition precedent for payment of the disputed tax demand as directed by it and further that the appeal of the assessee had not been disposed of and the non-disposal of appeal is not attributable to the assessee. It was submitted that, therefore, the Tribunal has duly applied its mind to the facts of the present case and has found that the delay in deciding the appeal is not attributable to the assessee. Under the circumstances, this case is squarely covered by the above decision of this court and hence, there is no warrant for interference. 5.1 Reference was also made to the decision of this court in the case of Commissioner v. Small Industries Development Bank of India rendered in Tax Appeals No. 341 of 2014 and allied matters wherein, the court, in the context of section 35C(2A) of the Central Excise Act, 1944, had adopted a similar view. Reliance was placed upon a decision of the Supreme Court in the case of Commissioner of Customs and Central Excise, Ahmedabad v. Kumar Cotton Mills Pvt. Ltd., (2005) 180 ELT 434 (SC), wherein the court in the context of similarly worded provisions of section 35C (2A) of the Central Excise Act, 1944, has held that the sub-section which was introduced in terrorem cannot be construed as punishing the assessees for matters which may be completely beyond their control. For example, many of the Tribunals are not constituted and it is not possible for such Tribunals to dispose of matters. Occasionally by reason of other administrative exigencies for which the assessee cannot be held liable, the stay applications are not disposed of within the time specified. The court found that the reasoning adopted by the Tribunal in the impugned order could not be faulted. The court, however, sounded a note of caution that it should not be understood as holding that any latitude is given to the Tribunal to extend the period of stay except on good cause and only if the Tribunal is satisfied that the matter could not be heard and disposed of by reason of the fault of the Tribunal for reasons not attributable to the assessee. 5.2 Reference was made to the affidavit-in-reply filed by the respondent and more particularly, to the order sheet of the Tribunal at page 31 of the case papers, wherein the Tribunal has noted that the assessee had requested for inspection of the case files, assessment records and certified copies of necessary documents and that the learned CIT DR had no objection if the same was permitted. It was pointed out that on 26.02.2016, the matter was adjourned at the request of the DR as the relevant case records were not available on that day. It was submitted that, therefore, the appeals pending before the Tribunal are being adjourned at the instance of the petitioner and not on account of any default on the part of the respondent-assessee. It was further pointed out that despite the fact that there is no default on the part of the respondent - assessee, the assessee is required to deposit Rs. 50,000/- per month in the light of the order passed on the stay applications and that the operation of the impugned order would come to an end on 19.03.2016 and that the respondent - assessee would be required to move another application for extension of the stay. It was, accordingly, urged that appropriate directions be issued to the Tribunal to dispose of the appeals as expeditiously as possible. 6. In rejoinder, Mr. Varun Patel invited the attention of the court to an order dated 11.01.2016 passed by the Supreme Court in the Petition for Special Leave to Appeal filed by the revenue against the order of this court in Deputy Commissioner of Income Tax v. Vodafone Essar Gujarat Ltd. (supra), whereby the delay in preferring the SLP has been condoned and notice has been issued. It was submitted that, therefore, the above decision of this court has not attained finality. 7. In the above backdrop, the sole controversy involved in these petitions is as to whether the Tribunal was justified in extending the stay of demand in favour of the assessee beyond the period prescribed under the third proviso to sub-section (2A) of section 254 of the Act. 7. In the above backdrop, the sole controversy involved in these petitions is as to whether the Tribunal was justified in extending the stay of demand in favour of the assessee beyond the period prescribed under the third proviso to sub-section (2A) of section 254 of the Act. While, from the language of the third proviso to sub-section (2A) of section 254 of the Act, it appears that the Tribunal has no power to extend the stay beyond a period of 365 days from the date when the initial stay was granted, this court in Deputy Commissioner of Income Tax v. Vodafone Essar Gujarat Ltd. (supra) wherein a similar controversy was involved, for the reasons detailed to paragraph 5 above, has held that the Tribunal has the power to extend the stay of demand beyond a period of 365 days. However, extension of stay of the demand beyond the total period of 365 days from the date of grant of initial stay would always be subject to subjective satisfaction of the Tribunal; on an application made by the petitioner to extend the stay; and on being satisfied that the delay in disposing of the appeal within a period of 365 days from the date of grant of initial stay is not attributable to the assessee. 8. In the facts of the present case, the Tribunal while extending the stay beyond the period of 365 days from the date of initial stay, has recorded satisfaction as regards compliance of the conditions of payment of the disputed tax as stipulated under the stay order and has also recorded a finding that non-disposal of the appeal is not attributable to the assessee. The learned counsel for the respondent - assessee has produced copies of the record and proceedings of the Tribunal to further point out that the appeals have not yet been heard as the Departmental Representative had prayed for an adjournment because the necessary case papers were not available to submit that even further delay is not attributable to the assessee. 9. Applying the decision of this court in the case of Deputy Commissioner of Income Tax v. Vodafone Essar Gujarat Ltd. (supra), to the facts of the present case, it cannot be said that the impugned order passed by the Tribunal suffers from any legal infirmity warranting interference. 10. In the aforesaid premises, the petitions fail and are, accordingly, dismissed. 9. Applying the decision of this court in the case of Deputy Commissioner of Income Tax v. Vodafone Essar Gujarat Ltd. (supra), to the facts of the present case, it cannot be said that the impugned order passed by the Tribunal suffers from any legal infirmity warranting interference. 10. In the aforesaid premises, the petitions fail and are, accordingly, dismissed. However, as rightly pointed out by the learned counsel for the respondent - assessee, the appeals are required to be disposed of as expeditiously as possible, inasmuch as, the period for which the stay has been further extended vide the impugned order is likely to lapse and the appeals have not yet been heard. In these circumstances, the Tribunal is requested to dispose of the appeals as expeditiously as possible, preferably within a period of three months from the date of receipt of copy of this order.