Hon'ble Naheed Ara Moonis,J.
Heard S/Sri Rupesh Jain and R.S.Agrawal, learned counsel for the petitioner and Sri Ashok Kumar, learned counsel for the respondents and perused the record.
With the consent of the learned counsel for the parties, this writ petition is being disposed of at this stage.
Challenging the order of Assessment passed by the Assessing Authority, the petitioner filed an appeal before the Income Tax Appellate Tribunal New Delhi in which an interim order was granted on 16.11.2011 which was to remain in force initially for a period of 180 days. The interim protection was subject to the petitioner depositing a sum of Rs. 30 crores in two instalments. It is not disputed that the said amount has been deposited in terms of the interim order dated 16.12.2011. Before the expiry of 180 days on 1.6.2012, the Tribunal, on being satisfied that the delay in disposal of the appeal was not attributable to the petitioner, extended the stay order for a further period of 90 days. The Tribunal on being satisfied that the delay in disposal of the appeal was not attributable to the petitioner, again extended the interim order for further period of 90 days each on 7.9.2012, 15.3.2013 and 2.8.2013. Lastly, on 9.12.2013, the interim order was extended for a further period of six months or till the disposal of the appeal, whichever was earlier.
All these extensions were granted by the Tribunal as it had found that the delay in disposal of the appeal was not attributable to the petitioner. The power of granting of such extension is provided for in the provisos to section 254 (2A) of the Income Tax Act 1961. It is admitted to the parties that the final hearing of the appeal was held on 6.5.2014 and 19.5.2014 and the arguments were concluded on 20.5.2014, after which, judgment in the appeal filed by the petitioner was reserved. It is not disputed that in terms of the last extension of the interim order on 9.12.2013 which was for a period of six months, interim order is to expire on 8th June 2014 .
The relevant section 254 (2A) which relates to the power of the Tribunal, including the power to grant stay is being reproduced hereto below for ready reference.
"254. Orders of Appellate Tribunal.-
1.......
2..........
(2A) In every appeal, the Appellate Tribunal, where it is possible, may hear and decide such appeal 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) 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 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 application made in this behalf by the assessee and on being satisfied that the delay in disposing of the appeal is not attributable to the assessee, extend the period of stay, or pass an order of stay for a further period or periods as it thinks fit; 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, 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."
The third proviso to sub-section 2A of Section 254 Income Tax Act puts a limit to the period for which a stay can be granted by the Tribunal, which according to the said proviso should not exceed to 365 days. In the present case, the first stay order was granted by the Tribunal on 16.12.2011 which was extended from time to time and lastly on 9.12.2013 which was for a period of six months.
Learned counsel for the respondent no.2 Sri Ashok Kumar submitted that since the power of the Tribunal to grant extension was not beyond the period of 365 days and such period had expired on 15.12.2012 (as the initial stay order was granted on 16.12.2011), the Tribunal had erred in extending the stay order after 15.12.2011. It is however, not disputed that even though extensions were granted time and again and also after 15.12.2012, yet respondents did not object to the same nor did they challenge the said extensions before the Tribunal itself or by filing any writ petition, meaning thereby that they succumbed to the extensions which were granted by the Tribunal even after 365 days.
Peculiar situation has now arisen when the judgment has been reserved by the Tribunal after hearing the parties on 20.5.2014 and there is less likelihood of judgment being delivered before 8.6.2014, when the interim order granted by the Tribunal would come to an end. The petitioners have been placed in a situation where, without any fault on their part, the appeal filed by them may not be decided and the stay order would come to an end. Such delay in decision of the appeal cannot be attributable to the petitioners. They could be placed in a situation where, because of the expiry of the interim order and judgment not being delivered before the said date, they may be subjected to demand notice or realization of such tax which is subject matter of appeal and had been stayed, which continued in operation till hearing of the appeal and the judgment was reserved.
Similar situation came up before a Division Bench of this court in Writ Tax No. 2859 of 2014 (M/s Adobe System India Pvt. Ltd. Vs. Joint Commissioner of Income Tax and another) wherein also interim order which was granted on 8.1.2013 was extended from time to time and lastly on 28.1.2014 which was for a period of 90 days. The judgment in that case was reserved by the Tribunal on 28.3.2014. There also the Tribunal had extended the period of stay beyond the period of 365 days and the stay order lastly extended, was to expire on 28.4.2014 which was after the Tribunal had heard the matter and reserved the judgment.
In the aforesaid facts and circumstances, the Division Bench considered the judgment of Delhi High Court in re Commissioner of Income Tax Vs. M/s Maruti Suzuki (India) Limited Delhi 2014 (362) ITR 215 wherein it was held as follows :-
"(i) In view of the third proviso to Section 254(2A) of the Act substituted by Finance Act, 2008 with effect from October 1, 2008, the Tribunal cannot extend stay beyond the period of 365 days from the date of first order of stay.
(ii) In case default and delay is due to lapse on the part of the Revenue, the Tribunal is at liberty to conclude hearing and decide the appeal, if there is likelihood that the third proviso to Section 254(2A) would come into operation.
(iii) The third proviso to Section 254(2A) does not bar or prohibit the Revenue or the Departmental representative from making a statement that they would not take coercive steps to recover the impugned demand and on such statement being made, it will be open to the Tribunal to adjourn the matter at the request of the Revenue.
(iv) An assessee can file a writ petition in the High Court pleading and asking for stay and the High Court has power and jurisdiction to grant stay and issue directions to the Tribunal as may be required. Section 254(2A) does not prohibit/bar the High Court from issuing appropriate directions, including granting stay of recovery."
After observing that the matter was heard by the Tribunal and then finally reheard on 28.3.2014 when the judgment was reserved, the Division Bench of this Court exercising extra ordinary jurisdiction under Article 226 of the Constitution of India, directed that the interim order would continue till the appeal was finally disposed off.
The facts of this case are similar to the case of Adobe System (supra). Here also the stay was extended by the Tribunal from time to time, even beyond the period of 365 days. The judgment was reserved during the period when the stay order was continuing but thereafter it was not extended till the delivery of the judgment. As we have also observed above, in case the judgment is not delivered by the Tribunal before the date of expiry of the interim order which is on 8.6.2014, the petitioners would be subjected to demand notice or recovery of tax which is subject matter of appeal before the Tribunal and has already been stayed by the Tribunal.
In such facts, we are of the view that in exercise of extra ordinary jurisdiction under Article 226 of the Constitution of India, to save the petitioners from harassment, which they would be likely to face because of the interim order not being extended, we hold that until decision of the appeal filed by the petitioners, interim order which was initially granted by the Tribunal and has been extended from time to time, and lastly on 9.12.2013, would continue to operate till the delivery of the judgment in appeal filed before the Tribunal. However, in the circumstances of the case, since the appeal has already been heard and the judgment has been reserved, we would request to the Tribunal to dispose of the appeal expeditiously, preferably within a period of three months from the receipt of a certified copy of this order.
The writ petition stands allowed to the extent as indicated above. No order as to costs.
Order Date :- 29.5.2014 Naim (Naheed Ara Moonis, J.) (Vineet Saran, J.)