Tribunal has no power to extend stay beyond 365 days even if assessee not at fault
The Tribunal allowed the assessee’s stay applications for a period beyond 365 days (presumably following Tata Communications (ITAT Bom SB)). The department filed an appeal claiming that the grant of stay beyond 365 days was in contravention of the third proviso to s. 254(2A) inserted by the FA 2008 w.e.f. 1.10.2008. HELD by the High Court allowing the appeal:
The third proviso to s. 254(2A) as amended by the FA 2008 w.e.f. 1.10.2008 provides that if the appeal is not decided within the period of 365 days, the order of stay shall stand vacated after the expiry of such period even if the delay in disposing of the appeal is not attributable to the assessee. The Tribunal which is a creature of the statute has to abide by these statutory provisions in letter and spirit. The third proviso to the Finance Act 2008 makes it abundantly clear that the purpose of putting the outer limits is only for curtailing the period an order of stay can operate and to ensure that it has no effect after the period of 365 days from the date of initial order. An interpretation to enable or confer power on the Tribunal to extend a stay order beyond 365 days would be contrary to such statutory provision. While the argument that hardship & injustice will be caused to the assessee by being deprived of the stay even when he is not at fault is appreciated, one cannot ignore the language of the provision (Ronuk Industries 333 ITR 99 (Bom) dissented from).