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DATE: April 6, 2021 (Date of pronouncement)
DATE: April 7, 2021 (Date of publication)
AY: -
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CITATION:
S. 254(2A) Stay by ITAT: Since the object of the 3rd proviso to s. 254(2A) is the automatic vacation of a stay that has been granted on the completion of 365 days, whether or not the assessee is responsible for the delay caused in hearing the appeal, such object being itself discriminatory, is liable to be struck down as violating Article 14 of the Constitution of India. Also, the said proviso would result in the automatic vacation of a stay upon the expiry of 365 days even if the Appellate Tribunal could not take up the appeal in time for no fault of the assessee. Further, vacation of stay in favour of the revenue would ensue even if the revenue is itself responsible for the delay in hearing the appeal. In this sense, the said proviso is also manifestly arbitrary being a provision which is capricious, irrational and disproportionate so far as the assessee is concerned. Consequently, the third proviso to s. 254(2A) will now be read without the word “even” and the words “is not” after the words “delay in disposing of the appeal”. Any order of stay shall stand vacated after the expiry of the period or periods mentioned in the Section only if the delay in disposing of the appeal is attributable to the assessee.

Judged by both these parameters, there can be no doubt that the third proviso to Section 254(2A) of the Income Tax Act, introduced by the Finance Act, 2008, would be both arbitrary and discriminatory and, therefore, liable to be struck down as offending Article 14 of the Constitution of India. First and foremost, as has correctly been held in the impugned judgment, unequals are treated equally in that no differentiation is made by the third proviso between the assessees who 23 https://itatonline.org are responsible for delaying the proceedings and assessees who are not so responsible. This is a little peculiar in that the legislature itself has made the aforesaid differentiation in the second proviso to Section 254(2A) of the Income Tax Act, making it clear that a stay order may be extended upto a period of 365 days upon satisfaction that the delay in disposing of the appeal is not attributable to the assessee. We have already seen as to how, as correctly held by Narang Overseas (supra), the second proviso was introduced by the Finance Act, 2007 to mitigate the rigour of the first proviso to Section 254(2A) of the Income Tax Act in its previous avatar. Ordinarily, the Appellate Tribunal, where possible, is to hear and decide appeals within a period of four years from the end of the financial year in which such appeal is filed. It is only when a stay of the impugned order before the Appellate Tribunal is granted, that the appeal is required to be disposed of within 365 days. So far as the disposal of an appeal by the Appellate Tribunal is concerned, this is a directory provision. However, so far as vacation of stay on expiry of the said period is concerned, this condition becomes mandatory so far as the assessee is concerned. The object sought to be achieved by the third proviso to Section 254(2A) of the Income Tax Act is without doubt the speedy disposal of appeals before the Appellate Tribunal in cases in which a stay has been granted in favour of the assessee.

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DATE: June 17, 2020 (Date of pronouncement)
DATE: June 27, 2020 (Date of publication)
AY: 2011-12, 2012-13
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CITATION:
S. 254(2A): ITAT President to consider whether a Special Bench should be constituted to decide two very significant aspects relating to the powers of the ITAT to grant unconditional stay of demand after the amendment in first proviso to s. 254(2A) by the Finance Act 2020, namely, (i) The legal impact, if any, of the amendment on the powers of the Tribunal u/s 254(1) to grant stay; and, (ii) if the amendment is held to have any impact on the powers of the Tribunal u/s 254(1),- (a) whether the amendment is directory in nature or is mandatory in nature; (b) whether the said amendment affects the cases in which appeals were filed prior to the date on which the amendment came into force; (c) whether, with respect to the manner in which, and nature of which, security is to be offered by the assessee, under first proviso to s. 254(2A), what are broad considerations and in what reasonable manner, such a discretion must essentially be exercised, while granting the stay,by the Tribunal.

We are of the considered view that these issues are of vital importance to all the stakeholders all over the country, and in our considered understanding, on such important pan India issues of far reaching consequence, it is desirable to have the benefit of arguments from stakeholders in different part of the country. We are also mindful of the fact, as learned Departmental Representative so thoughtfully suggests, the issues coming up for consideration in these stay applications involve larger questions on which well considered call is required to be taken by the bench. Considering all these factors, we deem it fit and proper to refer the instant Stay Applications to the Hon’ble President of Income Tax Appellate Tribunal for consideration of constitution of a larger bench and to frame the questions for the consideration by such a larger bench, under section 255(3) of the Income Tax Act, 1961

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DATE: April 24, 2020 (Date of pronouncement)
DATE: April 24, 2020 (Date of publication)
AY: 2010-11
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CITATION:
As the physical office of the ITAT is not functioning due to the lockdown, the stay petition was heard through video conferencing, from home offices of the respective Members. Attachment of bank account lifted and stay against coercive recovery granted as all of us are traversing through one of the toughest patch of time, facing the Covid 19 pandemic, and the poorer sections of society are hardest hit. It is necessary for every employer company to take care of its employees. The assessee not in a position to perform these obligations in view of the attachment of its bank accounts and debtors

As all of us are traversing through one of the toughest patch of time, facing the Covid 19 pandemic, and the poorer sections of society are hardest hit. It is, therefore, all the more necessary for every employer company to take care of its employees. We find that in view of the attachment of asessee’s bank accounts and assessee’s debtors, the assessee is stated to be not in a position to perform these obligations. Given this situation, we are satisfied that this situation calls for our interference

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DATE: January 20, 2020 (Date of pronouncement)
DATE: January 25, 2020 (Date of publication)
AY: 2013-14
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CITATION:
S. 226(3): Undue haste in recovery of disputed demands by issue of s. 226(3) garnishee notices, in respect of which the hearing of appeal as also the stay petition is already concluded, is indeed inappropriate. The revenue authorities should have at least waited the disposal of the stay petition. Interim stay granted and garnishee proceedings placed under suspension till the disposal of the stay petition

We have noted that the hearing of stay petition was concluded, as per information available to us, on 17th January 2020, but the order thereon has not been passed as yet since one of the Members constituting coram of the bench has gone on tour to Delhi benches due to unavoidable official exigencies. In the meantime, however, the revenue authorities have already issued garnishee notices, under section 226(3) of the Income Tax Act, 1961, to the bankers of the assessee on 17th January 2020 itself. Such an undue haste in recovery of the disputed demands, in respect of which the hearing of appeal as also the stay petition is already concluded, is indeed inappropriate. The revenue authorities should have at least waited for the disposal of the stay petition.

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DATE: October 21, 2019 (Date of pronouncement)
DATE: November 2, 2019 (Date of publication)
AY: 2011-12
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CITATION:
S. 254(2A): In cases where there is stay of recovery of demand of tax, the Tribunal should deal with the appeals pending before it on a higher priority. The Tribunal should consider forming a separate list of such cases which should be heard on priority after arranging the cases on the basis of their seniority as well as the quantum involved in the stay

We are of the considered view that in cases where there is stay of recovery of demand of tax, the Tribunal should deal with the appeals pending before it on a higher priority. The Tribunal should consider forming a separate list of such cases which should be heard on priority after arranging the cases on the basis of their seniority as well as the quantum involved in the stay

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DATE: February 28, 2019 (Date of pronouncement)
DATE: October 9, 2019 (Date of publication)
AY: 2013-14
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CITATION:
Stay of demand u/s 220(6)/254(2A): The Dept is not right in relying upon the decision of the Supreme Court in Asian Resurfing of Road Agency vs. CBI (AIR 2018 SC 2039) to contend that any stay against recovery granted would automatically lapse after six months. This is neither the purport of the judgment of the SC, nor the observations made in the said judgment in the context of civil and criminal litigation can be imported in present set of quasi judicial proceedings. The power of the AO to review the situation every six months, would not authorize him to lift the stay previously granted after full consideration and insist on full payment of tax without the assessee being responsible for delay in disposal of the appeal or any other such similar material change in circumstances

We are prima facie of the view that the Revenue Authorities committed serious error. Against the total demand arising out of the order of assessment of Rs. 205 crore, the Assessing Officer has already recovered a total of Rs. 140 crores by now through different means. There is no allegation that the petitioner is responsible for delay in disposal of the appeal before the Commissioner. Merely relying upon the decision of the Supreme Court in the case of Asian Resurfacing of Road Agency Pvt Ltd (supra), Revenue Authorities now held a belief that any stay against the recovery granted would automatically lapse after six months

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DATE: January 9, 2018 (Date of pronouncement)
DATE: January 17, 2018 (Date of publication)
AY: -
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CITATION:
Stay of demand: Pr CIT & ACIT directed to pay personal costs for filing frivolous writ petition to challenge ITAT stay order. Raising unsustainable, illegal and high pitched demands and enforcing coercive recovery and challenging stay orders shows utterly irresponsible and unfair behaviour. Thereafter, seeking adjournments by the Dept of the hearing in the ITAT adds insult to the injury. Irresponsible and uncoordinated manner of the Dept strongly deprecated

It is the unnecessary dogged approach of the Revenue to multiply the litigations in the Constitutional Courts, in turn wasting the precious public hours of time and unholy desire to become a litigant in the Constitutional Courts at Government costs, though there may be absolutely no justification for doing so. The efforts of the Revenue to prove their point that they had a good case on merits before the Constitutional Courts rather than respecting the orders passed by the statutorily created Tribunals not only shows lack of judicial discipline and hierarchical discipline which they should maintain, but treating the constitutional remedies as a vested right with them. The public functionaries and public officials cannot be allowed to spend Government money and public time much less public time of the Constitutional Courts just for the sake of proving their such fictional desires. First raising unsustainable, illegal and high pitched demands and then seeking to coercively recover the same even showing scant regard to the orders passed by highest Tribunal under the Act and for that invoking the writ jurisdiction to seek support to their such effort is nothing but an utterly irresponsible and unfair behaviour. It is the lack of such discipline with the Government Officials which turns Government Departments as a major litigant in the Constitutional Courts, in turn depriving the Constitutional Courts to devote their time for looking into the causes of poor people, which deserve their time and attention of the court more than such Government Departments

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DATE: December 20, 2017 (Date of pronouncement)
DATE: December 23, 2017 (Date of publication)
AY: 2013-14, 2009-10
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CITATION:
Coercive Tax Recovery: The AO wanted to preempt the Tribunal from dealing with the Stay application. The Act and conduct of the Revenue officials is against judicial conscience. Canons of law, justice and ethics have been broken down by the officials of the Department. An effort has been made to render the provisions of the law inoperative, debarring the assessee from availing any remedy from the higher forum

The act ion of the coercive recovery on the par t of the Assessing officer was against the elementary principal of rule of law. That the state is expected to act fairly. The undue haste on the part of the Assessing officer in recovering the amount was not only contrary to the binding decision of the Court but also shocking to the judicial conscience. The entire action was directed at rendering the Tribunal and the assessee helpless so that no relief can be granted in favour of the assessee. The Tribunal could not be silent spectator of the arbitrary and illegal act ion on the part of the Assessing officer so as to frustrate the legal process provided under the Act. The grant of refund of the amount that has been coercively recovered by the department was in the exercise of the tribunal’s inherent powers to ensure that the assessee is not left high and dry only on account of illegal and highhanded actions on the part of revenue and the assessing officer

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DATE: June 12, 2015 (Date of pronouncement)
DATE: June 27, 2015 (Date of publication)
AY: 2008-09, 2009-10
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CITATION:
S. 254(2A) third proviso cannot be interpreted to mean that extension of stay of demand should be denied beyond 365 days even when the assesseee is not at fault. ITAT should make efforts to decide stay granted appeals expeditiously

One cannot lost sight of the fact that there may be number of reasons due to which the learned Tribunal is not in a position to decide and dispose of the appeals within the maximum period of 365 days despite their best efforts. Some of the reasons due to which the learned Tribunal despite its best efforts is not in a position to dispose of the appeal/appeals at the earliest are stated herein above. There cannot be a legislative intent to punish a person/ assessee though there is no fault of the assessee and/or appellant

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COURT:
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DATE: May 19, 2015 (Date of pronouncement)
DATE: May 19, 2015 (Date of publication)
AY: -
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CITATION:
S. 254(2A): The Third Proviso which restricts the power of the ITAT to grant stay beyond 365 days “even if the delay in disposing of the appeal is not attributable to the assessee” is arbitrary, unreasonable and discriminatory. It is struck down as violative of Article 14. The ITAT has the power to extend stay even beyond 365 days

While it could be argued that the condition that the 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 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 appeal granted to the assessee by the statute to be illusory for no fault on the part of the assessee. The stay, which was available to him prior to the 365 days having passed, is snatched away simply because the Tribunal has, for whatever reason, not attributable to the assessee, been unable to dispose of the appeal

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