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| DATE: | March 30, 2011 (Date of publication) |
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| Click here to download the judgement (tata_comm_special_bench_stay_365_days.pdf) |
Despite Third Proviso to s. 254(2A), Tribunal has power to extend stay beyond 365 days if delay not attributable to assessee
The Third Proviso to s. 254(2A), as amended w.e.f. 1.10.2008, provides that if the appeal filed by the assessee is not disposed off within the period of stay granted by the Tribunal (which cannot exceed 365 days), the order of stay shall stand vacated even if the delay in disposing of the appeal is not attributable to the assessee. The assessee filed a stay application requesting stay of demand for penalty of Rs. 369 crores. On the expiry of 365 days of stay, the assessee asked for extension of stay relying on the Tribunal’s order in Ronak Industries where, stay had been granted beyond 365 days relying on the judgement of the Bombay High Court in Narang Overseas 295 ITR 22 (Bom). As it was felt by the Tribunal that the reliance in Ronak Industries on Narang Overseas was misplaced in view of the amendment to the Third proviso to s. 254(2A) w.e.f. 1.10.2008, the question whether the Tribunal had jurisdiction to extend stay beyond 365 days referred to the Special Bench. HELD by the Special Bench:
(i) In Ronak Industries, the Tribunal held, relying on Narang Industries, that the Tribunal has the power to extend stay beyond 365 days. This decision of the Tribunal was challenged by the department in the Bombay High Court by specifically raising a question as to the applicability of the Third Proviso to s. 254(2A) as amended w.e.f 1.10.2008. The High Court, vide order dated 22.10.2010, dismissed the department’s appeal. As such, the Tribunal’s order holding that there was power to extend stay even after 365 days stood affirmed;
(ii) The department’s argument that the High Court’s order in Ronak Industries should be treated as per incuriam on the ground that the amendment made by the FA 2008 was not considered by it is not acceptable because (a) In Narang Overseas (rendered prior to the amendment) a wider view was taken as regards the power to grant stay, (b) In the appeal filed by the department in Ronak Industries a specific question with regard to the effect of the Third Proviso was raised and so it cannot be said that the High Court had not taken cognizance of the amendment, (c) the Tribunal cannot ignore a High Court’s decision on the ground that a provision of law was not considered by the High Court and (d) the fact that there is no discussion in the High Court’s order in Ronak Industries does not mean that does not lay down any ratio decidendi;
(iii) However, the recovery of the arrears by the AO on the expiry of 365 days of stay cannot be ordered to be refunded because on the date of recovery the stay had expired and the application for extension was pending before the Special Bench. The AO’s act was bona fide and as the recovery was by adjustment of refunds, it was not a “coercive measure” (RPG Enterprises 251 ITR (AT) 20 (Mum) & other cases holding that the AO must refund taxes collected during the pendency of a stay application distinguished).
The ITAT’s order in TCL case has, in the nature of things, to be necessarily read keeping in mind and sharp focus what the HC has held in Narang’s case. On the first blush, in the HC case, both sides are noted to have eloquently put forth their respective arguments; and as would have been only expected, have, in support of the mutually contradicting stance, pressed into service several principles and rules of interpretation as culled out from the ‘ precedents’.
As may be observed, the TCL case has mainly turned on, by laying stress on inter alia, the following:
1. This is case where the assessee was not at all to be faulted; it was the ITAT who was to be blamed for the delay.
2. The two concepts of – ‘directory’ and ‘mandatory’ are distinct ; do not connote the one and the same thing.
3. ‘Equity’ and ‘taxation’ need not have to be always regarded ‘strangers’.
4. In a case such as here, for adjudicating on the issue, the empowered authority has to travel beyond what the governing provision, in terms, says, but ascertain the ‘intention’ behind.
On the proposition 3. above, one is obliged to spontaneously recall the recently reported judgment of the apex court @ Law, not equity must prevail: SC (ref. itatonline)
On the rest of them, one may have comments to offer, in order to help anyone else to make an independent and incisive study.
Apropos my previous Post, the following additional input is being volunteered, in the fond hope and sincere expectation that may assist anyone truly concerned for making an independent study as suggested:
1. Given below, is the from my feedback sent directly to the author of article published @http://www.taxguru.in/general-info/discretion-root-cause-of-corruption.html :
The ‘discretionary powers’ of any authority – whether he be a statutory or quasi-statutory authority- not to mention others, such as quasi judicial,- is .as per the common perception, a cause for the ever increasingly felt evil of corruption.
However, that cannot be regarded or concluded to be the only cause; much less as the root cause, for the noted evil.
Going to the very root of the matter, one cannot fail to realise that it is every ‘power’, not just the ‘discretionary power’, – executive, administrative, or even quasi judicial – which an authority is vested with under any statute or rules or regulations having a statutory force, – has the necessary potential, and might turn out to be in its own way responsible for the evil perpetrated or being perpetuated all along.
The other factor or cause for the ever dreaded, rather increasingly threatening evil of corruption – is, ‘ignorance of law’ – be it genuine or feigned or otherwise; not just on the part of the taxpaying community but also of those advising professionals. This aspect has been elaborated in the article, – Ignorance of law – is no excuse, or is it bliss? @http://www.ourkarnataka.com/articles/law/ignlaw09.htm
Undoubtedly, the evil directly or otherwise impinges on and impacts squarely ‘public interest’. As such, the men in governance should take all such effective steps to, if not eradicate, at least contain or keep it within tolerable bounds.
2. On the very point of deliberation herein, which is centred on – as to whether or not relaxation of statutory time limits is justifiable in general, one may refer the comments offered (reproduced below) wrt the CBDT Circular @
CCIT Personally Responsible For Timely Filing Of Appeals: CBDT Chairman
The subject directive has been issued by the CBDT in the aftermath of the mentioned ‘adverse observations’ of the SC, hence has confined itself to delays in the filing of Appeals / SLPs in courts.
However, there appears to be no rhyme or reason for not extending the discipline of strict/scrupulous adherence to ‘time limits’ prescribed, even to initiation of other proceedings – e.g. filing of appeals before lower forums – whether it is by the Revenue or the taxpayer. For, if so done, that is sure to go a long way in improving upon the performance of not only the judicial but also the quasi judicial functionaries. That also should help to avoid /reduce/decelerate the alarmingly increasing pendency of litigation at the different stages – right from the first appeal.
Ideally speaking, from the viewpoint of ‘public interest’, it is high time that the government should come out with constructive measures, more so with legislative steps, sooner than later, to inculcate the habit of timely action- both by the Revenue and taxpayer. That could be accomplished by simply making it mandatory, – that is, with no power, inherent or otherwise, left with any concerned quasi judicial or judicial authority to condone any ‘delay’ – regardless of highly subjective considerations such as, ‘reasonable cause’.
It calls for no special emphasis that, measures/ steps , if taken on the suggested lines, are bound to improve upon the system of administration of justice , quantitatively as also qualitatively; to the end of the people being guaranteed – ‘social justice’ or ‘natural justice’ , or by whatever other name one may wish to call it.
The DTC Bill may, as one thinks, come in handy and provide a golden opportunity for the government, given, of course, the ‘mind’ and ‘will power’ to do so, to accord a legal shape to action on the foregoing lines.
Errata:
To read-
1. Given below, is the EXTRACT from my feedback ….
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