The author argues that the verdict of the Special Bench in Tata Communications vs. DCIT that stay of demand can be extended by the Tribunal beyond 365 days is the result of inept handling by the department. He calls the situation a “fiasco” for the department and dishes out advice on what can be done to remedy the situation
The judgement of the Special Bench in Tata Communications vs. DCIT that the Tribunal has the power to extend stay beyond 365 days despite the clear language of the Third Proviso to s. 254(2) of the Act must have come as a big surprise to even the most optimistic tax-payer. Certainly, the decision caught battle-hardened tax professionals by surprise.
The blame for the fiasco lie squarely with the department for their inept handling of the matter. Of course, it is another matter that the provision of law is itself grossly misconceived.
The Tribunal’s power to grant stay of demand was recognized by the Supreme Court as early as in the year 1969 in ITO vs. M.K. Mohammed Kunhi 71 ITR 815 where it was held that the power to give final relief in the appeal included the power to grant interim relief to stay the demand.