Court held that , sub-section (2A) of section 254 of the Income-tax Act, 1961 is to the effect that the Appellate Tribunal may hear and decide the appeal within four years, “wherever it is possible”. Therefore, Parliament in its wisdom thought it fit not to make it mandatory for the Appellate Tribunal to dispose of the appeal within four years, by employing the words “wherever it is possible”. The obligation to dispose of an appeal within four years, under sub-section (2A), because of the peculiar language used by Parliament, is apparently only directory and not mandatory. If the obligation to dispose of an appeal within a time frame is only directory and not mandatory, the obligation under the proviso to dispose of an appeal within one year, cannot be said to be mandatory. The proviso will have to be read only as an exception to the main provision. If the main provision expresses a mere hope or imposes a pious obligation to dispose of an appeal within four years, if possible, it is not possible to construe the third proviso as mandatory. If an assessee is responsible for prolonging the matter, after having obtained a stay, he is certainly not entitled to continue to have the benefit of stay. But if for reasons not attributable to the assessee, the disposal of the appeal takes a longer time than what is prescribed, it may not be proper to impose penal consequences upon the assessee. No law which imposes a penal consequence upon one for the fault of another can be said to be mandatory. A penal consequence for non-adherence to a statutory prescription should fall only upon the person, who was responsible for such failure to adhere to the prescription. Therefore, the applicability of the -nd that in individual cases where the Tribunal finds that the assessee is responsible for procrastinating the decision of the appeal, the Tribunal should vacate the stay at its discretion. In other words, a stay will not stand automatically vacated under the third proviso to sub-section (2A) of section 254, unless the Tribunal records a finding that the assessee was responsible for the procrastination of the hearing of the appeal. ( AY. 2007 -08)
CIT (TDS) v. Vodafone Mobile Services Ltd. (2018) 408 ITR 140 (T&AP) (HC)
S. 254(2A): Appellate Tribunal –Stay- Direction to Tribunal to decide appeals within specified time is and vacation of stay is not mandatory-third proviso has to be understood with two clear prescriptions on caveat. They are that the third proviso has to be understood primarily as directory and not mandatory-Stay will not stand automatically vacated under third proviso to sub -section 2(A) of section 254 , unless the Tribunal records a finding that the assessee was responsible for the procrastination of hearing of the appeal- Interim stay granted to continue . [ S.254(1) ]