*Deputy Commissioner of Income-tax & Another Vs Pepsi Foods Limited *
*Forum-Supreme Court of India*
*Date-6th April 2021*
*Sub-Constitutional validity of 3rd proviso to Section 254(2A) of the Income-tax Act,1961*

The Apex Court in a land mark decision held that *the 3rd proviso to Section 254(2A) to be unconstitutional and violative of Article 14 of the Constitution of India in so far as it led to automatic vacation of a stay order granted by the Income-tax Appellate Tribunal upon expiry of 365 days without the assessee being the reason for delay in disposal of the appeal in any manner whatsoever* the . The Court held that 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, unequals are treated equally in that no differentiation is made by the third proviso between the assessees who 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.
Thus this judgement will lead to Income-tax Appellate Tribunal staying the collection of demand in appropriate cases even beyond 365 days.

Ramesh Patodia
07-04-2021