Income Tax Appellate Tribunal - Delhi
M/S. Jaypee Infratech Ltd., Noida vs Acit, Noida on 1 February, 2016
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH: "D" NEW DELHI
BEFORE SMT DIVA SINGH, JUDICIAL MEMBER
AND
SH. L.P.SAHU, ACCOUNTANT MEMBER
S.A.-18/Del/2016
(In I.T.A .No.414/Del/2015)
(ASSESSMENT YEAR- 2011-12)
Jaypee Infratech Ltd. vs ACIT
Sector-128 Circle - 2
Noida Noida
PAN : AABCJ9042R (RESPONDENT)
(APPELLANT)
Appellant by Sh.Anil Chopra, CA
Respondent by Ms. Sulekha Verma, CIT, DR
Date of Hearing 27.01.2016
Date of Pronouncement 01.02.2016
PER DIVA SINGH, JM
The present stay petition in ITA No. 414/Del/2015 pertaining to 2011- 12 assessment year has been filed by the assessee praying for further extension of stay granted in SA 408/Del/2015 dated 31.7.2015.
2. Referring to the record the ld. AR submitted that originally stay for 180 days was granted by the Tribunal which was extended by the aforesaid order dated 31.07.2011 by another period of 180 days as the hearing could not conclude for no fault of the assessee. The facts and circumstances as considered originally by the ITAT in S.A.No.43/Del/2015 vide order dated 30th January, 2015 and S.A.No.408/Del/2015 order dated 31.07.2015 continued to remain the same. Accordingly it was his prayer that the stay may be extended for a period beyond 365 days as the hearing could not take place for no fault of the assessee.
2.1. Relying upon the precedent as laid down by the Hon'ble Delhi High Court it was submitted that 365 days have elapsed on account of the specific adjournments sought by the Revenue. The prayer it was submitted S.A. No. 18/Del/2016 ITA No. 414/Del/2015 M/s. Jaypee Infratech Ltd.
is based on the decision of the Hon'ble Delhi High Court in the case of Pepsi Foods Pvt. Ltd. vs. ACIT [2015]376 ITR 0087 (Delhi). Reliance was also placed on DCIT (TDS) Vs. Vodafone Essar Gujarat Ltd., 376 ITR 323 (Guj.) and Narang Overseas P. Ltd. vs. CIT vs. ITAT [2007] 295 ITR 0022 Bom. And CIT vs. M/s. Tata Teleservices (Maharashtra) Ltd. dated 16.12.2015 in W.P.(Lodg.) No. 3437 of 2015. It was also his submission that various Benches of the ITAT have consistently being granting stay beyond the period of 365 days wherever the assessee is able to establish that the hearing could not conclude for no fault on the part of the assessee. 2.2. In order to demonstrate that the hearing could not conclude for no fault of the assessee attention was invited to the assertions made in paper book page no. 30 and 31 which is part of the Annexure D of the Stay Petition running from page 28 to 35.
2.3. For the sake of completeness it was his submission that he would be relying upon the facts as argued and considered by the ITAT in application no. 43/Del/2015. The assessee it was submitted is Special Purpose Vehicle (SPV Company) incorporated under the Companies Act, 1956 for developing, operating and maintaining the toll road between Noida and Agra. The assessee it was further submitted is a widely held listed company that has been formed for the sole purpose of carrying on the business of an infrastructure facility.
2.4. It was his submission that it had been stated that MAT payments for 2009-10 and 2010-11 assessment years are available for adjustment and if these amounts are adjusted then it could be considered that the assessee had paid / discharged more than 72 % of the outstanding tax demand and only 28% of the tax demand could be considered to be outstanding. 2.5. It was further submitted by him that the issue in the present appeal pertains to 80IA deduction and the assessing officer after scrutinising identical claims of the assessee in 2009-10 and 2010-11 has decided issue in assessee's favour. Accordingly prima facie the assessee had a case in its favour. Further in the present case, additional evidence being crucial and relevant has not been admitted by the CIT(A) i.e. an auditor' s certificate Page 2 of 17 S.A. No. 18/Del/2016 ITA No. 414/Del/2015 M/s. Jaypee Infratech Ltd.
supporting the assessee's claim. The issue it was submitted would constitute a procedural lapse in the proceedings and when coupled with the fact that in 2009-10 the ITAT in ITA no. 3339/Del/2014 by order dated 13.04.2015 has decided identical and similar issue in favour of the assessee accordingly it was submitted the issue can be considered to be prima facie in favour of the assessee.
2.6. In order to support its claim of irreparable loss if stay is not extended, it was submitted that the assessee is facing a liquidity crunch. Both the orders of the ITAT in the stay petitions have accepted the fact. For the said purpose, attention was invited to specific para 2 at page 30 and 31 of the petition filed. The same is extracted hereunder for any reference :
"That the assessment has been made on a total income of Rs. 17,92,96,91,790/- to a demand of tax Rs. 7,10,08,01,091/- along with interest thereon as against a returned income under the provisions of the Act not considering MAT of Nil. The assessment involved is a huge over pitched assessment leading to an exorbitant huge demand. The appellant is a reputed widely listed company and does have immoveable assets, but it does not have the liquid funds required to pay this unlawful demand. The appellant has outstanding loans exceeding Rs. 8,897 crores. It also has overdue interest payable exceeding Rs. 162.78 crores. The bank balances and some FDs had been cleaned out pursuant to attachment of bank as aforesaid."
(emphasis provided) 2.7. In the said background inviting attention to the Boards instruction no. 1914 dated 2.12.1993 it was his submission that extension of stay may be granted as not only its a case of "unlawful demand" and a case of acute loss and hardship which aspects have already been considered by the ITAT in its orders in the two petitions filed but also in terms of the precedent available in the case of the assessee itself prime facie the issue is in assessee's favour. Further relying upon Instruction no. 96 and the recent CBDT Instruction dated 7.11.2014 which in fact re-iterates Instruction towards 1914 of 1993 where the department makes it clear that it shall take "steps towards non adversarial tax regime" the stay it was submitted may be extended.
3. Ld. CIT, DR Mrs. S. Verma filed a paper book consisting of copies of the stay petitions moved by the assessee along with orders passed on the Page 3 of 17 S.A. No. 18/Del/2016 ITA No. 414/Del/2015 M/s. Jaypee Infratech Ltd.
petitions. It was her submission that the amounts as referred to in column
(iii) of the present Stay petition refers to outstanding demand of Rs.1,90,42,68,955/- after adjusting the amounts paid under MAT in AY of 2009-10 and AY 2010-11 offered by the assessee and recorded in para 6 of S.A. No. 43/Del/2015. However, in column (viii) in the present stay petition the assessee is making a prayer for stay of Rs.3,35,81,58,250/-. Accordingly it was her prayer that the assessee may be directed to clarify the position and stand by the offer made and considered by the ITAT. 3.1. The said submission it was stated was only on the factual aspect of the matter. In the facts of the present case it was her submission that the department has strong objection to the extension of stay beyond 365 days as the decision of the Hon'ble Delhi High Court in the case of Pepsi Food Pvt. Ltd. is a decision in a writ petition and is assessee specific and factual and thus lays down no precedence. Relying on State of Punjab and Others vs Surinder Kumar 194 ITR 434 (SC) it was argued that a decision is only a decision if it decides a question of law and if it is factual then it cannot be relied upon as a precedent.
3.2. In the alternative it was her submission that even if it is considered that it is a precedent even then in Pepsi Food Pvt.Ltd. the challenge is only made to the third proviso to section 254 (2A) i.e to the amendment introduced therein by the Finance Act, 2008 with effect from 01.04.2008 in the context of the words "even if the delay in disposing of the appeal is not attributable to the assessee". Thus since the second proviso barring the Tribunal to extend stay beyond 365 days still stands on the Statute it was argued stay could not be extended. Reliance was placed upon the decision of Maruti Suzuki India (2014) 44 taxman.com 166 [Delhi] which has been considered by the High Court in Pepsi Food Pvt. Ltd. Also. Accordingly relying on Maruti Suzuki's case it was argued that the Tribunal does not have the power to extend period of stay beyond 365 days. 3.3. It was further her argument that even otherwise the alternate Remedy of approaching the High Court was available under law. Thus, in view of the Page 4 of 17 S.A. No. 18/Del/2016 ITA No. 414/Del/2015 M/s. Jaypee Infratech Ltd.
second proviso to section 254(2A) still standing on the Statute it was submitted the Tribunal was barred from extending stay.
4. The ld. AR Mr. Anil Chopra, in reply addressing the first issue first submitted that whereas in column no. (iii) the assessee has reflected the exact position of the outstanding demand as understood by it after adjustments offered and the recovery made by the department by way of bank attachment etc. are given effect to. In column no. (viii) of the stay petition the amount mentioned in the prayer has been faithfully picked up by the assessee as the exact amount found mentioned by the department in the notice issued under section 220(1) of the Act. It was his categoric stand that the assessee stands by the adjustments offered of the tax paid under MAT for the earlier two assessment years. The prayer for stay of demand is made of whatever amount is outstanding as per the calculation of the department.
4.1. Addressing the point of law it was again submitted that in the facts of the present case the assessee has all along been ready to argue the appeal on each of the dates. The adjournments have been sought by the department. It was re-iterated that the adjournments are sought in the background where consistently the orders available in assessee's own case in its favour are on record. Thus the lapse of 365 days it was submitted, is not attributable to the assessee. Justice and fairplay it was submitted in a non adversarial tax regime as espoused by the Revenue would require that the department should argue the appeal and having avoided arguing the appeal on merit should not be allowed to press for collection of outstanding demand which accordingly to the assessee is an unlawful demand. 4.2. The decision of the Apex court relied upon by the revenue in its paper book it was submitted is not relevant to the case at hand as the issue considered therein was purely factual and could not have been a precedent.
5. We have heard the rival submissions and perused the material available on record. At the outset, we propose to set out the relevant provision of the Act which we are required to consider:-
Page 5 of 17 S.A. No. 18/Del/2016 ITA No. 414/Del/2015M/s. Jaypee Infratech Ltd.
"254. Orders of Appellate Tribunal - (1) The Appellate Tribunal may, after giving both the parties to the appeal an opportunity of being heard, pass such orders thereon as it thinks fit.
(2A) In every appeal, the Appellate Tribunal, where it is possible, may hear and decide such appeal within a period of four years from the end of the financial year in which such appeal is filed under sub-
section (1) or sub-section 253:
Provided that the Appellate Tribunal may, after considering the merits of the application made by the assessee, pass an order of stay in any proceedings relating to an appeal filed under sub-section (1) of section 253, for a period not exceeding one hundred and eighty days from the date of such order and the Appellate Tribunal shall dispose of the appeal within the said period of stay specified in that order :
Provided further that where such appeal is not so disposed of within the said period of stay as specified in the order of stay, the Appellate Tribunal may, on an application made in this behalf by the assessee and on being satisfied that the delay in disposing of the appeal is not attributable to the assessee, extend the period of stay, or pass an order of stay for a further period or periods as it thinks fit; so, however, that the aggregate of the period originally allowed and the period or periods so extended or allowed shall not, in any case, exceed three hundred and sixty-five days and the Appellate Tribunal shall dispose of the appeal within the period or periods of stay so extended or allowed:
Provided also that if such appeal is not so disposed of within the period allowed under the first proviso or the period or periods extended or allowed under the second proviso, which shall not, if any case, exceed three hundred and sixty-five days, the order of stay shall stand vacated after the expiry of such period or periods, even if the delay in disposing of the appeal is not attributable to the assessee."
5.1. Considering the above provision, read along with the decision in Pepsi Food Pvt.Ltd., we find that the arguments of the Ld. CIT DR relying on the decision of the Apex Court in State of Punjab & Others vs Surender Kumar (cited supra) are completely out of context. The issue under consideration there and the decision has been misunderstood. Even otherwise on a perusal of the decision in Pepsi Food Pvt.Ltd. there is no debate that it strikes down the third proviso to section 254(2A) as ultra vires. The consequence is that the said provision to that extent ceases to exist on the Statute unless it is upset or stayed by the Apex Court. The argument that it is assessee specific or factual is an incorrect appreciation of the law. The third provision to Section 254 (2A) has been held to be violative of Article 14 of the Constitution Page 6 of 17 S.A. No. 18/Del/2016 ITA No. 414/Del/2015 M/s. Jaypee Infratech Ltd.
of India and we shall deliberate on this conclusion hereinafter. At this stage we would first address the arguments of the Ld. CIT DR that the law as laid down in Maruti Suzuki's decision should prevail. We find that after taking into consideration the decision in Maruti Suzuki's case in Pepsi Foods Pvt.Ltd.the Court was careful to record that in the Maruti Suzuki's case the Division Bench had left the question of the Constitutional validity of the third proviso of section 254(2A) open. This was specifically made clear by the Division Bench as would be evident from para 27 of the said decision. The Court in Pepsi Foods Pvt.Ltd. examining the claim of the tax payers held that the third proviso "made a hostile discrimination against those assessee's who are law abiding and did not cause any delay." The following para of the said decision makes it abundantly clear:-
12. "From the above extract, it is evident that the Division Bench was not called upon and did not examine the constitutional validity of the provisos to Section 254(2A) of the said Act and left the issue open. It is only on a plain reading of the provisos, as they existed, that the Division Bench came to the conclusion that the Tribunal had no power to extend stay beyond a period of 365 days from the date of the first order of stay but that an assessee could file a writ petition in the High Court asking for stay even beyond the said period of 365 days and the High Court had the power and jurisdiction to grant stay and issue directions to the Tribunal and that Section 254(2A) did not prohibit/bar the High Court from issuing appropriate directions, including grant of stay of recovery. A similar view was taken by the Bombay High Court in Jethmal Faujimal Soni case (supra). But that decision was also rendered on a plain meaning of the provisos, as they stood. There was no challenge to the constitutional validity of the third proviso to Section 254(2A) of the said Act after the amendment introduced by the Finance Act, 2008. No decision of any High Court has been brought to our notice by the learned counsel for the parties, wherein the constitutional validity of the third proviso to Section 254(2A) of the said Act has been examined."
(emphasis provided) 5.2. The position was again re-iterated as would be evident from the following extract of the decision in Pepsi Foods Pvt.Ltd.:-
16. At this juncture itself, we may reiterate that the decision of the Division Bench in Maruti Suzuki (India) Ltd. (supra) was based on an interpretation of the third proviso to Section 254(2A) as it stands. The constitutional validity of the same had not been examined. It only spelt out the legislative intent and Page 7 of 17 S.A. No. 18/Del/2016 ITA No. 414/Del/2015 M/s. Jaypee Infratech Ltd.
that was more than clear that no stay could be granted by the Tribunal beyond the period of 365 days under any circumstances. The question that we have to examine is whether this intention of the legislature is not hit by Article 14 of the Constitution of India. We may also point out that the fact that judicial review was available to an assessee under Article 226 of the Constitution, would not, in any way, add to or subtract from the issue of constitutional validity of the third proviso to Section 254(2A).
(emphasis provided) 5.3. At this stage it may not be out of place to go a little back in time and trace the position in the context of the third proviso to section 254(2A) wherein the words "even if the delay in disposing of the appeal is not attributable to the assessee" was not on the Statute. The provision prior to the amendment was considered by the Hon'ble Bombay High Court in Navrang Overseas (Supra). The Division Bench therein relying upon ITO Mr. M.K. Mohammed kunni 71 IM 815 and Commissioner of Customs and Central Excise Cotton Mills [2006] 6 RC 82 had an occasion to consider the interim relief of stay in the following words:-
"The power to grant stay or interim relief being inherent or incidental is not defeated by the provisos to section 254(2A). The third proviso to section 254(2A) has to be read as a limitation on the power of the Tribunal to continue interim relief in a case where the hearing of the appeal has been delayed for acts attributable to the assessee. It cannot mean that a construction be given that the acts attributable are not of the assessee but of the Revenue or of the Tribunal itself. The power of the Tribunal, therefore, to continue interim relief is not overridden by the language of the third proviso to section 254(2A). There would be power in the Tribunal to extend the period of stay on good cause being shown and on the Tribunal being satisfied that the matter could not be heard and disposed of for reason not attributable to the assessee."
5.4. It is seen that to overcome the impact of the above decision, the Parliament w.e.f 1.4.2008 introduced the following words by way of the amendment in the third proviso "even if the delay in disposing of the appeal is not attributable to the assessee". The issue thereafter came up for consideration before the Jurisdictional High Court in Pepsi Foods Pvt.Ltd. wherein the vires of the third proviso was struck as being unconstitutional Page 8 of 17 S.A. No. 18/Del/2016 ITA No. 414/Del/2015 M/s. Jaypee Infratech Ltd.
and violative of article 14 of the constitution as the legislature was found to have placed both sets of classes of assesses i.e. the ones who delay the hearings; and those who are not responsible for delay in the same category. The Division Bench proceeded to examine the interim relief of stay after tracing the historical perspective of the issue when there was no explicit statutory provision empowering the tribunal to grant stay as considered by the Apex Court in the celebrated decision of M.Kunhi's case (cited supra) in the following words:-
17. It would now be relevant to examine the decision of the Supreme Court in M. K. Mohammed Kunhi (supra). The question before the Supreme Court was whether the Income Tax Appellate Tribunal had power under the relevant provisions of the said Act to stay the recovery of the realization of the penalty imposed by the departmental authorities on an assessee during the pendency of an appeal before it. In that case, the Tribunal had declined to order any stay holding that it had no power to grant such a prayer. We must be mindful of the fact that at that point of time Section 254(2A) was not there in the said Act. The said provision was introduced with effect from 01.06.1999 by the Finance Act, 1999. In the absence of any specific provision, permitting the Tribunal to grant stay, the question arose as to whether the Tribunal had the power to stay the proceedings as also the collection of penalties pending the appeal. The High Court of Kerala held that the Tribunal had such power and that the power was incidental and ancillary to its appellate jurisdiction. The Supreme Court observed that the powers, which had been conferred by Section 254 on the Appellate Tribunal, were of the widest possible amplitude and, therefore, must carry with them, by necessary implication, all powers and duties incidental and necessary to make the exercise of those fully effective. Finally, the Supreme Court concluded by holding:--
"13. Section 255(5) of the Act does empower the Appellate Tribunal to regulate its own procedure, but it is very doubtful if the power of stay can be spelt out from that provision. In our opinion the Appellate Tribunal must be held to have the power to grant stay as incidental or ancillary to its appellate jurisdiction. This is particularly so when Section 220(6) deals expressly with a situation when an appeal is pending before the Appellate Assistant Commissioner, but the Act is silent in that behalf when an appeal is pending before the Appellate Tribunal. It could well be said that when Section 254 confers appellate jurisdiction, it impliedly grants the Page 9 of 17 S.A. No. 18/Del/2016 ITA No. 414/Del/2015 M/s. Jaypee Infratech Ltd.
power of doing all such acts, or employing such means, as are essentially necessary to its execution and that the statutory power carries with it the duty in proper cases to make such orders for staying proceedings as will prevent the appeal if successful from being rendered nugatory.
14. A certain apprehension may legitimately arise in the minds of the authorities administering the Act that if the Appellate Tribunals proceed to stay recovery of taxes or penalties payable by or imposed on the Assessees as a matter of course the revenue will be put to great loss because of the inordinate delay in the disposal of appeals by the Appellate Tribunals. It is needless to point out that the power of stay by the Tribunal is not likely to be exercised in a routine way or as a matter of course in view of the special nature of taxation and revenue laws. It will only be when a strong prima facie case is made out that the tribunal will consider whether to stay the recovery proceedings and on what conditions, and the stay will be granted in most deserving and appropriate cases where the tribunal is satisfied that the entire purpose of the appeal will be frustrated or rendered nugatory by allowing the recovery proceedings to continue during the pendency of the appeal." (underlining added)
18. From this decision, it is evident that the power to grant a stay is incidental or ancillary to the appellate jurisdiction of the Tribunal. It is also clear that the power of stay exercised by the Tribunal is not likely to be exercised in a routine way or as a matter of course in view of the special nature of taxation and revenue laws and it is only when a strong prima facie case is made out that the Tribunal would consider whether to stay the recovery proceedings and on what conditions. The stay is also granted in deserving and appropriate cases where the Tribunal is satisfied that the entire purpose of the appeal would be frustrated or rendered nugatory by allowing the recovery proceedings to continue during the pendency of the appeal. These words of the Supreme Court were indeed prophetic, as can be discerned from the data which has been referred to by a Division Bench of this Court in Maruti Suzuki (India) Ltd. (supra), which shows that in less than 10% of the appeals filed by assessees, the Tribunal has granted stay orders and in a very few of such cases, the appeals are pending beyond the period of 365 days stipulated under the provisions, as they now stand.
(emphasis provided) 5.5. It is also seen that the Division Bench also had the occasion to consider the argument of availability of Alternate Remedy as has been canvassed by the Ld. CIT DR before us where she has argued that the tax payer could always approach the Hon'ble High Court. The said argument Page 10 of 17 S.A. No. 18/Del/2016 ITA No. 414/Del/2015 M/s. Jaypee Infratech Ltd.
has been considered by the Division Bench as not being relevant as would be evident from the following paras :
21. The decision in Wire Netting Store, Delhi (supra) was relied upon by the learned counsel for the petitioners for the proposition that the availability of a constitutional remedy would not remove the lacuna of a provision which was inherently unconstitutional. There can be no dispute with this proposition. The provision which is challenged, as being violative of Article 14 of the Constitution, would have to be tested on its own without recourse to the availability of the remedy of judicial review under Article 226 of the Constitution.
22. In Dr. Subramanian Swamy (supra), a Constitution Bench of the Supreme Court, while considering the parameters which needed to be kept in mind in determining whether a particular provision of a statute was violative of Article 14 or not, made the following observations:--
"46. In Air India v. Nergesh Meerza : [1981] 4 SCC 335, the three- Judge Bench of this Court while dealing with constitutional validity of Regulation 46(i)(c) of Air India Employees' Service Regulations (referred to as 'A.I. Regulations') held that certain conditions mentioned in the Regulations may not be violative of Article 14 on the ground of discrimination but if it is proved that the conditions laid down are entirely unreasonable and absolutely arbitrary, then the provisions will have to be struck down. With regard to due process clause in the American Constitution and Article 14 of our Constitution, this Court referred to State of West Bengal v. Anwar Ali Sarkar : [1952] SCR 284, and observed that the due process clause in the American Constitution could not apply to our Constitution. The Court also referred to A.S. Krishna v. State of Madras: 1957 S.C.R. 399 wherein Venkatarama Ayyar, J. observed:
"13. ....The law would thus appear to be based on the due process clause, and it is extremely doubtful whether it can have application under our Constitution."
47. In D.S. Nakara v. Union of India: [1983] 1 SCC 305, the Constitution Bench of this Court had an occasion to consider the scope, content and meaning of Article 14. The Court referred to earlier decisions of this Court and in para 15, the Court observed:
"15. Thus the fundamental principle is that Article 14 forbids class legislation but permits reasonable classification for the purpose of legislation which classification must satisfy the twin tests of classification being founded on an intelligible differentia which distinguishes persons or things that are grouped together from those that are left out of the group and that differentia must have a rational nexus to the object sought to be achieved by the statute in question.""
** ** ** Page 11 of 17 S.A. No. 18/Del/2016 ITA No. 414/Del/2015 M/s. Jaypee Infratech Ltd. "Court's approach
49. Where there is challenge to the constitutional validity of a law enacted by the legislature, the Court must keep in view that there is always a presumption of constitutionality of an enactment, and a clear transgression of constitutional principles must be shown. The fundamental nature and importance of the legislative process needs to be recognized by the Court and due regard and deference must be accorded to the legislative process. Where the legislation is sought to be challenged as being unconstitutional and violative of Article 14 of the Constitution, the Court must remind itself to the principles relating to the applicability of Article 14 in relation to invalidation of legislation. The two dimensions of Article 14 in its application to legislation and rendering legislation invalid are now well recognized and these are (i) discrimination, based on an impermissible or invalid classification and (ii) excessive delegation of powers; conferment of uncanalised and unguided powers on the executive, whether in the form of delegated legislation or by way of conferment of authority to pass administrative orders-if such conferment is without any guidance, control or checks, it is violative of Article 14 of the Constitution. The Court also needs to be mindful that a legislation does not become unconstitutional merely because there is another view or because another method may be considered to be as good or even more effective, like any issue of social, or even economic policy. It is well settled that the courts do not substitute their views on what the policy is."
It is clear that where a legislation is sought to be challenged, as being unconstitutional or violative of Article 14 of the Constitution, the Court must keep in mind the principles relating to the applicability of Article 14 in relation to invalidation of a legislation. The two dimensions of Article 14 in its application to legislation and for rendering legislation invalid are well settled and these are - (i) discrimination, based on an impermissible or an invalid classification and (ii) excessive delegation of powers; conferment of uncanalised and unguided powers on the executive, whether in the form of delegated legislation or by way of conferment of authority to pass administrative orders. The Constitution Bench also cautioned that the Courts need to be mindful that a legislation does not become unconstitutional merely because there is another view or because another method may be considered to be as good or even more effective, like any issue of social, or even economic policy.
23. Keeping in mind the principles set out by the Supreme Court in Dr. Subramanian Swamy (supra), we need to examine whether the present challenge to the validity of the third proviso to Section 254(2A) can be sustained. This is not a case of excessive delegation of powers and, therefore, we need not bother about the second dimension of Article 14 in its application to legislation. We are here concerned with the question of discrimination, based on an impermissible or Page 12 of 17 S.A. No. 18/Del/2016 ITA No. 414/Del/2015 M/s. Jaypee Infratech Ltd.
invalid classification. It is abundantly clear that the power granted to the Tribunal to hear and entertain an appeal and to pass orders would include the ancillary power of the Tribunal to grant a stay. Of course, the exercise of that power can be subjected to certain conditions. In the present case, we find that there are several conditions which have been stipulated. First of all, as per the first proviso to Section 254(2A), a stay order could be passed for a period not exceeding 180 days and the Tribunal should dispose of the appeal within that period. The second proviso stipulates that in case the appeal is not disposed of within the period of 180 days, if the delay in disposing of the appeal is not attributable to the assessee, the Tribunal has the power to extend the stay for a period not exceeding 365 days in aggregate. Once again, the Tribunal is directed to dispose of the appeal within the said period of stay. The third proviso, as it stands today, stipulates that if the appeal is not disposed of within the period of 365 days, then the order of stay shall stand vacated, even if the delay in disposing of the appeal is not attributable to the assessee. 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. Take the case of delay being caused in the disposal of the appeal on the part of the revenue. Even in that case, the stay would stand vacated on the expiry of 365 days. This is despite the fact that the stay was granted by the Tribunal, in the first instance, upon considering the prima facie merits of the case through a reasoned order.
(emphasis provided) 5.6. A careful reading of the said decision would show that after agreeing with the interpretation of the Bombay High Court in Narang Overseas that where the delay was not attributable to the assessee the Tribunal had the power to extend stay beyond 365 days, the issue on facts was restored to the Page 13 of 17 S.A. No. 18/Del/2016 ITA No. 414/Del/2015 M/s. Jaypee Infratech Ltd.
ITAT vide para 25 for considering the merits of extension of stay beyond 365 days:
"24. Furthermore, the petitioners are correct in their submission that unequals have been treated equally. Assessees who, after having obtained stay orders and by their conduct delay the appeal proceedings, have been treated in the same manner in which assessees, who have not, in any way, delayed the proceedings in the appeal. The two classes of assessees are distinct and cannot be clubbed together. This clubbing together has led to hostile discrimination against the assessees to whom the delay is not attributable. It is for this reason that we find that the insertion of the expression - 'even if the delay in disposing of the appeal is not attributable to the assessee'- by virtue of the Finance Act, 2008, violates the non-discrimination clause of Article 14 of the Constitution of India. The object that appeals should be heard expeditiously and that assessees should not misuse the stay orders granted in their favour by adopting delaying tactics is not at all achieved by the provision as it stands. On the contrary, the clubbing together of 'well behaved' assessees and those who cause delay in the appeal proceedings is itself violative of Article 14 of the Constitution and has no nexus or connection with the object sought to be achieved. The said expression introduced by the Finance Act, 2008 is, therefore, struck down as being violative of Article 14 of the Constitution of India. This would revert us to the position of law as interpreted by the Bombay High Court in Narang Overseas (supra), with which we are in full agreement. Consequently, we hold that, where the delay in disposing of the appeal is not attributable to the assessee, the Tribunal has the power to grant extension of stay beyond 365 days in deserving cases. The writ petitions are allowed as above.
25. Consequently, the petitioners may approach the Tribunal for extension of stay in each of the cases before us and till the Tribunal passes such orders, the interim orders granted by us in these matters shall continue. The petitioners shall move the Tribunal within four weeks from the date of this judgment. The parties are left to bear their own costs.
(emphasis provided) 5.7. Thus it is seen that the Division Bench in Pepsi Foods Pvt.Ltd. while striking down the third proviso read down the second proviso of section 254(2A) of the Income Tax Act, 1961.
5.8. The view taken is further fortified by the latest decision dated 16th December, 2015 of the Bombay High Court in CIT vs. M/s. Tata Tele Services vs. In WP (LODG.) 3437 of 2015. The Division Bench vide paras 1 & Page 14 of 17 S.A. No. 18/Del/2016 ITA No. 414/Del/2015 M/s. Jaypee Infratech Ltd.
2 of the said decision has summed up the facts of the case and the grievance of the Revenue in the following manner:-
1. "In these appeals under Section 260-A of the Income Tax Act, 1961 (the Act), the challenge is to the common order dated 26 June 2015 passed by the Income Tax Appellate Tribunal (the Tribunal), in the pending appeals filed by the respondent-assessee. By the common impugned order dated 26 June 2015, the Tribunal extended the stay of the demand in respect of the appeals pending for the Assessment years 2009-10 to 2012-13, for further period of six months or the earlier disposal of the Appeals. These were in line with its earlier order dated 27 February 2015.
2. The grievance of the petitioner with the impugned order is that in terms of the third proviso to section 254(2A) of the Act, the Tribunal has no power under the Act to extend the stay of demand in the appeals pending before it beyond the period of 365 days."
(emphasis provided) 5.8.1. Considering the amendment to the Statute the position taken in Narang Overseas was followed taking note of the fact that the decision rendered in Pepsi Food Pvt. Ltd. to extend stay beyond 365 days was arrived at reading down the second proviso was upheld as would be evident from the following extract :
"8. It may be pointed out that the only substantial difference in the pre-substituted third proviso and substituted third proviso to Section 254(2A) of the Act is the addition of the words "even if delay in disposing of the appeal is not attributable to the assessee" These additional words added in the substituted third proviso to Section 254(2A) of the Act has been struck down by the Delhi High Court in "Pepsi Foods (P) Ltd. Vs. Asstt. Commissioner of Income Tax, (232 Taxmann 78.)
9. In the above view, we see no reason to entertain the petitions. Accordingly, petitions dismissed. No order as to costs."
5.9. Accordingly on considering the chequered history of the provision, we find that the Courts having struck the third proviso to section 254(2A) as being unconstitutional have read down the second proviso in certain deserving cases where the delay is not attributable to the assessee. Accordingly the point of law is in favour of the assessee. 5.10. Examining the facts, we find that the appeal came up for hearing on 03rd Sept. 2015 and again on 27th Nov. 2015 and on both these dates it was adjourned on the department's written request seeking time to appoint a Page 15 of 17 S.A. No. 18/Del/2016 ITA No. 414/Del/2015 M/s. Jaypee Infratech Ltd.
special counsel. Thereafter it again came up for hearing on 11th Jan. 2016 seeking time on the following grounds:-
"MAY IT PLEASE YOUR HONOURS Reg : Appeal in the case of : Jaypee Infratech Ltd.
ITA No. : 414/Del/2015 A.Y. : 2011-12 The above mentioned case is fixed for hearing on 11.01.2016.
The applicant most respectfully submits that earlier in this case special counsel had to represent this case and the matter of appointment of special counsel was pending. Recently I have been instructed by the field authorities to appear in this case on behalf of revenue. A paper book is required to be filed in this case which has been asked from the field authorities to submit, and considering the complexity of the case I require some time to defend the case of revenue.
It is, therefore, requested that the aforesaid appeal may kindly be adjourned atleast for a month. The counsel of the assessee has already been informed.
The Petitioner shall ever be grateful for this act of kindness.
Commissioner of Income Tax (DR) D-Bench, ITAT, New Delhi Dated : 11.01.2016"
(emphasis provided) 5.11. Accordingly on a consideration of the peculiar facts and circumstances of the case and the position of law as considered above including the arguments of the parties before us on the issues involved we find:
a) That non-disposal of the appeal in the facts of the present case is solely on the grounds of adjournments sought by the Revenue on each of the dates the appeal came up for hearing;
b) Where no arguments assailing the assessee's claim that prima facie the issue is covered in assessee's favour having been advanced by the Revenue;
c) Nothing has been placed before us by the Revenue disputing the assessee's claim of irreparable loss to the running of the business has been placed before us nor there is any rebuttal on the plea of Liquidity crunch faced by the assessee.Page 16 of 17 S.A. No. 18/Del/2016 ITA No. 414/Del/2015
M/s. Jaypee Infratech Ltd.
5.12. In these above peculiar facts we are of the view that the present case is a fit case for extending stay for a further period of 3 months or disposal of appeal whichever is earlier.
5.13. We find that the appeal is listed for hearing on 16th Feb. 2016. The Revenue is directed to file Paper Books if any well in advance. Needless to state that no adjournment on any reasonable ground shall be sought by the assessee.
6. In the result the stay petition stands allowed in terms of the above directions.
The said order was pronounced in the open Court at the time of hearing.
The order is pronounced in the open court on 01st of February 2016.
Sd/- Sd/-
( L.P.SAHU) (DIVA SINGH)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Dated:01/02/2016
*Binita/Amit Kumar*
Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT(Appeals)
5. DR: ITAT
ASSISTANT REGISTRAR
ITAT NEW DELHI
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