Income Tax Appellate Tribunal - Mumbai
Dcit Rg 7(3)(2), Mumbai vs Piramal Enterprise Ltd, Mumbai on 15 March, 2019
IN THE INCOME TAX APPELLATE TRIBUNAL
"J" Bench, Mumbai
Before Shri Mahavir Singh, Judicial Member
and Shri N.K. Pradhan, Accountant Member
MA No. 143/Mum/2019
(Arising out of SA No. 453/Mum/2018)
(Assessment Year: 2011-12)
DCIT, Range 7(3)(2) M/s. Piramal Enterprise Ltd.
Room No. 669A, 6th Floor Piramal Tower, Ganpatrao
Aayakar Bhavan, M.K. Road Vs. Kadam Marg, Lower Parel
Mumbai 400020 Mumbai 400013
PAN - AAACN4538P
Applicant Respondent
Applicant by: Shri Rajeev Gubgotra
Respondent by: Shri Roank Doshi
Date of Hearing: 15.03.2019
Date of Pronouncement: 15.03.2019
ORDER
Per Mahavir Singh, JM
By way of this Miscellaneous Application filed by the Revenue under Section 254(2A) of Income Tax Act, 1961 (hereinafter "the Act") requesting for recall of the stay order passed by the Tribunal in Stay Application No. 453/Mum/2018 dated 04.12.2018.
2. The learned Sr. D.R., Shri Rajeev Gubgotra stated the fact that the total demand involved in this case for A.Y. 2011-12 is `125.,42 crores and this demand has been stayed by the Tribunal six times and beyond 2½ years, finally granting 6th extension on 04.12.2018. It was contended by the learned Sr. D.R. that the ground of addition made by the AO was by disallowance under Section 80IC of the Act emanating from A.Y. 2008-09 wherein the issue was decided by the Tribunal in favour of assessee on jurisdictional issue. For assessment years 2009-10, 2010-11 and 2011-12 the issue is pending on merit before the ITAT. Now the learned D.R. stated that as per the 3rd proviso to Section 254(2A) of the Act the stay beyond 2 ITA No. 143/Mum/2019 M/s. Piramal Enterprise Ltd.
365 days cannot be granted by the Tribunal and the Tribunal has no power to grant stay beyond 356 days. Hence he requested for vacation of stay after the expiry of this period, i.e. 365 days. He stated that the Tribunal has granted stay in this case vide orders as under: -
Sl. No. Stay Application No. Date of Order
I 135/Mum/2016 18.03.2016
Ii 327/Mum/2016 16.09.2016
Iii 168/Mum/2017 17.03.2017
Iv 415/Mum/2017 29.09.2017
V 247/Mum/2018 06.04.2018
vi 543/Mum/2018 04.12.2018
When asked by the Bench the learned D.R. could not point out any mistake apparent from record in the order of the Tribunal granting stay, finally extending the stay vide order dated 04.12.2018. He only requested for vacation of stay in view of the 3rd proviso to section 254(2A). Further the learned D.R. relied on the recent decision of the Hon'ble Supreme Court in the case of Asian Resurfacing of Road Agency P. Ltd. and Others vs. Central Bureau of Investigation in Criminal Appeal Nos. 1375 & 1376 of 2013, judgement dated 28.03.2018. The learned Sr. D.R. argued that in this case the Hon'ble Supreme Court ordered that all the cases held up due to stay order will automatically restart at the end of six months from the date of the order of the Hon'ble Supreme Court. But in exceptional cases if the judge thinks that the stay order should continue for some more time, the judge would have to outline the reasons in a written order. The six month rule would also apply to all stay granting orders granted by courts. In this line the learned Sr. D.R. also requested for vacation of the stay in this case.
3. On the other hand, the learned counsel for the assessee, Mr. Ronak Doshi, first of all referred to the 3rd proviso to section 254(2A) of the Act which reads as under: -
"(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 3 ITA No. 143/Mum/2019 M/s. Piramal Enterprise Ltd.
of the financial year in which such appeal is filed under sub-section (1) or sub-section (2) of 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, in 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."
The learned counsel for the assessee, in view of this third proviso referred to in the decision of the Hon'ble Delhi High Court in the case of Pepsi Foods (P) Ltd. (2015) 376 ITR 87 (Del) wherein the Hon'ble Delhi High Court has struck down the expression, "even if the delay in disposing of the appeal is not attributable to the assessee" as brought in by the Legislature in the said proviso. The learned counsel for the assessee referred to the relevant para 24 of the order in the case of Pepsi Foods (P) Ltd. (supra) which reads as under: -
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 4 ITA No. 143/Mum/2019 M/s. Piramal Enterprise Ltd.
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 assesses 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' assesses 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.
He further referred to the decision of the Hon'ble Bombay High Court in the case of CIT vs. Tata Teleservices (Maharashtra) Ltd. (2016) 286 CTR 336 (Bom) wherein referring to the decision of the Hon'ble Bombay High Court in the case of Pepsi Foods (P) Ltd. (supra) has considered this aspect and noted that the Hon'ble Delhi High Court has struck down the relevant addition as substituted by the 3rd proviso to Section 254(2A) of the Act which is in addition of the words even if delay in disposing of the appeal is not attributable to the assessee". The learned counsel for the assessee referred to para 8 which reads as under: -
"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 substitute third proviso to Section 254(2A) of the Act has been struck down by the Delhi High Court in "Pepsi Foods () Ltd. v. Asstt. CIT [2015] 376 ITR 87/57 taxmann.com
337."
The learned counsel for the assessee also referred to the decision of the Hon'ble Bombay High Court in the case of Narang Overseas (P) Ltd. vs. ITAT (2007) 295 ITR 22 (Bom), which was also considered by the Hon'ble Bombay High Court in the case of Tata Teleservices (Maharashtra) Ltd.
5 ITA No. 143/Mum/2019M/s. Piramal Enterprise Ltd.
(supra) in which it was held that although the Tribunal is not a Court, but it exercises judicial powers and that the Tribunal's powers to deal with appeals are of the widest amplitude and have in some cases been held similar to and identical with the powers of an appellate Court under the Civil Procedure Code, 1908. As regards to the latest decision of the Hon'ble Supreme Court in the case of Asian Resurfacing of Road Agency P. Ltd. (supra) the learned counsel for the assessee relied on the Hon'ble Jurisdictional High Court decision in the case of Oracle Financial Services Pvt. Ltd. vs. DCIT in Writ Petition No. 542 of 2019 dated 28.02. 2019 wherein the judgement of the Hon'ble Supreme Court was fully considered and held that this judgement will not apply to the present set of quasi- judicial proceedings as revenue matters but the said judgement is in the context of Civil and Criminal litigation. The Hon'ble Bombay High Court considered this issue vide para 4 as under: -
4. We are prima facie of the view that the Revenue Authorities committed serious error. Against the total demand arising out of the order of assessment of Rs. 205 crore, the Assessing Officer has already recovered a total of Rs. 140 crores by now through different means. There is no allegation that the petitioner is responsible for delay in disposal of the appeal before the Commissioner. Merely relying upon the decision of the Supreme Court in the case of Asian Resurfacing of Road Agency Pvt Ltd (supra), Revenue Authorities now held a belief that any stay against the recovery granted would automatically lapse after six months. This is neither the purport of the judgment of the Supreme Court, nor the observations made in the said judgment in the context of civil and criminal litigation can be imported in present set of quasi judicial proceedings. The power of the Assessing Officer to review the situation every six months, would not authorized him to lift the stay previously granted after full consideration and insist on full payment of tax without the assessee being responsible for delay in disposal of the appeal or any other such similar material change in circumstances."
The learned counsel for the assessee also argued that there is no mistake apparent from record in the order of the Tribunal extending stay even though fifth time for the reason that the Revenue has not taken up or never argued or pressed this issue at the time of extension of the stay by the Tribunal and hence mistake apparent from record cannot be attributable at this stage. For this the learned counsel for the assessee 6 ITA No. 143/Mum/2019 M/s. Piramal Enterprise Ltd.
relied on the decision of the Coordinate Bench of this Tribunal's Amritsar Bench in the case of ACIT vs. J & K Bank Ltd. (2007) 104 ITD 316 (Asr).
4. We have heard the rival contentions and given through the facts and circumstances of the case. We have gone through the said order in the Stay Application No. 453/Mum/2018 for A.Y. 2011-12 dated 04.12.2018 and noted that the Tribunal has categorically noted a finding of fact that appeals for assessment years 2009-10, 2010-11 and Appeal for A.Y. 2011-12 was fixed for hearing on various dated but the matter was adjourned on account of want of time or any other reason. The assessee cannot be faulted at this stage or non-disposal of appeal cannot be attributed to the assessee. In terms of this the stay was extended for further 180 days from date of order, i.e. 04.12.2018 and the appeal for A.Y. 2011-12 was fixed for hearing on 31.01.2019. This appeal was adjourned to 03.04.2019 due to paucity of time as the appeal for A.Y. 2009-10 was head on that very day and the order is reserved and awaited as informed by the learned counsel for the assessee. We have gone through the decision of the Hon'ble Delhi High Court in the case Pepsi Food (P) Ltd. (supra) and conscious of the fact that the Hon'ble Delhi High Court has struck down the addition of expression by virtue of Finance Act, 2008 by holding the same as violative of non-discriminatory clause of Article 14 of the Constitution of India. The said expression was introduced by Finance Act, 2008 and the expression was that, "even if the delay in disposing of the appeal is not attributable to the assessee", the same was struck down and this was further interpreted by the Hon'ble Bombay High Court in the case of Narang Overseas (P) Ltd. (supra). As regard the extension of stay beyond 365 days the Hon'ble Bombay High Court has categorically considered this decision in the case of Tata Teleservices (Maharashtra) Ltd. (supra) and held that this court (Hon'ble Bombay High Court) has consistently taken a view that the Tribunal has powers to extend stay even after substitution of 3rd proviso to Section 254(2A) of the Act. Even this fact is clear from variety of case law referred to above and discussed above. As regards the decision of the Hon'ble Supreme Court in 7 ITA No. 143/Mum/2019 M/s. Piramal Enterprise Ltd.
the case of Asian Resurfacing of Road Agency P. Ltd. (supra) we noted that the context of the issue before the Hon'ble Supreme Court was criminal jurisdiction regarding the Prevention of Corruption Act and the cases pending at trial stage and the proceedings stayed by the Hon'ble High Court. This issue has been dealt with by the Hon'ble Supreme Court in the case of Asian Resurfacing of Road Agency P. Ltd. vide paras 36 & 37 as under: -
"36. Thus, we declare the law to be that order framing charge is not purely an interlocutory order nor a final order. Jurisdiction of the High Court is not barred irrespective of the label of a petition, be it under Sections 397 or 482 Cr.P.C. or Article 227 of the Constitution. However, the said jurisdiction is to be exercised consistent with the legislative policy to ensure expeditious disposal of a trial without the same being in any manner hampered. Thus considered, the challenge to an order of charge should be entertained in a rarest of rare case only to correct a patent error of jurisdiction and not to re-appreciate the matter. Even where such challenge is entertained and stay is granted, the matter must be decided on day-to-day basis so that stay does not operate for an unduly long period. Though no mandatory time limit may be fixed, the decision may not exceed two-three months normally. If it remains pending longer, duration of stay should not exceed six months, unless extension is granted by a specific speaking order, as already indicated. Mandate of speedy justice 37 applies to the PC Act cases as well as other cases where at trial stage proceedings are stayed by the higher court i.e. the High Court or a court below the High Court, as the case may be. In all pending matters before the High Courts or other courts relating to PC Act or all other civil or criminal cases, where stay of proceedings in a pending trial is operating, stay will automatically lapse after six months from today unless extended by a speaking order on above parameters. Same course may also be adopted by civil and criminal appellate/ revisional courts under the jurisdiction of the High Courts. The trial courts may, on expiry of above period, resume the proceedings without waiting for any other intimation unless express order extending stay is produced.
37. The High Courts may also issue instructions to this effect and monitor the same so that civil or criminal proceedings do not remain pending for unduly period at the trial stage."
This was also confronted to the learned Sr. D.R., where they have raised the issue of exceeding 365 days before the Tribunal at the time of extension of the say vide order dated 04.12.2018, the learned Sr. D.R. 8 ITA No. 143/Mum/2019 M/s. Piramal Enterprise Ltd.
could not reply to the same. We noted that this judgement of Hon'ble Supreme Court will not help the Revenue for the reason that even the Legislature in this provision of Section 254(2A) introduced third proviso vide Finance Act, 2008 and allowed the period for granting of stay not exceeding 365 days in normal circumstances. Hence the Legislature was conscious of the fact that there are circumstances where stay has to be granted beyond six months as the facts requires in the exceptional cases. We have gone through the said order and noticed that no such plea was placed before the Tribunal at the time of hearing or from record we could not trace such arguments or plea. Hence taking into consideration all the facts and circumstances, we are of the view that the Hon'ble High Court has struck down the expression, "even if the delay in disposing of the appeal is not attributable to the assessee" as substituted by 3rd proviso to Section 254(2A) of the Act and taken a view that the Tribunal has power to extend stay even beyond 365 days and even after the substitution of 3rd proviso to Section 254(2A) of the Act. Hence, respectfully following the above referred decisions, discussing legal positions, we dismiss this miscellaneous application of the Revenue.
Order pronounced in the open court on 15th March, 2019.
Sd/- Sd/-
(N.K. Pradhan) (Mahavir Singh)
Accountant Member Judicial Member
Mumbai, Dated: 15th March, 2019
Copy to:
1. The Appellant
2. The Respondent
3. The CIT(A) -concerned, Mumbai
4. The CIT - concerned, Mumbai
5. The DR, "J" Bench, ITAT, Mumbai
By Order
//True Copy//
Assistant Registrar
ITAT, Mumbai Benches, Mumbai
n.p.