Appellate Tribunal : Power and duty : Third proviso to S. 254(2A) of Income-tax Act, 1961 : The Tribunal has power to grant stay of recovery for a period of 365 days only : The Tribunal is therefore under a bounden duty and obligation to ensure that the a

[Jethmal Faujimal Soni v. ITAT, 231 CTR 332 (Bom.)]

In an appeal preferred by the assessee before the Tribunal,
the assessee’s application for stay of recovery was allowed by the Tribunal and
the recovery was stayed for a period of six months. On a subsequent application
the stay was extended by a further period of six months. The hearing of the
appeal was adjourned from time to time for the reason that the issue in the
appeal was pending before the Special Bench. The Tribunal rejected the third
application for stay dated 4-11-2009 for the reason that the third proviso to S.
254(2A) of the Income-tax Act, 1961 prohibits the Tribunal from granting such
stay.

On a writ petition filed by the assessee, the Bombay High
Court directed the Tribunal to dispose of the appeal within a period of four
months. The counsel appearing on behalf of the Revenue informed the Court that
the Revenue shall not take any coercive steps for enforcing the demand during
that period. The High Court held as under :

“(i) A stringent provision is made by the third proviso to
S. 254(2A), as a result of which even if the delay in disposing of the appeal
is not attributable to the assessee, the stay has to stand vacated in any
event upon the lapse of a period of three hundred and sixty-five days. Having
regard to the nature of the provision which has been enacted by the
Parliament, the Tribunal is under a bounden duty and obligation to ensure that
the appeal is disposed of, so as not to result in prejudice to the assessee,
particularly in a situation like the present where no fault could be found
with the conduct of the assessee.

(ii) The fact that an issue was pending before the Special
Bench was not a reason for the Tribunal not to dispose of the appeal,
particularly since the consequence of the inability of the Tribunal to do so
would result in vacating of the order of stay, which was passed originally in
favour of the assessee.

(iii) It is unfortunate that the Tribunal simply adjourned
the appeal merely on the ground of the pendency of an identical issue before
the Special Bench. The state of affairs which has come to pass could well have
been avoided by the appeal being taken up for final disposal.”