My ITAT stay has crossed 365 days and the appeal is still not decided. Can the Tribunal extend it?
Yes, where the delay is not attributable to you. The Bombay High Court held that the Tribunal retains the power to extend a stay beyond 365 days despite the substituted third proviso to s.254(2A), because the power to grant interim relief must be read as coextensive with the power to grant final relief under s.254(1).
Decided by the High Court (Bombay High Court — M.S. Sanklecha J and G.S. Kulkarni J) on 2015-12-16, reported as [2017] 81 taxmann.com 348 (Bom) / [2016] 286 CTR 336 (Bom); Writ Petition (Lodg.) Nos. 3437 to 3440 of 2015; AYs 2009-10 to 2012-13. It bears on section 254(2A), section 254(1) of the Income Tax Act 1961, in Demand, Recovery & Stay and Appeals matters.
This is the answer to a recovery notice issued the moment the 365 days expire in an appeal held up by the Tribunal's own docket. The reasoning was later vindicated: the words 'even if the delay in disposing of the appeal is not attributable to the assessee' were struck down in the Pepsi Foods litigation, first by the Delhi High Court and then by the Supreme Court in April 2021, so a stay now lapses only where the delay is the assessee's doing. The statutory frame around it has since been rewritten, which limits how far the case can be pushed.
Binding within that High Court's jurisdiction. Persuasive elsewhere.
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The assessee had appeals pending before the Tribunal for assessment years 2009-10 to 2012-13 with a stay of the disputed demand. By a common order of 26 June 2015, in line with an earlier order of 27 February 2015, the Tribunal extended the stay for a further six months or the earlier disposal of the appeals, the stay having by then run past 365 days. The Revenue moved the High Court in four connected proceedings, contending that under the third proviso to s.254(2A) the Tribunal has no power to extend a stay beyond 365 days. In argument the Revenue went further and submitted that the Court's own earlier decisions required reconsideration, because they rested on Narang Overseas (P.) Ltd. v. ITAT, which was concerned with the proviso as it stood before substitution.
The Revenue's petitions were dismissed, with no order as to costs. The Court held that it has consistently taken the view that the Tribunal has power to extend a stay beyond 365 days even after the substituted third proviso to s.254(2A) was introduced, and that the ratio of Narang Overseas applies equally to the substituted proviso. It declined to reconsider that line, noting that the Revenue had not appealed against its earlier orders on the substituted proviso and had shown no reason for taking a different stand here.
The Court noted that the Tribunal had granted the extension conscious of s.254(2A), relying on this Court's decisions in Narang Overseas (P.) Ltd. v. ITAT [2007] 295 ITR 22 and CIT v. Ronuk Industries Ltd. [2011] 333 ITR 99, which had been consistently followed in DIT v. Ingram Micro (India) Exports Pte. Ltd., DIT (IT) v. St. Jude Medical Inc. and CIT v. PTC Software (India) (P.) Ltd., so that the point stood concluded against the Revenue (para 3). Two reasons were then given for refusing the Revenue's invitation to reconsider. First, the Court had consistently held that the power survives the substituted proviso, and the Revenue had not appealed against those orders; nothing was shown as to why, having accepted them, it took a different stand here (para 5). Second, the ratio of Narang Overseas applies to the substituted proviso in any event. The Court set out that ratio in full: the power to grant interim relief was recognised in ITO v. M.K. Mohammed Kunhi [1969] 71 ITR 815 (SC), where an express grant of statutory power was held to carry by necessary implication the authority to use all reasonable means to make it effective, and Polini v. Gray was approved for the principle that the ultimately successful party should reap the fruits of the litigation and not obtain merely a barren success - from which it follows that the power to grant interim relief is co-extensive with the power to grant final relief, since otherwise the final relief may be defeated. Narang Overseas had also followed CCE v. Kumar Cotton Mills (P.) Ltd. (paras 6-7). The Court added that the only substantial difference between the pre-substituted and substituted proviso is the addition of the words 'even if delay in disposing of the appeal is not attributable to the assessee', and that those added words had been struck down by the Delhi High Court in Pepsi Foods (P.) Ltd. v. Asstt. CIT [2015] 376 ITR 87 (para 8).
We find that this Court has consistently taken a view that the Tribunal has power to extend the stay even after the substituted third proviso to sub-section 2A to Section 254 of the Act was introduced.
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Handle my notice → Ask a CA on WhatsAppYes, where the delay is not attributable to you. The Bombay High Court held that the Tribunal retains the power to extend a stay beyond 365 days despite the substituted third proviso to s.254(2A), because the power to grant interim relief must be read as coextensive with the power to grant final relief under s.254(1). This was decided by the High Court (Bombay High Court — M.S. Sanklecha J and G.S. Kulkarni J) and bears on section 254(2A), section 254(1) of the Income Tax Act 1961. It is reported as [2017] 81 taxmann.com 348 (Bom) / [2016] 286 CTR 336 (Bom); Writ Petition (Lodg.) Nos. 3437 to 3440 of 2015; AYs 2009-10 to 2012-13. This is the answer to a recovery notice issued the moment the 365 days expire in an appeal held up by the Tribunal's own docket. The reasoning was later vindicated: the words 'even if the delay in disposing of the appeal is not attributable to the assessee' were struck down in the Pepsi Foods litigation, first by the Delhi High Court and then by the Supreme Court in April 2021, so a stay now lapses only where the delay is the assessee's doing. The statutory frame around it has since been rewritten, which limits how far the case can be pushed. If it applies to you, the first step is this: Check when the stay was granted and which text of s.254(2A) governs before relying on this: a stay application today must first clear the Finance Act 2020 condition of depositing 20 per cent of the disputed demand or furnishing equivalent security, a condition this judgment never considered.
The assessee had appeals pending before the Tribunal for assessment years 2009-10 to 2012-13 with a stay of the disputed demand. By a common order of 26 June 2015, in line with an earlier order of 27 February 2015, the Tribunal extended the stay for a further six months or the earlier disposal of the appeals, the stay having by then run past 365 days. The Revenue moved the High Court in four connected proceedings, contending that under the third proviso to s.254(2A) the Tribunal has no power to extend a stay beyond 365 days. In argument the Revenue went further and submitted that the Court's own earlier decisions required reconsideration, because they rested on Narang Overseas (P.) Ltd. v. ITAT, which was concerned with the proviso as it stood before substitution. The matter was decided on 2015-12-16 by the High Court (Bombay High Court — M.S. Sanklecha J and G.S. Kulkarni J). On those facts the High Court held as follows. The Revenue's petitions were dismissed, with no order as to costs. The Court held that it has consistently taken the view that the Tribunal has power to extend a stay beyond 365 days even after the substituted third proviso to s.254(2A) was introduced, and that the ratio of Narang Overseas applies equally to the substituted proviso. It declined to reconsider that line, noting that the Revenue had not appealed against its earlier orders on the substituted proviso and had shown no reason for taking a different stand here.
The Court noted that the Tribunal had granted the extension conscious of s.254(2A), relying on this Court's decisions in Narang Overseas (P.) Ltd. v. ITAT [2007] 295 ITR 22 and CIT v. Ronuk Industries Ltd. [2011] 333 ITR 99, which had been consistently followed in DIT v. Ingram Micro (India) Exports Pte. Ltd., DIT (IT) v. St. Jude Medical Inc. and CIT v. PTC Software (India) (P.) Ltd., so that the point stood concluded against the Revenue (para 3). Two reasons were then given for refusing the Revenue's invitation to reconsider. First, the Court had consistently held that the power survives the substituted proviso, and the Revenue had not appealed against those orders; nothing was shown as to why, having accepted them, it took a different stand here (para 5). Second, the ratio of Narang Overseas applies to the substituted proviso in any event. The Court set out that ratio in full: the power to grant interim relief was recognised in ITO v. M.K. Mohammed Kunhi [1969] 71 ITR 815 (SC), where an express grant of statutory power was held to carry by necessary implication the authority to use all reasonable means to make it effective, and Polini v. Gray was approved for the principle that the ultimately successful party should reap the fruits of the litigation and not obtain merely a barren success - from which it follows that the power to grant interim relief is co-extensive with the power to grant final relief, since otherwise the final relief may be defeated. Narang Overseas had also followed CCE v. Kumar Cotton Mills (P.) Ltd. (paras 6-7). The Court added that the only substantial difference between the pre-substituted and substituted proviso is the addition of the words 'even if delay in disposing of the appeal is not attributable to the assessee', and that those added words had been struck down by the Delhi High Court in Pepsi Foods (P.) Ltd. v. Asstt. CIT [2015] 376 ITR 87 (para 8). In the words reproduced by the source cited on this page: "We find that this Court has consistently taken a view that the Tribunal has power to extend the stay even after the substituted third proviso to sub-section 2A to Section 254 of the Act was introduced." The decision followed or applied Narang Overseas (P.) Ltd. v. ITAT [2007] 295 ITR 22/165 Taxman 557 (Bom.); CIT v. Ronuk Industries Ltd. [2011] 333 ITR 99/15 taxmann.com 369 (Bom.); DIT v. Ingram Micro (India) Exports Pte. Ltd., IT Appeal (L) No. 137 of 2013 (Bom.), 06-03-2013; DIT (International Taxation) v. St. Jude Medical Inc., IT Appeal (L) No. 2121 of 2012 (Bom.), 01-03-2013; CIT v. PTC Software (India) (P.) Ltd., IT Appeal (L) No. 1927 of 2012 (Bom.), 28-02-2013.
It was decided by the High Court on 2015-12-16 and is reported as [2017] 81 taxmann.com 348 (Bom) / [2016] 286 CTR 336 (Bom); Writ Petition (Lodg.) Nos. 3437 to 3440 of 2015; AYs 2009-10 to 2012-13. Binding within that High Court's jurisdiction. Persuasive elsewhere. A High Court decision binds the assessing officer, the Commissioner (Appeals) and the Income Tax Appellate Tribunal within that state, and is persuasive elsewhere. If your assessment is in a different jurisdiction, check whether your own High Court has taken the same view before relying on it. On section 254(2A), section 254(1), the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It helps the taxpayer. The Revenue's petitions were dismissed, with no order as to costs. The Court held that it has consistently taken the view that the Tribunal has power to extend a stay beyond 365 days even after the substituted third proviso to s.254(2A) was introduced, and that the ratio of Narang Overseas applies equally to the substituted proviso. It declined to reconsider that line, noting that the Revenue had not appealed against its earlier orders on the substituted proviso and had shown no reason for taking a different stand here. It arises in Demand, Recovery & Stay and Appeals matters, on section 254(2A), section 254(1) of the Income Tax Act 1961, and was decided by Bombay High Court — M.S. Sanklecha J and G.S. Kulkarni J. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Put a dated chronology on record showing that the delay in disposal is not attributable to the assessee — listings, adjournments and who sought them — because that is the fact the extension turns on. Cite Narang Overseas and Ronuk Industries alongside this decision; the Court held their ratio continues to apply to the substituted proviso. Expect the department to press the 365-day outer ceiling retained by the Finance Act 2020 and the 180-day limit on the first order; the tension between that ceiling and the Tribunal's residual power is unresolved.
Validity check could not be completed. No later decision applying, following or affirming this judgment was established. The Revenue did carry it to the Supreme Court: SLP(C) Nos. 31428 of 2016, 31431 of 2016 and 197 of 2017, against Writ Petition (Lodging) No. 3439 of 2015 decided 16 December 2015, were dismissed on 22 April 2019 by Dr D.Y. Chandrachud and Hemant Gupta, JJ., on the ground that the Tribunal had disposed of the assessee's appeal on 27 May 2016 so that the stay question no longer survived; the Court expressly expressed no opinion on the question of law, so the dismissal neither affirms nor unsettles the reasoning. What can also be said is that the ground on which the Revenue relied has since gone: the words added by the substituted third proviso to s.254(2A), 'even if the delay in disposing of the appeal is not attributable to the assessee', were struck down by the Delhi High Court in Pepsi Foods (P.) Ltd. v. Asstt. CIT [2015] 376 ITR 87, which this judgment noted at para 8, and that position was upheld by the Supreme Court in April 2021. The statutory frame has since been rewritten by the Finance Act 2020, which conditions a stay on a deposit of twenty per cent of the disputed amount, limits the first order to 180 days and retains a 365-day outer ceiling, so the provision this judgment construed is not the provision in force. The text of the judgment itself could not be retrieved from any primary source; the citation, bench, the paragraph 5 quotation and the paragraph 8 reference to Pepsi Foods all rest on secondary reports and have not been checked against the judgment. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
The particulars are settled from the report: Bombay High Court, M. S. Sanklecha and G. S. Kulkarni, JJ., Writ Petition (Lodg.) Nos. 3437 to 3440 of 2015, decided 16 December 2015, assessment years 2009-10 to 2012-13, reported at [2017] 81 taxmann.com 348 and [2016] 286 CTR 336. The outcome is now clear: the Revenue's petitions were dismissed with no order as to costs (para 9). One oddity in the report is worth knowing before you cite it - the proceedings are registered as writ petitions but para 1 describes them as appeals under s.260A. Read the reasoning with care about attribution: the co-extensive-power principle for which the case is usually cited is the ratio of Narang Overseas (P.) Ltd. v. ITAT [2007] 295 ITR 22, which this Court reproduced and applied to the substituted proviso, and it traces back to ITO v. M.K. Mohammed Kunhi [1969] 71 ITR 815 (SC). The judgment construes s.254(2A) as it stood before the Finance Act 2020; nothing in it addresses the present twenty per cent deposit condition or the 180-day first order. Later treatment of the decision itself was not established. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
The Revenue's petitions were dismissed, with no order as to costs. The Court held that it has consistently taken the view that the Tribunal has power to extend a stay beyond 365 days even after the substituted third proviso to s.254(2A) was introduced, and that the ratio of Narang Overseas applies equally to the substituted proviso. It declined to reconsider that line, noting that the Revenue had not appealed against its earlier orders on the substituted proviso and had shown no reason for taking a different stand here.
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