The Principal Commissioner Of Income Tax, Gurgaon v. M/S Sun Life India Service Centre Pvt. Ltd

ITA-408-2016 (O&M) IN THE HIGH COURT OF PUNJAB & HARYANA AT CHANDIGARH ITA-408-2016 (O&M) Date of decision: 10.01.2017 The Principal Commissioner of Income Tax, Gurgaon ..... Appellant Versus M/s Sun Life India Service Centre Pvt. Ltd. ..... Respondent CORAM:HON'BLE MR. JUSTICE AJAY KUMAR MITTALHON'BLE MR. JUSTICE RAMENDRA JAIN PRESENT: Mr. Tajinder K. Joshi, Advocate for the appellant. AJAY KUMAR MITTAL, J. (ORAL) 1.The appellant-Revenue has filed this appeal under Section260A of the Income Tax Act, 1961 against the order dated 18.03.2016(Annexure A-II) passed by the Income Tax Appellate Tribunal, DelhiBench, New Delhi (in short, “the Tribunal”) whereby the Tribunal, had heldthat non-disposal of appeal is not attributable to the assessee and, thus,extended the stay for a further period of 180 days or till the disposal ofappeal. 2.The appellant-Revenue has claimed the following substantialquestions of law in the present appeal:- 1.Whether the Hon'ble ITAT has acted in contravention ofthe Second Proviso of Section 254(2A) of the IncomeTax Act, 1961, as the combined period of stay hasexceeded 365 days.the Second Proviso of Section 254(2A) of the IncomeTax Act, 1961, as the combined period of stay hasexceeded 365 days. 2.Whether the order of the ITAT be treated as void-ab-initio in the light of Third Proviso to Sec 254(2A) of theIncome Tax Act, 1961, which provides that stay ofdemand stands vacated after expiry of a period of 365days, even if delay in disposal of appeal is notattributable to the assessee.initio in the light of Third Proviso to Sec 254(2A) of theIncome Tax Act, 1961, which provides that stay ofdemand stands vacated after expiry of a period of 365days, even if delay in disposal of appeal is notattributable to the assessee. 3.It was not disputed by learned counsel for the appellant-Revenue that the issue raised herein is squarely covered by variousdecisions of this Court including ITA-5-2016,(Principal Commissioner ofIncome Tax, Gurgaon Vs. M/s Carrier Air Conditioning and RefrigerationLimited),decided on 25.04.2016, wherein it was held as under:-Revenue that the issue raised herein is squarely covered by variousdecisions of this Court including ITA-5-2016,(Principal Commissioner ofIncome Tax, Gurgaon Vs. M/s Carrier Air Conditioning and RefrigerationLimited),decided on 25.04.2016, wherein it was held as under:- “4.It would be expedient to reproduce the relevant statutoryprovision i.e. Section 254(2A) of the Act including its provisos,which reads as under:- provision i.e. Section 254(2A) of the Act including its provisos,which reads as under:- “4.It would be expedient to reproduce the relevant statutoryprovision i.e. Section 254(2A) of the Act including its provisos,which reads as under:- provision i.e. Section 254(2A) of the Act including its provisos,which reads as under:- “254 (2A). In every appeal, the Appellate Tribunal,where it is possible, may hear and decide such appealwithin a period of four years from the end of the financialyear in which such appeal is filed under sub-section (1)or sub-section (2) or sub-section (2A) of section 253 :Provided that the Appellate Tribunal may, afterconsidering the merits of the application made by theassessee, pass an order of stay in any proceedingsrelating to an appeal filed under sub-section (1) ofsection 253, for a period not exceeding one hundred andeighty days from the date of such order and the AppellateTribunal shall dispose of the appeal within the saidperiod of stay specified in that order: Provided furtherthat where such appeal is not so disposed of within thesaid period of stay as specified in the order of stay, theAppellate Tribunal may, on an application made in thisbehalf by the assessee and on being satisfied that thedelay in disposing of the appeal is not attributable to theassessee, extend the period of stay, or pass an order ofwhere it is possible, may hear and decide such appealwithin a period of four years from the end of the financialyear in which such appeal is filed under sub-section (1)or sub-section (2) or sub-section (2A) of section 253 :Provided that the Appellate Tribunal may, afterconsidering the merits of the application made by theassessee, pass an order of stay in any proceedingsrelating to an appeal filed under sub-section (1) ofsection 253, for a period not exceeding one hundred andeighty days from the date of such order and the AppellateTribunal shall dispose of the appeal within the saidperiod of stay specified in that order: Provided furtherthat where such appeal is not so disposed of within thesaid period of stay as specified in the order of stay, theAppellate Tribunal may, on an application made in thisbehalf by the assessee and on being satisfied that thedelay in disposing of the appeal is not attributable to theassessee, 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 originallyallowed and the period or periods so extended or allowedshall not, in any case, exceed three hundred and sixty-five days and the Appellate Tribunal shall dispose of theappeal within the period or periods of stay so extended orallowed: Provided also that if such appeal is not so disposed ofwithin the period allowed under the first proviso or theperiod or periods extended or allowed under the secondproviso, which shall not, in any case, exceed threehundred and sixty-five days, the order of stay shall standvacated after the expiry of such period or periods, even ifthe delay in disposing of the appeal is not attributable tothe assessee.” 5.While interpreting the provisions of Section 35C(2A) ofthe Central Excise Act, 1944 which is pari materia to section254(2A) of the Act, this Court in STA No.15 of 2015(Commissioner of Central Excise, Rohtak vs. M/s VoiceTelesystem) decided on 20.1.2016 after considering therelevant case law on the point concluded that wherever theappeal could not be decided by the Tribunal due to pressure ofpendency of cases and delay in the disposal of the appeal is notattributable to the assessee in any manner, the interimprotection can continue beyond 365 days in deserving casesand recorded as under:- 5.While interpreting the provisions of Section 35C(2A) ofthe Central Excise Act, 1944 which is pari materia to section254(2A) of the Act, this Court in STA No.15 of 2015(Commissioner of Central Excise, Rohtak vs. M/s VoiceTelesystem) decided on 20.1.2016 after considering therelevant case law on the point concluded that wherever theappeal could not be decided by the Tribunal due to pressure ofpendency of cases and delay in the disposal of the appeal is notattributable to the assessee in any manner, the interimprotection can continue beyond 365 days in deserving casesand recorded as under:- “15. In Pepsi Foods Pvt. Limited now merged withPepsico India Holding Pvt. Limited vs. AssistantCommissioner of Income Tax and another, 2015-TIOL-1306 HC-DEL-IT, the challenge was to the constitutionalvalidity of third proviso to Section 254(2A) of theIncome Tax Act, 1961 which was amended to mean thatthe Tribunal could not grant any further extension of thestay after expiry of 365 days even though the appealsfiled by the assessee before the Tribunal were pendingPepsico India Holding Pvt. Limited vs. AssistantCommissioner of Income Tax and another, 2015-TIOL-1306 HC-DEL-IT, the challenge was to the constitutionalvalidity of third proviso to Section 254(2A) of theIncome Tax Act, 1961 which was amended to mean thatthe Tribunal could not grant any further extension of thestay after expiry of 365 days even though the appealsfiled by the assessee before the Tribunal were pending and the delay in the disposal of the appeals was not onaccount of any conduct attributable to the assessee. Afterconsidering the relevant statutory provisions and the caselaw on the point, it was held that the Tribunal has thepower to grant extension of stay beyond 365 days indeserving cases. The relevant observations recorded readthus:- “23.Keeping in mind the principles set out by theSupreme Court in Dr Subramanian Swamy(supra), [(2014) 8 SCC 682 (SC)] we need toexamine whether the present challenge to thevalidity of the third proviso to Section 254(2A) canbe sustained. This is not a case of excessivedelegation of powers and, therefore, we need notbother about the second dimension of Article 14 inits application to legislation. We are hereconcerned with the question of discrimination,based on an impermissible or invalid classification.It is abundantly clear that the power granted to theTribunal to hear and entertain an appeal and topass orders would include the ancillary power ofthe Tribunal to grant a stay. Of course, the exerciseof that power can be subjected to certainconditions. In the present case, we find that thereare 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 notexceeding 180 days and the Tribunal shoulddispose of the appeal within that period. Thesecond proviso stipulates that in case the appeal isnot disposed of within the period of 180 days, ifthe delay in disposing of the appeal is notattributable to the assessee, the Tribunal has thepower to extend the stay for a period not exceeding365 days in aggregate. Once again, the Tribunal is ITA-408-2016 (O&M) ITA-408-2016 (O&M) -5-directed to dispose of the appeal within the saidperiod of stay. The third proviso, as it stands today,stipulates that if the appeal is not disposed ofwithin the period of 365 days, then the order ofstay shall stand vacated, even if the delay indisposing of the appeal is not attributable to theassessee. While it could be argued that thecondition that the stay order could be extendedbeyond a period of 180 days only if the delay indisposing of the appeal was not attributable to theassessee was a reasonable condition on the powerof the Tribunal to the grant an order of stay, it can,by no stretch of imagination, be argued that wherethe assessee is not responsible for the delay in thedisposal of the appeal, yet the Tribunal has nopower to extend the stay beyond the period of 365days. The intention of the legislature, which hasbeen made explicit by insertion of the words –‘even if the delay in disposing of the appeal is notattributable to the assessee’– renders the right ofappeal granted to the assessee by the statute to beillusory for no fault on the part of the assessee. Thestay, which was available to him prior to the 365days having passed, is snatched away simplybecause the Tribunal has, for whatever reason, notattributable to the assessee, been unable to disposeof the appeal. Take the case of delay being causedin the disposal of the appeal on the part of therevenue. Even in that case, the stay would standvacated on the expiry of 365 days. This is despitethe fact that the stay was granted by the Tribunal,in the first instance, upon considering the primafacie merits of the case through a reasoned order.24. Furthermore, the petitioners are correct in theirsubmission that unequals have been treated -6- equally. Assessees who, after having obtained stayorders and by their conduct delay the appealproceedings, have been treated in the same mannerin which assessees, who have not, in any way,delayed the proceedings in the appeal. The twoclasses of assessees are distinct and cannot beclubbed together. This clubbing together has led tohostile discrimination against the assessees towhom the delay is not attributable. It is for thisreason that we find that the insertion of theexpression – ‘even if the delay in disposing of theappeal is not attributable to the assessee’– byvirtue of the Finance Act, 2008, violates the non-discrimination clause of Article 14 of theConstitution of India. The object that appealsshould be heard expeditiously and that assessesshould not misuse the stay orders granted in theirfavour by adopting delaying tactics is not at allachieved by the provision as it stands. On thecontrary, the clubbing together of ‘well behaved’assesses and those who cause delay in the appealproceedings is itself violative of Article 14 of theConstitution and has no nexus or connection withthe object sought to be achieved. The saidexpression introduced by the Finance Act, 2008 is,therefore, struck down as being violative of Article14 of the Constitution of India. This would revertus to the position of law as interpreted by theBombay High Court in Narang Overseas (supra),[(2007) 295 ITR 22 (Bom.)] with which we are infull agreement. Consequently, we hold that, wherethe delay in disposing of the appeal is notattributable to the assessee, the Tribunal has thepower to grant extension of stay beyond 365 daysin deserving cases. The writ petitions are allowed as above.” 16. The Apex Court in Commissioner of Customs &Central Excise, Ahmedabad vs. Kumar Cotton MillsPvt. Limited, (2005) 180 ELT 434, interpreting subsection 2A of Section 35C of the Act as introduced on11.5.2002 had noticed as under:- as above.” 16. The Apex Court in Commissioner of Customs &Central Excise, Ahmedabad vs. Kumar Cotton MillsPvt. Limited, (2005) 180 ELT 434, interpreting subsection 2A of Section 35C of the Act as introduced on11.5.2002 had noticed as under:- “6. The sub section which was introduced interrorem cannot be construed as punishing theassessees for matters which may be completelybeyond their control. For example, many of theTribunals are not constituted and it is not possiblefor such Tribunals to dispose of matters.Occasionally by reason of other administrativeexigencies for which the assessee cannot be heldliable, the stay applications are not disposed withinthe time specified. The reasoning of the Tribunalexpressed in the impugned order and as expressedin the Larger Bench matter namely IPCL vs.Commissioner of Central Excise, Vadodara (supra)cannot be faulted. However, we should not beunderstood as holding that any latitude is given tothe Tribunal to extend the period of stay except ongood cause and only if the Tribunal is satisfied thatthe matter could not be heard and disposed of byreason of the fault of the Tribunal for reasons notattributable to the assessee.” 17. In view of the above, the question posed in para 5above is answered in the affirmative. Accordingly, itwould be concluded that wherever the appeal could notbe decided by the Tribunal due to pressure of pendencyof cases and the delay in disposal of the appeal is notattributable to the assessee in any manner, the interimprotection can continue beyond 365 days in deservingcases.” In view of the above position of law, we do not find any error ITA-408-2016 (O&M) in the order passed by the Tribunal. Thus, no substantial question of lawarises. The appeal stands dismissed. Needless to say that the Tribunal shallmake sincere efforts for expeditious disposal of the appeal, in accordancewith law. ( AJAY KUMAR MITTAL ) JUDGE January 10, 2017rishu Whether speaking/reasonedWhether Reportable ( RAMENDRA JAIN ) JUDGEYes/NoYes/No