Facts of the Case

The Petitioner, New Delhi Television Limited (NDTV), had filed an appeal before the Income Tax Appellate Tribunal (ITAT) against the assessment order passed by the Income Tax Department for the Assessment Year 2009–10. During the pendency of the appeal, the ITAT initially granted a stay on the demand raised pursuant to the assessment order, subject to certain conditions, which were duly complied with by the Petitioner.

Subsequently, the Tribunal extended the interim stay through an order dated 10.10.2014. However, in view of the judgment passed by the Delhi High Court in CIT v. Maruti Suzuki (India) Limited, it was clarified that the Tribunal had no authority to extend the stay beyond 365 days from the date of the initial grant of stay.

As the statutory period of 365 days was expiring on 25.03.2015 and the appeal before the Tribunal could not be heard for reasons not attributable to the Petitioner, the Petitioner approached the High Court under Article 226 of the Constitution seeking continuation of the stay till disposal of the appeal. 

Issues Involved

  1. Whether the High Court can exercise jurisdiction under Article 226 of the Constitution of India to extend the stay granted by the ITAT beyond the statutory limit of 365 days?
  2. Whether the assessee can be denied continuation of stay when delay in disposal of appeal is not attributable to it?
  3. Whether the ends of justice warrant continuation of interim protection till final adjudication by the Tribunal? 

Petitioner’s Arguments

  • The Petitioner submitted that the ITAT had already granted a conditional stay after considering the merits and the conditions imposed had been duly complied with.
  • The delay in hearing the appeal was not attributable to the Petitioner.
  • Since the Tribunal was legally barred from extending the stay beyond 365 days, the High Court, in exercise of writ jurisdiction under Article 226, had the power to grant continuation of the stay.
  • Reliance was placed on various orders passed by the High Court where such extension had been granted till disposal of the appeal.

Respondent’s Arguments

  • The Revenue relied upon the statutory limitation governing the Tribunal’s power to grant stay, particularly the restriction on extending the stay beyond 365 days.
  • It was contended that the Tribunal had no authority to continue the interim protection after expiry of the statutory period.

Court Order / Findings

The Delhi High Court observed that there is no legal bar for the High Court to exercise its writ jurisdiction under Article 226 of the Constitution to extend the operation of the stay granted by the Tribunal where justice so requires.

The Court noted that:

  • The Petitioner had complied with all conditions imposed by the Tribunal.
  • The appeal was already pending and in the process of hearing before the Tribunal.
  • The delay in disposal was not attributable to the Petitioner.

Accordingly, the Court held that in the interest of justice, the stay granted by the Tribunal shall continue till the disposal of the appeal by the ITAT.

The writ petition was disposed of with a direction that the Tribunal should dispose of the pending appeal expeditiously.

Important Clarification

This judgment clarifies that although the ITAT is statutorily restricted from extending stay beyond 365 days, the constitutional powers of the High Court under Article 226 remain unaffected and can be invoked to protect the assessee from coercive recovery where the delay in adjudication is not attributable to the assessee.

The decision reinforces the principle that statutory limitations on Tribunal powers do not curtail the extraordinary constitutional jurisdiction of High Courts.

Sections Involved

  • Section 254(2A), Income Tax Act, 1961 – Power of ITAT to grant stay and limitation on extension
  • Article 226, Constitution of India – Writ jurisdiction of High Court
  • Assessment proceedings under the Income Tax Act relating to demand recovery

Link to Download the Order https://delhihighcourt.nic.in/app/case_number_pdf/2015:DHC:2828-DB/BDA24032015CW29922015.pdf

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