Facts of the Case

Bentley Systems India Private Limited filed an appeal before the Income Tax Appellate Tribunal (ITAT), being aggrieved by the order passed by the Dispute Resolution Panel dated 16.08.2013. During the initial proceedings, the Tribunal granted a stay of the tax demand on 26.12.2013, subject to the condition that the petitioner deposit 40% of the demand amount.

Pursuant to the Tribunal’s order, the petitioner deposited an amount of ₹95,68,762/- representing 40% of the tax demand, and the recovery of the remaining amount was stayed.

Subsequently, the Tribunal extended the interim stay on 27.06.2014. However, based on the legal position laid down in CIT v. Maruti Suzuki (India) Ltd., the Tribunal lacked authority to extend the stay beyond a period of 365 days from the initial date of stay.

Since the petitioner's appeal could not be heard due to reasons not attributable to the petitioner and was scheduled for hearing on 12.01.2015, the petitioner approached the Delhi High Court seeking continuation of stay against recovery proceedings till disposal of the appeal.

Issues Involved

  1. Whether the High Court can exercise powers under Article 226 of the Constitution to extend a stay against tax recovery after expiry of the Tribunal's statutory power.
  2. Whether continuation of stay can be granted when delay in disposal of appeal is not attributable to the assessee.
  3. Whether the limitation of 365 days imposed on ITAT's power to extend stay bars the High Court from granting relief.

Petitioner's Arguments

  • The petitioner contended that it had complied with all conditions imposed by the Tribunal by depositing 40% of the tax demand.
  • It was submitted that the appeal could not be heard for reasons entirely beyond the petitioner's control.
  • The petitioner relied upon several judgments where the High Court exercised its writ jurisdiction and continued the stay granted by the Tribunal until disposal of the appeal.
  • It was argued that denial of relief would result in undue hardship and coercive recovery despite absence of fault on the part of the assessee.

Respondent's Arguments

  • The respondents relied upon the statutory restriction on the powers of the Tribunal, which prohibited extension of stay beyond 365 days from the original date of grant.
  • It was implied that the Tribunal itself lacked jurisdiction for further extension of the stay period.

Court Findings / Court Order

The Delhi High Court observed that although the Tribunal had no authority to extend stay beyond 365 days, there existed no legal bar preventing the High Court from exercising jurisdiction under Article 226 of the Constitution to grant appropriate relief where justice so demanded.

The Court further noted:

  • The petitioner had complied with the conditions imposed by the Tribunal.
  • Delay in disposal of appeal was not attributable to the petitioner.
  • The Tribunal was already in the process of hearing the appeal.

Accordingly, the Court held that continuation of stay would serve the ends of justice and directed that the stay granted by the Tribunal would continue until disposal of the appeal by the Tribunal.

The writ petition was accordingly disposed of.

Important Clarification

The Court clarified that:

  • Although ITAT cannot extend stay beyond 365 days because of statutory limitations, the constitutional powers of the High Court under Article 226 remain unaffected.
  • High Courts retain inherent jurisdiction to prevent injustice in deserving cases.
  • Relief may be granted where the delay in disposal of appeal is not attributable to the taxpayer.

This judgment reinforces that statutory restrictions on tribunals do not curtail constitutional remedies available before High Courts.

Sections  Involved

Constitution of India

  • Article 226 – Power of High Courts to issue writs

Income Tax Act, 1961

  • Section 254(2A) – Power of Appellate Tribunal regarding grant and extension of stay of demand

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Link to download the order -https://delhihighcourt.nic.in/app/case_number_pdf/2014:DHC:7464-DB/BDA24122014CW94092014.pdf

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