Delhi ITAT granted stay beyond 365 days holding that delay was not attributable to assessee and his conduct was bonafide and reasonable

In a recent judgment, ITAT Delhi following Pepsi Foods (P) Ltd case  has granted stay beyond 365 days in a re-fixed appeal for clarification, holding that the  delay was not attributable to the assessee.

Case Law Details:
S.A.-211/Del/2016 (In ITA No.-1681/Del/2015) AY: 2010-11
D.E.Shaw India Advisory Services Pvt.Ltd vs. DCIT
Date of Order/Judgment: 07/04/2016

Brief Facts of the Case:
Hearing  in ITA No.-1681/Del/2015 had duly concluded on 03.09.2015. Thereafter, the appeal was fixed for clarification by the Co-ordinate Bench on 05.11.2015. the appeal came up for hearing in clarification proceedings on 24.11.2015 and thereafter six time subsequently. Except for 24.11.2015, for each time the hearing was adjourned on the request of the Revenue.

The Assessee filed the present stay petition  praying for extension of stay granted by the ITAT vide order dated 09.10.2015. The assessee submitted that originally stay was granted for a period of six months vide order dated 01.04.2015 which was extended by another period of six months. That the assessee had been ready to argue the appeal on all the dates the appeal came up for hearing but adjourned on Revenue’s application. That infact the hearing had concluded on 03.09.2015 and thereafter it was re-fixed for clarification on a few dates and finally released for a fresh hearing. Thus it was submitted that the hearing has not concluded in the stipulated period of one year on account of no fault of the assessee.

Excerpts from ITAT Judgment:

In the facts of the present case, we are called upon to decide whether in the peculiar facts and circumstances of the case, stay beyond a period of 365 days can be granted to the assessee or not. It is evident from record that stay for a period of one year i.e. 365 days has already been granted by the ITAT.

The third proviso of sub-section (2A) of section 255 of the Act which curtailed the powers of the ITAT to grant stay beyond a period of 365 days was considered by the Jurisdictional High Court in Pepsi Foods Pvt.Ltd.(cited supra). After taking into consideration the decision rendered in the case of Maruti Suzuki India [2014] 44 taxman.com.166 (Del.) it was held that the Division Bench of the High Court in the case of Maruti Suzuki’s was not called upon to examine the Constitutional validity of the third proviso to Section 254(2A) of the said Act and the said issue had been left open. Thus examining the amendment carried out by the Finance Act, 2008 in the third proviso which introduced the words “even if the delay in disposing of the appeal is not attributable to the assessee” the Jurisdictional High Court held that the Legislature created a “hostile discrimination” against those assessees who are law abiding and did not cause any delay in their respective appeals by putting them in the same category as those who have delayed the hearing after having obtained the stay. Holding the Amendment carried out by the Finance Act 2008 as violating the non-discrimination clause of Article 14 of the Constitution of India, the third proviso was struck down and the second proviso was read down.

We also draw support from the decision taken by the Tribunal in ITA No.750/Del/2015 in the case of M/s Sun Life India Service Centre Pvt. Ltd. vs DCIT dated 18.03.2016 in SA No.-138/Del/2016.

Considering the above legal precedent, we hold that in deserving cases, the ITAT is empowered to extend stay beyond 365 days. We thus proceed to consider the facts of the present case.

we find from the record that except for seeking an adjournment on 24.11.2015 on all the other dates the appeal has been adjourned on the request of the Revenue. The circumstances which led the assessee to seek an adjournment on 24.11.2015 can be best addressed in assessee’s own version by referring to the application on record as it can throw light on the conduct of the assessee which is under consideration. A perusal of the record shows that in the adjournment petition dated 24.11.2015, the reason cited for pleading inability to be present is stated that “I submit that I am unable to attend the proceedings before your honors for the above captioned appeal due to my preoccupation with an appeal before the Hon’ble Chennai ITAT, “D” Bench (KOB Medical Textiles Pvt.Ltd-ITA No.855/CHNY/2015).”

On considering the said petition, we are of the view that the duty, responsibility and the obligation of the assessee to address the issues in the stay granted appeal stood discharged on 03.09.2015 as on the said date the hearing stood concluded. Thereafter, we hold that there was no onus whatsoever placed upon the assessee to ensure the availability of his counsel on 24.11.2015. The need and necessity to do so arose only on account of the fact that the Co-ordinate Bench deemed it necessary to re-fix the appeal for clarification vide the aforeextracted order dated 05.11.2011. The onus and responsibility to ensure representation arose only on receiving the order dated 05.11.2015. There is nothing on record to show when the order was communicated to the assessee. In the circumstances, we find that the conduct of the Ld.AR on behalf of the assessee in moving the afore-said request seeking time on 24.11.2015 was bonafide and reasonable. The said adjournment request pleading time cannot in these circumstances lead to construing that the assessee is delaying the hearing. Being satisfied by the conduct of the assessee evidencing from record, we find that delay in deciding the appeal cannot be attributed to the assessee.

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