Shri Jethmal Faujimal Soni vs. ITAT- Writ Petition- Bombay High Court

While adjudicating on the writ petition challenging section 254(2A) of the Income Tax Act which states no stay of tax demand by ITAT beyond 365 days of pandancy of appeal, BHC has concluded that:
 
1. A stringent provision is made by the third proviso to Section 254(2A), as a result of which even if the delay in disposing of the appeal is not attributable to the assessee, the stay has to stand vacated in any event upon the lapse of a period of three hundred and sixtyfive days. Having regard to the nature of the provision which has been enacted by Parliament, the Tribunal is under a bounden duty and obligation to ensure that the appeal is disposed off, so as to not result in prejudice to the assessee, particularly in a situation like the present, where no fault can be found with the conduct of the assessee. 

2. The fact that an issue was pending before the Special Bench was not a reason for the Tribunal not to dispose of the appeal, particularly since the consequence of the inability of the Tribunal to do so would result in the vacating of the order of stay, which was passed originally in favour of the assessee . It is unfortunate that the Tribunal simply adjourned the appeal merely on the ground of the pendency of an identical issue before the Special Bench. The state of affairs which has come to pass could well have been avoided by the appeal being taken up for final disposal.

(Click here for judgment)