DOABA COLLEGE TANDA ROAD JALANDHAR CITY vs. INCOME TAX APPELLATE TRIBUNAL & ORS

Facts

The petitioner, Doaba College, filed writ petitions before the High Court of Punjab & Haryana seeking an extension of an interim stay granted by the Income Tax Appellate Tribunal (ITAT), Amritsar. The stay order had been statutorily vacated under Section 254(2-A) of the Income Tax Act, 1961, due to the pendency of the appeal before the ITAT. The petitioner sought to have the stay extended until the appeal was decided. The revenue contended that the stay order, having been vacated by operation of law, could not be extended under Article 226 of the Constitution, especially as the petitioner was allegedly at fault.

Held

The High Court, without opining on whether Section 254(2-A) of the Income Tax Act, 1961, was mandatory or directory, disposed of the writ petitions. Taking into consideration that the appeal was pending adjudication, the Court directed the ITAT, Amritsar, to decide the petitioner's appeal within three months. The interim stay granted by the Tribunal was ordered to continue for this three-month period, subject to the petitioner filing an undertaking before the Tribunal to the effect that they would not delay the disposal of the appeal. No specific finding was recorded on the fault of the petitioner.

Key Issues

1. Whether the interim stay granted by the ITAT, which stood statutorily vacated under Section 254(2-A) of the Income Tax Act, 1961, could be extended by the High Court in exercise of its powers under Article 226 of the Constitution, particularly when an appeal is pending adjudication before the ITAT. Contentions: Assessee (Petitioner): Prayed for the extension of the stay order until the decision of the appeal pending before the ITAT. Revenue (Respondent): Submitted that as the petitioner was at fault, the stay order stood vacated by operation of Section 254(2-A) and therefore could not be extended by the High Court.