KANYA MAHA VIDYALAYA JALANDHAR CITY vs. INCOME TAX APPELLATE TRIBUNAL & ORS

Facts

The petitioner, Kanya Maha Vidyalaya, Jalandhar, filed writ petitions before the High Court of Punjab & Haryana at Chandigarh. An appeal filed by the assessee was pending adjudication before the Income Tax Appellate Tribunal (ITAT), Amritsar. The ITAT had initially granted an interim stay, which was statutorily vacated under Section 254(2-A) of the Income Tax Act, 1961. The petitioner sought an extension of this stay order 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.

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. The Court directed the Income Tax Appellate Tribunal, Amritsar, to decide the petitioner's pending appeal within three months from the date of the order. 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 that it would not cause any delay in the disposal of the appeal. The Court did not decide the issue of whether the stay could be extended under Article 226, but rather facilitated the expeditious disposal of the appeal.

Key Issues

1. Whether the interim stay granted by the Income Tax Appellate Tribunal, 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 of India. Assessee's contention: The assessee sought an extension of the stay order to remain in effect until the final decision of its appeal by the ITAT. Revenue's contention: The revenue argued that as the stay order had been vacated by operation of Section 254(2-A) of the Act, it could not be extended by the High Court.