Automatic vacation of stay granted by ITAT after the expiry of 365 days is unconstitutional: SC
Case Details: DCIT V/s Pepsi Foods Ltd.
The Supreme Court has held that the object of the third proviso to Section 254 (2A) is an automatic vacation of a stay that has been granted on the completion of 365 days. This automatic vacation is granted even if the assessee is not responsible for the delay caused in hearing the appeal.
Such object is being discriminatory and is liable to be struck down as violating Article – 14 of the Constitution of India.
Also, the said proviso would result in the automatic vacation even if the Appellate Tribunal could not take up the appeal in time for no fault of the assessee. Further, the vacation of stay in favour of the revenue would ensue even if it is responsible for the delay in hearing the appeal.
In this sense, the said proviso is also manifestly arbitrary as capricious, irrational and disproportionate so far as the assessee is concerned.
Thus, the third proviso to Section 254 (2A) will now be read without the word “even” and the words “is not” added after the words “delay in disposing of the appeal”.
Any order of stay shall stand vacated after the expiry of the period mentioned in the Section only if the delay in disposing of the appeal is attributable to the assessee.