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In Pursuit of Knowledge |
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Is it necessary?
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Sub-section (2A) which was inserted in section 254 by the Finance Act 1999 with effect from 1-6-1999 directs the Appellate Tribunal as far as possible to decide an appeal within a period of 4 years from the end of the financial year in which the appeal is filed. Subsequently, the Finance Act, 2001, inserted the following two provisos with effect from 1-6-2001: “Provided that where an order of stay is made in any proceedings relating to an appeal filed under sub-section (1) of section 253, the Appellate Tribunal shall dispose of the appeal within a period of one hundred and eighty days from the date of such order: Provided further that if such appeal is not so disposed of within the period specified in the first proviso, the stay order shall stand vacated after the expiry of the said period.” Thus from 1-6-2001 it was laid down that if the appeal was not disposed of within 180 days from the date of the order granting stay “the said order shall stand vacated.” Quite wisely and rightly Benches of the Tribunal all over India took uniformly the view that this was merely a guideline and did not impinge upon the Tribunal’s inherent power to grant and continue stay as laid down by the Supreme Court in ITO vs. M. K. Mohammed Kunhi 71 ITR 815. The Finance Act, 2007 has now substituted the 2 provisos to section 254(2A) by the following 3 provisos with effect from 1-6-2007: “Provided that the Appellate Tribunal may, after considering the merits of the application made by the assessee, pass an order of stay in any proceedings relating to an appeal filed under sub-section (1) of section 253, for a period not exceeding one hundred and eighty days from the date of such order and the Appellate Tribunal shall dispose of the appeal within the said period of stay specified in that order: Provided further that where such appeal is not so disposed of within the said period of stay as specified in the order of stay, the Appellate Tribunal may, on an application made in this behalf by the assessee and on being satisfied that the delay in disposing of the appeal is not attributable to the assessee, extend the period of stay, or pass an order of stay for a further period or periods as it thinks fit; so however, that the aggregate of the period originally allowed and the period or periods so extended or allowed shall not, in any case, exceed three hundred and sixty-five days and the Appellate Tribunal shall dispose of the appeal within the period or periods of stay so extended or allowed: Provided also that if such appeal is not so disposed of within the period allowed under the first proviso or the period or periods extended or allowed under the second proviso, the order of stay shall stand vacated after the expiry of such period or periods.” It is obvious that if the stay did not get automatically vacated after 180 days as per the old second proviso (as it laid down a guideline) it would equally follow that the stay does not now get vacated after the expiry of 365 days as per the present third proviso. Indeed the provision has been liberalized as the guideline speaks of 365 days as being the indicated time limit and not 180 days. The High Court at Bombay in Writ Petition Lodg. No. 1454 of 2007 has also taken the view that the inherent power of the Tribunal’s power to continue a stay is not affected by the 2007 amendment. UO No. F.29 seems to be based on the belief that the time limit of 365 days is a mandatory requirement and cuts down the power of the Tribunal to grant stay and extend stay in appropriate matters and proceeds to cut down even this period of 365 days. If the earlier second proviso did not require special directions to be issued the occasion to do so under the present third proviso is even less. A time table is also sought to be laid down by the UO No. F29: a) the hearing date of an appeal should be within one month from the grant of stay b) the appeal should not be adjourned in any case for a period exceeding 3 weeks (it would seem only one adjournment over all is directed to be given, and c) the final order should be passed within 40 days from the date of the hearing. In terms of figures this means that the appeal should be disposed of within 91 days from the date of the order granting stay (30 + 21 + 40). It should be noted that even the new first proviso speaks of disposal of the appeal within 180 days from the date of the order of stay and that too in the first instance. The second proviso permits a further period of 185 days for disposal of the appeal. If the appeal is to be disposed of within 91 days the second proviso which speaks of extension of the period of stay by another 185 days will really have no meaning. In other words one-fourth of the period within which an endeavour should be made to dispose of an appeal, as per the guidelines in the first two provisos has by UO No. F.29 been prescribed as the mandatory period. The Tribunal is functioning well, it should not feel it has a point to prove. In paragraph 4 of UO No. F.29 it is stated “unless there is extraordinary reason no adjournment should be given.” This intrudes on the judicial power of a tribunal to decide an application for adjournment and to grant such adjournment if it feels such a grant is called for irrespective of whether there are “extraordinary” reasons – a phrase which at best is nebulous. Each person has his own concept of what is “extraordinary.” It appears to be wholly improper to fetter the Tribunal’s judicial power to consider whether an adjournment should be granted in ordinary circumstances. The last line in the same paragraph 4 states “In any case the appeal should not be adjourned for a period exceeding three weeks.” This again seems to be unwarranted. This means that according to the directive even where extraordinary circumstances exist an adjournment should not be granted for more than 3 weeks. The normal rule is that when one party asks for time it is for the other party to choose the next convenient date – without being unduly unreasonable. In practice it is found that even when a longer adjournment of a hearing is warranted the members feel constrained not to grant it because of the Presidential directive. A practical difficulty in fixing an early hearing may be referred to. There are two parties before the Tribunal. Whereas the Department’s representative is whole time based in the particular Bench the assessee’s representative’s diary may not make it possible for him to offer a date within 3 weeks. This difficulty particularly arises at a multi Bench place like Mumbai where there are 13 Court rooms. It is likely that in the 12 appeal hearing days in the succeeding 3 weeks (appeals are not heard on Fridays, at least in Bombay and assuming one or more of the 12 days is not a bank holiday) the assessee’s representative may be “booked” on all of them. The representative of the assessee has to be particularly careful in giving a clear day as a second adjournment is apparently forbidden. Counsel also have to accommodate High Court hearings which presently in Mumbai now take place on 3 days in a week with the prospect of being extended to the whole week. To give a date for hearing in the concerned Bench when he already has matters in another Bench would create complications particularly if the other matter is also a stay granted matter or an early hearing matter. Further the members of the Tribunal require that the assessee’s representative must give priority to the Bench where a more senior member is presiding. Thus, if the stay granted matter is in, say, Bench A but within 3 weeks the representative is forced to give a date when he already has a matter on that day in, say, Bench B and a more senior member presides over Bench B compared to Bench A there will be some unpleasantness if he gives preference to the stay granted matter in Bench A. One can, of course, urge that another representative should be briefed by the assessee on the short-fixed date. Though as a professional I may be accused of bias, I honestly feel that this is easier said than done. The representative may have a long-standing relation with the client. He may be attending to the client’s case right from appearance before the Officer year after year and is fully aware of all the intricate facts. Now to seek representation by another may be difficult for the assessee. Even where Counsel is engaged it may be difficult for the assessee to engage another Counsel. If one is to undergo an operation but the surgeon of choice is not available on the date fixed by the hospital for the operation it would be harsh to ask the patient to settle for another surgeon! In paragraph 4 it is stated “In case the Revenue is seeking adjournment, it should be in writing under a written approval of the Chief Commissioner of Income-tax or CIT who is in charge of the ITAT. If the assessee is seeking adjournment or is otherwise not co-operating then the Bench shall consider whether the stay granted is to be continued or vacated.” For obtaining an adjournment the Revenue has to produce a letter but the assessee must contend with having the stay vacated! One may legitimately ask where is the question of vacating the stay. As per the present first proviso the initial period of stay may be 180 days from the grant of stay. As per UO No. 29 the first hearing will be within 30 days of the grant of stay. Does it mean that the stay may be vacated even within the initial 180 days period of stay as per the first proviso? It is doubtful whether one can issue general direction that “in no case it (the order in appeal) should be delayed beyond 40 days from the date of hearing” (see para 5 of the Directive). The members require time to consider intricate issues which often arise in stay granted matters. The laying down of such an arbitrary time limit often means that a somewhat skimpy order is passed which does not reflect the submissions made, arguments urged and cases cited. It also results in a bland statement being made to the effect that “Several arguments have been made and cases have been cited and all of them have been considered but it is not necessary to refer to the same in our order.” In such a case the parties do not know what has been and what has not been considered. Incidentally who is it who wisely observed “justice hurried is justice buried?” I clarify that the above are my personal views as a practising advocate. |