Amendment in Section 254(2A) | Directory or Mandatory? | Case referred to President of ITAT

Tata Education and Development Trust Vs ACIT (ITAT Mumbai)

The issue under consideration is regarding application of Stay of Demand in front of Tribunal, whether the amendment done by Finance Act, 2020 in Section 254 will be applicable in present case?

In the present case, the assessee applicant seeks a stay on collection/recovery of the amount of tax and interest etc. With respect to the amendment to Section 254(2A) vide Finance Act, 2020, learned counsel for the assessee submitted that this amendment is only directory, not mandatory, in nature, and it does not curtail the powers of the Tribunal.

ITAT states that, after considered legal history on this aspect of the matter vis-à-vis the spate of amendments, from time to time, believed to be having impact on the powers of the Tribunal. There are two very significant aspects of the whole controversy- first, with respect to the legal impact, if any, of the amendment in first proviso to Section 254(2A) on the powers of the Tribunal, under section 254(1) to grant stay; and, second, if this amendment is held to have any impact on the powers of the Tribunal under section 254(1),- (a) whether the amendment is directory in nature or is mandatory in nature; (b) whether the said amendment affects the cases in which appeals were filed prior to the date on which the amendment came into force; (c) whether, with respect to the manner in which, and nature of which, security is to be offered by the assessee, under first proviso to Section 254(2A), what are broad considerations and in what reasonable manner, such a discretion must essentially be exercised, while granting the stay by the Tribunal.

Further, these issues are of vital importance to all the stakeholders all over the country, and in our considered understanding, on such important pan India issues of far reaching consequence, it is desirable to have the benefit of arguments from stakeholders in different part of the country. Considering all these factors, we deem it fit and proper to refer the instant Stay Applications to the Hon’ble President of Income Tax Appellate Tribunal for consideration of constitution of a larger bench and to frame the questions for the consideration by such a larger bench, under section 255(3) of the Income Tax Act, 1961.

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