DCIT Vs Pepsi Foods Ltd. (Supreme Court of India)
FULL TEXT OF THE SUPREME COURT JUDGMENT/ORDER
The Hon’ble Supreme Court in DCIT v. Pepsi Foods Ltd. [Civil Appeal Nos. 1106 to 1139 of 2021 decided on April 6, 2021] has upheld the Hon’ble Delhi High Court’s verdict of partially striking down third proviso to Section 254(2A) of the Income Tax Act, 1961 (IT Act) which did not permit extension of a stay on tax assessment beyond 365 days even if the assessee is not responsible for delay in hearing of appeals by terming it as ‘arbitrary and discriminatory’.
Facts:-
Pepsi Foods Ltd. (“the Respondent”) is an Indian Company and engaged in the business of manufacture and sale of concentrates, fruit juices, processing of rice and trading of goods for exports.
On September 30, 2008, a return of income was filed for the Assessment Year 2008-2009 declaring a total income of Rs. 92,54,89,822/-. A final assessment order was passed on October 19, 2010 (“Impugned Order”) which was adverse to the Respondent. Aggrieved by the Impugned order, the Respondent filed an appeal before the Income-Tax Appellate Tribunal (“ITAT”) on April 29, 2013. On May 31, 2013, ITAT stayed the operation of the Impugned order for a period of six months. Further, the stay was extended till January 8, 2014 and continued being extended until May 28, 2014.
Since the period of 365 days as provided in Section 254(2A) of the IT Act was to end on May 30, 2014, beyond which no further extension could be granted, the Respondent, apprehending coercive action from the Revenue (“the Petitioner”), filed a writ petition before the Hon’ble Delhi High Court on May 21, 2014 challenging the constitutional validity of the third proviso to Section 254(2A) of the IT Act. By a judgment dated May 19, 2015, the Delhi High Court struck down a part of the third proviso to Section 254(2A) of the IT Act which did not permit the extension of a stay order beyond 365 days even if the assessee was not responsible for delay in hearing the appeal.
The Revenue aggrieved by the above judgment of the Hon’ble Delhi High Court filled an appeal in the Supreme Court.
Issue:-
Whether automatic vacation of stay granted by ITAT after expiry of 365 days even if the assessee is not responsible for delay in hearing the appeal is unconstitutional in the eyes of law?
Held:-
The Hon’ble Supreme Court in Civil Appeal Nos. 1106 to 1139 of 2021 decided on April 6, 2021 has held as under:
