DELIVERHEALTH SOLUTIONS INDIA PVT. LIMITED,BANGALORE V. DEPUTY COMMISSIONER OF INCOME TAX, CIRC-2(1)(1), BANGALORE

SA 59/BANG/2024

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The case involves Deliverhealth Solutions India Pvt. Ltd., which filed a stay petition against the recovery of an outstanding tax demand for the assessment year 2018-19 amounting to Rs.6,69,12,139. The Tribunal had previously granted stays, and the current petition sought an extension due to delays in the appeal process not attributable to the assessee. The Department opposed the extension, citing previous stays granted. The Tribunal's decision to extend the stay was influenced by the Supreme Court's interpretation of the Income Tax Act, particularly section 254(2A), which allows for stays unless the delay is caused by the assessee.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 34983 (ITAT-BANGALORE)
• Duration Of Justice: 25 day(s)
• Appeal Type: Others
• Pronouncement Date: 14-10-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 10-10-2024
• Assessment Year: 2018-2019
• Appeal Filed On: 19-09-2024
• Other Referred Cases: CIT Vs. M/s. Ecom Gill Coffee Trading Pvt. Ltd., Pepsi Foods (P) Ltd. Vs. ACIT, Dy. CIT v. Pepsi Foods
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A.SREENIVASA RAO
• Assessee Lawyers: S.S. TOMAR
• Keywords: TDS; Recovery proceedings; Application of stay; Extension of stay
• Section: 234B

Judgement Text

"SP No.59/Bang/2024 Deliverhealth Solutions India Pvt. Ltd., Bangalore IN THE INCOME TAX APPELLATE TRIBUNAL “C’’ BENCH: BANGALORE BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND SHRI KESHAV DUBEY, JUDICIAL MEMBER SP No.59/Bang/2024 (Arising out of ITA No.748/Bang/2022) Assessment Year: 2018-19 Deliverhealth Solutions India Pvt. Ltd. (Earlier known as Nuance Transcription Servies India Pvt. Ltd.) B Wing, 2nd Floor, Embassy Signet No.10003, 13/1, Embassy Tech Square Main Road, Bellandur SO Kadubeesanahalli, Bangalore 560 103, Karnataka, India PAN NO : AAACF3465F Vs. DCIT Circle-2(1)(1) Bangalore APPELLANT RESPONDENT Appellant by : Sri S.S. Tomar, A.R. Respondent by : Sri A. Sreenivasa Rao, D.R. Date of Hearing : 10.10.2024 Date of Pronouncement : 14.10.2024 O R D E R PER KESHAV DUBEY, JUDICIAL MEMBER: This stay petitions is filed by the assessee in respect of appeal cited above praying for an order of extension of stay of recovery of the balance outstanding demand for the assessment year 2018-19 amounting to Rs.6,69,12,139/- as detailed below: Particulars Amount (in INR) Net tax liability 18,80,17,546 Add: Interest u/s 234B 3,04,35,010 Add: Interest u/s 234C 6,93,395 Aggregate Income-tax liability 21,91,45,951 Gross Demand 21,91,45,951 SP No.59/Bang/2024 Deliverhealth Solutions India Pvt. Ltd., Bangalore Page 2 of 5 Less: Tax already paid (TDS, Advance Tax, self-assessment tax and regular tax) 13,52,33,812 Less: Tax paid as per the order dated September 6, 2023 passed by the Hon’ble Tribunal in the Stay Application No.7/Bang/2023 1,70,00,000 Total amount payable 6,69,12,139 2. The ld. Counsel for the assessee explained the reasons for seeking extension of stay by stating that the original stay application bearing SP No.7/Bang/2023 was filed by the assessee on 3.2.2023 wherein the Tribunal vide order dated 6.9.2023 granted stay the recovery of outstanding demand for a period of 180 days from the date of order or till the disposal of subject appeal, whichever is earlier, with direction to the assessee to pay Rs.1,70,00,000/- in two equal instalments i.e. on or before September 20, 2023 and balance on or before October 20, 2023. The assessee in compliance to the aforesaid order, deposited the said amount vide challans dated 18.9.2023 & 19.10.2023. The said stay was last extended by the Tribunal bearing SP No.20/Bang/2024 vide order dated 22.3.2024 and the same is scheduled to expire on 18.9.2024. The ld. Counsel for the assessee stated that since the extension of last stay, the hearing in the aforesaid appeal was scheduled on the following dates: Hearing Dates Remarks May 27, 2024 Rescheduled at the request of Department. June 12, 2024 Rescheduled on account of pending issue of limitation basis the decision of Roca Bathroom Products: 140 taxmann.com 304 August 5, 2024 Rescheduled on account of pending issue of limitation basis the decision of Roca Bathroom Products; 140 taxmann.com 304 September 09, 2024 Rescheduled on account of pending issue of limitation basis the decision of Roca Bathroom Products; 140 taxmann.com 304 2.1 The subject appeal is now fixed for hearing on 10.10.2024. In view of the above, the ld. A.R. for assessee respectfully submitted SP No.59/Bang/2024 Deliverhealth Solutions India Pvt. Ltd., Bangalore Page 3 of 5 that the delay in disposal of appeal is not attributable to the assessee, and the assessee, therefore, requested to pass orders extending the stay of the recovery of the balance tax demand of Rs.6,69,12,139/- pending disposal of the appeal before this Tribunal and the respondent or its subordinates or its successors may be restrained from taking any action as regards recovery of tax, interest and penalty levied or leviable for the relevant AY and the assessee affirmed that the matter has not yet been disposed due to no fault on the part of the assessee and he prayed before us that it may graciously be pleased to extend the stay for a further period of six months or till the disposal of the subject appeal, whichever is earlier. 3. On the other hand, ld. D.R. vehemently requested not to grant further stay as this Tribunal had already granted stay twice. The ld. D.R. highly relied on the judgement of the Jurisdictional High Court in the case of CIT Vs. M/s. Ecom Gill Coffee Trading Pvt. Ltd. dated 5.7.2012. 4. We have heard the rival submissions and perused the material on record. In our opinion, the facts and circumstances of the case for grant of stay remains the same as in the order of this Tribunal dated 22.3.2024. We also found that the non-disposal of the appeal is not attributable to the assessee. Now the moot question that arises here is whether the Tribunal has power to extend the stay beyond a period of 365 days which is contrary to third proviso to section 254(2A) of the Act. 4.1 The constitutional validity of the third proviso was examined by Hon’ble Delhi High Court in the case of Pepsi Foods (P) Ltd. Vs. ACIT (2015) 57 taxmann.com 337 (Delhi) where the phrase, “even if the delay in disposing of the appeal is not attributable to the assessee” was struck down by court on the ground being violative of the non-discrimination clause of Article 14 of the Constitution of India. SP No.59/Bang/2024 Deliverhealth Solutions India Pvt. Ltd., Bangalore Page 4 of 5 4.2 The first proviso was again amended by Finance Act, 2020 with effect from 1.4.2020 to provide that Tribunal can grant stay subject to the condition that the assessee deposits not less than 20% of the amount of tax, interest, fee, penalty, or any other sum payable under the provisions of this Act or furnishes security of equal amount in respect thereof. Thus, the Tribunal can no longer grant stay for entire disputed amount. Assessee will have to approach High Court under Article 226 of the Constitution of India if they wish to seek stay for entire disputed amount. 4.3 The second proviso was also amended by Finance Act, 2020 w.e.f. 1.4.2020. The proviso has now been negatively worded and, also substituting the word ‘may’ with ‘shall’. By this substitution, the power of the Tribunal has been curtailed and inherent power of granting the stay beyond 365 days even in deserving cases has been taken away. This amendment has been done to overrule various rulings which provided that extension beyond 365 days can be granted if the delay is not attributable to the assessee. 4.4 Striking down of the third proviso by Hon’ble Delhi High Court in the case of Pepsi Foods (P) Ltd. (supra) was subject matter of challenge before Hon’ble Supreme Court in Dy. CIT v. Pepsi Foods (2021) 126 taxmann.com 69 (SC) and the court on 6.4.2021 held that the third proviso to section 254(2A) of the Act will now be read without the word “even” and the words “is not” after the words “delay in disposing of the appeal”. Any order of stay shall stand vacated after the expiry of the period or periods mentioned in the Section only if the delay in disposing of the appeal is attributable to the assessee. Thus, the ratio decidendi of the Hon’ble Delhi High Court has now been affirmed by the Hon’ble Supreme Court. 4.5 In view of the judgment of the Hon’ble Delhi High Court in the case of Pepsi Foods (P) Ltd. v. ACIT, 376 ITR 87 (Del) affirmed by the Hon’ble Supreme Court in SLP (C) No.30284 of 2015 for extension of SP No.59/Bang/2024 Deliverhealth Solutions India Pvt. Ltd., Bangalore Page 5 of 5 stay beyond the period of 365 days, we grant extension of stay for a period of six months from 18.9.2024 or till the disposal of the appeal, whichever is earlier. 5. In the result, the stay petition filed by the assessee is allowed. Order pronounced in the open court on 14th Oct, 2024 Sd/- (Waseem Ahmed) Accountant Member Sd/- (Keshav Dubey) Judicial Member Bangalore, Dated 14th Oct, 2024. VG/SPS Copy to: 1. The Applicant 2. The Respondent 3. The CIT 4. The DR, ITAT, Bangalore. 5 Guard file By order Asst. Registrar, ITAT, Bangalore. "