In Brief
The Supreme Court examined the constitutional validity of the third proviso to Section 254(2A) of the Income Tax Act, 1961, which previously mandated that a stay order granted by the Appellate Tribunal be automatically vacated after 365 days, regardless of whether the assessee was responsible for delays in disposing of the appeal. The Court held this provision violated Article 14 of the Constitution by treating differently-situated assessees equally—those causing delay were treated the same as those not responsible for delay. The Court found the provision both discriminatory and manifestly arbitrary. Accordingly, the Court struck down the words "even" and "is not" from the provision, restoring the Tribunal's power to extend stay beyond 365 days in deserving cases where delay is not attributable to the assessee. All revenue appeals were dismissed.
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