ITAT Has Power To Grant Stay Even Without Tax Demand; Tribunal Cannot Refuse Jurisdiction: J&K High Court
The Jammu & Kashmir and Ladakh High Court has held that the Income Tax Appellate Tribunal (ITAT) has the power to grant stay of an order appealed against even when there is no existing tax demand, and that refusal to consider a stay application on the ground of lack of jurisdiction is legally unsustainable. A Division Bench of Justice Sindhu Sharma and Justice Shahzad Azeem...
The Jammu & Kashmir and Ladakh High Court has held that the Income Tax Appellate Tribunal (ITAT) has the power to grant stay of an order appealed against even when there is no existing tax demand, and that refusal to consider a stay application on the ground of lack of jurisdiction is legally unsustainable.
A Division Bench of Justice Sindhu Sharma and Justice Shahzad Azeem was hearing a writ petition filed by J&K Yateem Foundation, a registered charitable society whose registration under Section 12A/12AB of the Income Tax Act had been cancelled by the Commissioner of Income Tax (Exemptions).
The Foundation had challenged the cancellation before the ITAT, Amritsar Bench, and also filed a stay application seeking suspension of the cancellation order during pendency of the appeal. However, the Tribunal dismissed the stay application on the ground that there was no outstanding tax demand and, therefore, it had no jurisdiction to grant stay.
Setting aside the Tribunal's order, the High Court observed that it is well settled that the power to grant stay is incidental and ancillary to appellate jurisdiction. Relying on the Supreme Court judgment in ITO v. M.K. Mohammed Kunhi [1969] 71 ITR 815, the Court reiterated that when appellate jurisdiction is conferred, it necessarily includes the power to pass interim orders to ensure that the appeal, if successful, is not rendered meaningless.
The Bench held that the Tribunal's view that it could not stay the operation of a cancellation order merely because no tax demand existed was contrary to settled law under Section 254 of the Income Tax Act.
In view of the above, the High Court quashed the ITAT's order and remitted the matter back to the Tribunal to consider and decide the stay application afresh, in accordance with law. It clarified that it had not examined the merits of the appeal or the stay request, and all issues were left open.
The writ petition was disposed of.
Case Tile: J&K Yateem Foundation vs. Income Tax Appellate Tribunal & Anr
Case No.: WP(C) No. 2118/2025 CM No. 5604/2025
Appearnce for Petitioner: Mr. Z.A. Qureshi, Sr. Advocate with Mr. Robinder Singh, Advocate
Appearance for Respondent: Mr. Umar Rashid Wani, Advocate