Answer any two of the following three sub-parts (i), (ii), (iii) on the basis of decided case laws, bringing out the following – (1) Issue involved…

(a) (i) Issue Involved: The issue under consideration is whether the stay order can be automatically vacated upon expiry of extended period of stay of 365 days, where the delay in disposing of the appeal is not attributable to the assessee. Relevant provision of law: The third proviso to section 254(2A) provides that where the appeal filed before the Appellate Tribunal is not disposed of within the period of stay or extended period of stay granted by the Tribunal, the order of stay shall stand vacated after the expiry of 365 days, even if the delay in disposing of the appeal is not attributable to the assessee. Analysis & Conclusion: This provision would result in the automatic vacation of a stay upon the expiry of 365 days, even if the Appellate Tribunal could not take up the appeal in time for no fault of the assessee. Thus, the vacation of stay in favour of the Department would ensue even if the Department is itself responsible for the delay in hearing the appeal. This will cause undue hardship to the assessee, even where he is not at fault. In this sense, the provision is arbitrary and disproportionate so far as the assessee is concerned. The contention of the revenue is not justified. 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. Note – The facts given in the question are similar to the facts in DCIT v. Pepsi Foods Ltd (2021) 433 ITR 295, wherein the above issue came up before the Supreme Court. The above answer is based on the rationale of the Supreme Court ruling in that case. (ii) Issue Involved: The issue under consideration is whether the participation by the assessee in assessment proceedings would make the omission to issue notice under section 143 (2) a curable defect on account of the deeming provision under section 292BB. Relevant provision of law: As per section 292BB, any notice which is required to be served upon an assessee shall be deemed to have been duly served and the assessee would be precluded from taking any objection that the notice was - (a) not served upon him; or (b) not served upon him in time; or (c) served upon him in an improper manner, if he had appeared in any proceedings or co-operated in any enquiry relating to assessment or re-assessment. Analysis & Conclusion: Issue of notice under section 143 (2) is mandatory for making a regular assessment under section 143 (3) . Section 292BB is a deeming provision that seeks to cure defects in any notice issued under any provision of the Income-tax Act, 1961, if the assessee has participated in the proceedings. For section 292BB to apply, the notice must have emanated from the Department. It is only the infirmities in the manner of service of notice that the section seeks to cure. The section is not intended to cure the complete absence of notice itself. Accordingly, non-issuance of notice under section 143 (2) is not a curable defect under section 292BB inspite of participation by the assessee in assessment proceedings. In the present case, since the assessment of Mr. Sharma was completed u/s 143 (3) without issuing notice u/s 143 (2) , the assessment is bad in law and not a curable defect u/s 292BB. Therefore, the contention of Mr. Sharma is valid and the contention of the Assessing Officer is invalid in spite of the fact that Mr. Sharma participated in the assessment proceedings. Note – The facts given in the question are similar to the facts in CIT v. Laxman Das Khandelwal (2019) 417 ITR 325, wherein the issue came up before the Supreme Court. The above answer is based on the rationale of the Supreme Court in the said case. (iii) Issue Involved: The issue under consideration is whether prosecution proceedings can be initiated where tax deducted has been deposited by the assessee suo moto, after the time prescribed under the Act but before receiving notice from the income-tax department, along with interest under section 201(1A) and the assessee has shown reasonable cause for such delay. Relevant provisions of law: Prosecution proceedings are attracted under section 276B, if a person fails to pay to the credit of the Central Government, the tax deducted at source by him as required under the provisions of the Act. The punishment is rigorous imprisonment for not less than 3 months but which may extend to 7 years and with fine. Section 278AA, however, provides that no person would be punishable for such failure if he proves that there was reasonable cause for the same. Analysis & Conclusion: The CBDT has, vide Circular No. 24/2019 dated 9.9.2019, in exercise of the powers under section 119, listed out the offences covered under Chapter XXII of the Income-tax Act, 1961 in respect of which prosecution proceedings shall be launched by Approving Authority being the Sanctioning Authority where the quantum of offences exceed the prescribed monetary threshold. Accordingly, in case of failure to pay TDS under section 276B or failure to pay TCS u/s 276BB, no prosecution will be processed if the TDS/TCS amount does not exceed 25lakhs and delay in deposit is less than 60 days. In this case, the company has reasonable and sufficient cause since it was facing financial hardship on account of large sum of money stuck up with the debtors and also with the income-tax department on account of refunds. Inspite of the financial crisis, the company has suo moto deposited the TDS along with interest under section 201(1A) of the Act, before receiving any notice from the income-tax department in this regard. Since it has deposited the TDS along with interest suo moto before receiving any notice from the department and it has also shown reasonable cause for such delay in deposit, the company cannot be punishable for the delay in deposit of TDS. The initiation of prosecution proceedings under section 276B against the company and the directors is, therefore, not correct. Note - The facts given in the question are similar to the facts in ACIT v. AT-Dev Prabha (JV) and others (2023) 454 ITR 59, wherein the above issue came up before the Supreme Court. The above answer is based on the rationale of the Supreme Court in the said case read along with the CBDT Circular.