2007 (7) TMI 207 - HC - Income Tax

Summary

Issues involved:
- Appeal under section 260A of the Income-tax Act, 1962 against the order of the Income-tax Appellate Tribunal, Bench "B", Chennai
- Computation of limitation for passing order of revision by the Commissioner under section 263
- Requirement of clearance from the High Powered Committee for prosecuting appeals involving Government Departments and public sector undertakings

Analysis:
The judgment pertains to appeals filed by the Revenue under section 260A of the Income-tax Act, 1962 against the order of the Income-tax Appellate Tribunal, Bench "B", Chennai. The central issue raised was whether the Tribunal was correct in considering the date of dispatch of the order for the computation of limitation to pass the order of revision by the Commissioner under section 263. During the proceedings, it was highlighted that in cases involving a dispute between a Government Department and a public sector undertaking, it is mandatory to obtain clearance from the High Powered Committee before initiating litigation. The Supreme Court decisions in the cases of Oil and Natural Gas Commission v. CCE and Mahanagar Telephone Nigam Ltd. v. Chairman, CBDT emphasized the importance of avoiding unnecessary litigation between Government Departments and public sector undertakings. It was noted that the High Powered Committee plays a crucial role in preventing frivolous disputes from reaching the courts without proper examination and clearance. The judgment underscored the significance of coordination between different entities within the government system to avoid wastage of public resources and time.

The court referred to the settled law that clearance from the High Powered Committee is essential before proceeding with litigation involving Government Departments or public sector undertakings. It was emphasized that the decision of the Committee is binding on all concerned parties and must be respected to maintain discipline and prevent unnecessary legal battles. In the present case, it was concluded that as the appellants had not obtained clearance from the Committee, the proceedings could not be continued. The court held that the High Court erred in delving into the merits of the case without considering the clearance aspect. Consequently, the appeals were dismissed, and costs were not awarded. However, the Revenue was given the option to revive the tax cases if clearance from the High Powered Committee was obtained in the future, highlighting the importance of adhering to the established procedures and legal requirements in such matters.