Facts of the Case

·         The Appellant, Power Finance Corporation Ltd. (a Public Sector Undertaking), filed a series of Income Tax Appeals (ITA Nos. 1093/2010, 1095/2010, 1097/2010, and 1125/2010) before the High Court of Delhi against the Additional Commissioner of Income Tax (Respondent).

·         Along with the appeals, civil miscellaneous applications (CM No. 14066/2010 and CM Nos. 14070-71/2010) were preferred seeking the condonation of delay in filing and refiling the respective appeals.

·         At the time of the hearing, the Appellant had not secured the mandatory clearance/prior approval from the Committee on Disputes (COD), which was a compulsory clearance mechanism for litigation between Government Departments and Public Sector Undertakings (PSUs).

Issues Involved

1.      Whether the delay in filing and refiling the Income Tax Appeals by the Appellant could be condoned based on the grounds presented in the applications.

2.      Whether an Income Tax Appeal preferred by a Public Sector Undertaking (PSU) against the Income Tax Department can be entertained or maintained by the High Court in praesenti without obtaining the requisite prior approval from the Committee on Disputes (COD).

Petitioner’s (Appellant’s) Arguments

·         The learned counsel for the Appellant, Ms. Mahua Kalra, submitted the necessary facts and assertions explaining the reasons behind the delay in filing and refiling the appeals to satisfy the court for condonation.

·         The Appellant candidly submitted before the Bench that the mandatory prior approval from the Committee on Disputes (COD) had not yet been obtained for pursuing these appeals against the Revenue Department.

Respondent’s Arguments

·         The learned counsel for the Respondent, Mr. Anshul Sharma (appearing for Ms. Prem Lata Bansal), put forth the stance of the Income Tax Department.

·         The Respondent did not successfully oppose the condonation of delay given the sufficient cause shown, but maintained alignment with the legal position that litigation involving PSUs requires proper administrative clearance before it can be effectively adjudicated by the court.

Court Order / Findings

·         Condonation of Delay: The Division Bench consisting of Hon’ble the Chief Justice and Hon’ble Mr. Justice Manmohan reviewed the assertions made in the applications for condonation of delay. The Court found sufficient cause and officially condoned the delay in filing and refiling the appeals (CM No. 14066/2010 and CM Nos. 14070-71/2010). The exemption applications (CM No. 14069/2010 and CM No. 14102/2010) were also allowed.

·         Dismissal for Lack of COD Approval: On the main tax appeals, the Court noted the submission that the prior approval from the Committee on Disputes (COD) was absent. Consequently, the High Court stated it was not inclined to interfere with or entertain the appeals in praesenti (at the present time).

·         Liberty to Refile: The High Court dismissed all four appeals (ITA Nos. 1093/2010, 1095/2010, 1097/2010, and 1125/2010). However, the Court granted explicit liberty to the Appellant, noting that after obtaining the requisite approval from the Committee on Disputes, the Appellant is permitted to refile the appeals.

Important Clarification

·         The COD Mechanism Era: This order highlights the strict application of the Committee on Disputes (COD) mechanism that existed during that period. Originating from the landmark Supreme Court orders in Oil and Gas Natural Corporation (ONGC) vs. Collector of Central Excise, the mechanism was designed to prevent public funds from being wasted on inter-departmental litigation.

·         Conditional Dismissal: The dismissal of an appeal for want of COD clearance was not a dismissal on merits. It operated as a procedural rejection with a standing layout of liberty, ensuring the PSU's statutory right to appeal under Section 260A remained preserved until administrative clearance was sorted.

Section Involved

·         Section 260A of the Income-tax Act, 1961 (Appeals to High Court).

·         Section 5 of the Limitation Act, 1963 / Relevant provisions relating to the Condonation of Delay.

 

Link to download the order - https://delhihighcourt.nic.in/app/case_number_pdf/2010:DHC:12081/MMH13082010ITA10952010_115247.pdf

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