Facts of the Case

  • The Revenue (Income Tax Department) filed an appeal (ITA No. 89/2009) before the Hon’ble High Court of Delhi against an order passed under the Income Tax Act, 1961.
  • Along with the appeal, a civil miscellaneous application for exemption (CM No. 1070/2009) was moved, which was allowed by the court subject to all just exceptions.
  • At the time of hearing the main tax appeal, it was found that the mandatory prior approval/clearance from the Committee on Disputes (COD) had not been secured by the appellant before approaching the High Court.

. Issues Involved

  • Whether a tax appeal filed by the Revenue/Government Department is maintainable before the High Court under Section 260A of the Income Tax Act, 1961, without obtaining prior clearance or approval from the Committee on Disputes (COD).
  • Whether liberty can be granted to file a fresh appeal if such COD approval is subsequently obtained after the disposal of the initial incompetent appeal.

. Petitioner’s (Appellant’s) Arguments

  • The counsel appearing on behalf of the Appellant (Revenue) submitted the appeal for entertainment and adjudication on merits.
  • Implicitly, upon the court pointing out the procedural defect, the counsel sought leave and liberty to approach the Committee on Disputes (COD) to apply for the necessary administrative approval to pursue the litigation.

. Respondent’s Arguments

  • Procedural Note: The order was passed at the admission stage primarily on a technical-procedural ground regarding maintainability; hence, detailed substantive merits or arguments from the respondent's side were not called for or recorded.

. Court Findings & Order

  • The Division Bench consisting of Hon’ble Mr. Justice Vikramajit Sen and Hon’ble Mr. Justice Rajiv Shakdher held that because the explicit approval of the Committee on Disputes (COD) was missing, the court must decline to entertain the appeal at this stage.
  • Disposal with Liberty: The High Court granted explicit leave to the appellant to apply for the necessary approval from the Committee on Disputes (if not already done).
  • Limitation Relaxation: The Court ordered that if the COD subsequently grants the necessary approval, the Revenue is at complete liberty to file a fresh appeal within a strict window of 15 days from the date the appellant receives the approval order.
  • The appeal (ITA No. 89/2009) was accordingly disposed of under these terms.

. Important Clarification (Legal Context)

  • This judgment follows the historical mechanism established by the Supreme Court of India in the landmark ONGC cases (Oil and National Gas Commission v. Collector of Central Excise), which mandated that government departments and PSUs must get clearance from the Committee on Disputes (COD) before litigating against one another or within courts to prevent unnecessary inter-departmental litigation expenses.
  • Historical Note: While the COD mechanism was active during the time of this 2009 judgment, the Supreme Court later dismantled the COD setup in the 2011 judgment of Electronics Corporation of India Ltd. v. Union of India, restoring the unhindered right of departments to approach courts. However, this 2009 case remains a rigid precedent for strict procedural compliance during the era the COD was operational.

  • . Section Involved

    • Primary Section: Section 260A of the Income Tax Act, 1961 (Appeals to High Court).
    • Procedural Law: Requirement of clearance from the Committee on Disputes (COD) for litigation involving Government Departments/Public Sector Undertakings.

Link to download the order –

https://delhihighcourt.nic.in/app/case_number_pdf/2009:DHC:9878-DB/VJS23012009ITA892009_172452.pdf

 

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