Commissioner Of Income-Tax-Iii,Chennai v. Neyveli Lignite Corporation Ltd.,Corporate Office Block 1,Neyveli

IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 02.07.2007 Coram : THE HONOURABLE MR.JUSTICE P.D.DINAKARAN AND THE HONOURABLE MR.JUSTICE P.P.S.JANARTHANA RAJA Tax Case (Appeal) Nos.692 and 693 of 2007 Commissioner of Income-tax-III,Chennai...Appellant in both the T.C.(A)s. Vs. Neyveli Lignite Corporation Ltd.,Corporate Office Block 1,Neyveli. ..Respondent in both the T.C.(A)s. Appeals under Section 260A of the Income-tax Act, 1961against the order of the Income Tax Appellate Tribunal, Bench'B', Chennai in I.T.A. Nos.1763 & 1764(Mds)/2004 dated07.06.2005 for the assessment years 1999-2000 and 2000-2001against C No.3033 (36) /III/ 2003-2004 and C.No.3033 (37)/III/2003-2004 dt.20.04.2004 on the file of the Commissionerof Income Tax, Chennai III against PAN No.GI No. /NE/65 on the file of Asst.Commissioner of Income TaxCompany Circle IV (4) Chennai -34 dated 19.3.2002. For Appellant :Mr.J.Narayanaswamy, Standing Counsel forIncome-tax Department JUDGMENT(Judgment of the Court was delivered byP.P.S.Janarthana Raja, J.) These appeals are filed under Section 260A of the IncomeTax Act, 1961 by the Revenue, against the order of the IncomeTax Appellate Tribunal, Bench 'B', Chennai in I.T.A. Nos.1763& 1764(Mds)/2004 dated 07.06.2005, raising the followingcommon substantial question of law:- https://hcservices.ecourts.gov.in/hcservices/ "Whether in the facts and circumstancesof the case, the Tribunal was right inholding that for the purpose ofcomputation of limitation to pass orderof revision by the Commissioner undersection 263, the date of dispatch of theorder had to be taken into account andsetting aside the revision proceedings ofthe Commissioner of Income Tax undersection 263?" 2.The present tax cases are filed against a PublicSector Undertaking. When the matter came up on 18.06.2007,the Standing Counsel appearing for the Revenue requested foradjournment to find out whether the Revenue had obtainedclearance from the High Powered Committee for prosecuting thepresent appeals. Hence the matter was adjourned and taken uptoday. Even today, the counsel is unable to state whether theRevenue has filed necessary application for obtainingclearance from the High Powered Committee, or not. 3.The Supreme Court, in the case of Oil & Natural GasCommission Vs. CCE [1995] Suppl 4 SCC 541, held that whenthere is a dispute between a Government Department and aPublic Sector Undertaking, the matter should be referred tothe High Powered Committee for clearance. Further it wasalso held that no litigation shall come to the Court or to aTribunal without the matter having been first examined by theCommittee and its clearance for litigation. In the case ofMahanagar Telephone Nigam Ltd. Vs. Chairman, Central Board,Direct Taxes and Another [2004] 267 ITR 647, the SupremeCourt held as follows:- "Undoubtedly, the right to enforce aright in a court of law cannot beeffaced. However, it must be rememberedthat courts are overburdened with a largenumber of cases. The majority of suchcases pertain to Government Departmentsand/or public sector undertakings. As isstated in Chief Conservator of Forests'case [2003] 3 SCC 472 it was notcontemplated by the framers of theConstitution or the Civil Procedure Codethat two departments of a State or Unionof India and/or a department of theGovernmentandapublicsectorundertaking fight a litigation in a courtof law. Such a course is detrimental topublic interest as it entails avoidable https://hcservices.ecourts.gov.in/hcservices/ "Undoubtedly, the right to enforce aright in a court of law cannot beeffaced. However, it must be rememberedthat courts are overburdened with a largenumber of cases. The majority of suchcases pertain to Government Departmentsand/or public sector undertakings. As isstated in Chief Conservator of Forests'case [2003] 3 SCC 472 it was notcontemplated by the framers of theConstitution or the Civil Procedure Codethat two departments of a State or Unionof India and/or a department of theGovernmentandapublicsectorundertaking fight a litigation in a courtof law. Such a course is detrimental topublic interest as it entails avoidable https://hcservices.ecourts.gov.in/hcservices/ wastage of public money and time. Theseare all limbs of the Government and mustactinco-ordinationandnotconfrontation. The mechanism set up bythis court is not, as suggested byMr.Andhyarujina, only to conciliatebetween Government Departments. It isalso set up for purposes of ensuring thatfrivolous disputes do not come beforecourts without clearance from the HighPowered Committee. If it can, the HighPowered Committee will resolve thedispute. If the dispute is not resolvedthe Committee would undoubtedly giveclearance. However, there could also befrivolous litigation proposed by adepartment of the Government or a publicsector undertaking. This could beprevented by the High Powered Committee.In such cases, there is no question ofresolving the dispute. The Committeeonly has to refuse permission tolitigate. No right of the Department/public sector undertaking is affected insuch a case. The litigation being of afrivolous nature must not be brought tocourt. To be remembered that in almostall cases one or the other party will notbe happy with the decision of the HighPowered Committee. The dissatisfiedparty will always claim that its rightsare affected, when in fact, no right isaffected. The Committee is constitutedof highly placed officers of theGovernment, who do not have an interestin the dispute, it is thus expected thattheir decision will be fair and honest.Even if the Department/ public sectorundertakingfindsthedecisionunpalatable, discipline requires thatthey abide by it. Otherwise the wholepurpose of this exercise will be lost andevery party against whom the decision isgiven will claim that they have beenwronged and that their rights areaffected. This should not be allowed tobe done. In this case this is absolutely whathas happened. The appellants wanted toapproach the court only against a showcause notice. It is settled law that against a show cause notice litigationshould not be encouraged. The decisionof the High Powered Committee, set outhereinabove, merely emphasizes the wellsettled position. It is an eminentlyfair and correct decision. The purposeof the decision was to prevent frivolouslitigation. No right of the appellantsis being affected. It has been clarifiedthat the appellants could move a court oflaw against an appealable order. By notmaintaining discipline and abiding by thedecision the appellants have wastedpublic money and time of the courts. Theclarificatory order, relied on upon byMr.Andhyarujina, clarifies in paragraph 5as to what is to happen if clearance isnot given by the Committee. It is set outthat in the absence of clearance theproceedings must not be proceeded with.This position is further clarified inChief Conservator of Forests' case [2003]3 SCC 472 where again this court has heldthat the decision taken by such aCommittee is binding on all Departmentsconcerned and it is the stand of theGovernment. In view of this settled law, which isbinding on us, we hold that as clearancehas not been given to the appellantsthese proceedings cannot be proceededwith. The High Court was wrong indealing with the merits of the matter.We, therefore, do not examine whether theHigh Court was right on the merits. Theappeal accordingly stands disposed ofwith no order as to costs." Applying the above principles, the present tax cases filed bythe Revenue are not maintainable. Accordingly, the tax casesare dismissed. Consequently, M.P.No.1 of 2007 in T.C.(A)No.693 of 2007 is closed. No costs. 4.However, if the Revenue obtains clearance from theHigh Powered Committee, the Revenue is at liberty to move thematter to this Court for reviving the above tax cases. Sd/Asst.Registrar/true copy/Sub Asst.RegistrarkmTo1. The Assistant Registrar, Income-tax Appellate Tribunal, Bench 'B', Chennai.2. The Commissioner of Income-tax, Chennai III, Chennai.3. The Income-tax Officer (HQ), Chennai III, Chennai.4. The Assistant Commissioner of Income-tax, Company Circle IV(4), Chennai-34.+1cc to M/s.Pushya Sitaraman, Advocate Sr 39872MBS (CO)km/18.7. T.C.(A) Nos.692 and 693of 2007