2009 (2) TMI 141 - HC - Income Tax

ITAT jurisdiction exceeded by dismissing appeals without COD approval; Fresh consideration ordered

The court held that the Income-tax Appellate Tribunal (ITAT) exceeded its jurisdiction by dismissing appeals for lack of approval from the Committee of ... PSU – approval of COD before filing an appeal before tribunal - ITAT refused to admit the appeal as no COD approval was obtained – In the present case, the impugned order reveals that the Tribunal has assumed powers which it does not have, for determining whether the appeal is to be admitted or not. The Tribunal has lost sight of the fact that, both the assessee and the Revenue, are statutorily vested with a right under the Act by virtue of section 253(1), 253(2) and 253(4) of the Act to file an appeal or cross-objections. Such right granted by the statute cannot be divested by the Tribunal on an erroneous assumption of powers arrogated to itself under a mistaken belief of law - The appeals filed by the assessee and the Revenue before the Tribunal stand restored to the file of the Tribunal for being heard and decided afresh on the merits in accordance with law. Issues Involved1. Whether the Income-tax Appellate Tribunal (ITAT) has the power to dismiss appeals based on the lack of approval from the Committee of Disputes (COD).2. Interpretation and application of Supreme Court judgments regarding disputes involving public sector undertakings and government departments.Detailed AnalysisIssue 1: Tribunal's Power to Dismiss Appeals Without COD ApprovalThe primary issue addressed in this judgment is whether the ITAT has the authority to dismiss appeals due to the absence of approval from the COD. The court examined the statutory provisions governing the ITAT's powers, particularly sections 252, 253, 254, and 255 of the Income-tax Act, 1961, and the Income-tax (Appellate Tribunal) Rules, 1963.The court concluded that the ITAT, being a statutory body, can only exercise powers explicitly conferred by the statute. Section 253 outlines the right of an aggrieved party to file an appeal, and section 254 mandates the ITAT to pass orders on the appeals filed. The court emphasized that the ITAT does not possess inherent powers to refuse to admit an appeal on grounds not specified in the Act. Specifically, the court stated:> 'The Tribunal does not have powers to determine as to whether an appeal should be admitted or not, except to the extent provided by sub-section (5) in a case where the appeal or the cross-objections are presented beyond the prescribed period of limitation.'Thus, the ITAT's decision to dismiss the appeals for lack of COD approval was beyond its jurisdiction and constituted an error of law.Issue 2: Interpretation of Supreme Court JudgmentsThe court analyzed several Supreme Court judgments to determine whether the requirement for COD approval applied to the disputes in question. The key cases considered included:1. ONGC v. Collector of Central Excise [1992] Supp (2) SCC 432: The Supreme Court emphasized that public sector undertakings and government departments should avoid litigation and seek resolution through the COD.2. ONGC v. Collector of Central Excise [1995] Supp (4) SCC 541: The court directed the creation of a High-Powered Committee to monitor disputes and ensure that no litigation reaches the courts without the Committee's clearance.3. Chief Conservator of Forests, Government of A.P. v. Collector [2003] 3 SCC 472: The Supreme Court extended the requirement for a similar committee to state governments to resolve inter-departmental disputes.The court noted that these judgments primarily addressed disputes between central government departments and public sector undertakings, not between state government undertakings and central government departments. The court clarified:> 'The scope of powers of the Committee only relates to a dispute between Union of India and its statutory corporations and at no stage is either the State Government or a State Government undertaking contemplated in the aforesaid arrangement.'Therefore, the ITAT's reliance on these Supreme Court judgments to demand COD approval for the appeals was misplaced.ConclusionThe court held that the ITAT erred in dismissing the appeals for lack of COD approval, as the COD's jurisdiction did not extend to disputes involving state government undertakings and central government departments. The court quashed the ITAT's order and directed the ITAT to hear and decide the appeals on their merits.> 'The impugned order, therefore, cannot be sustained and is hereby quashed and set aside and both the petition filed by the assessee, and the tax appeals filed by the Revenue, are required to be allowed.'The appeals were restored to the ITAT for fresh consideration in accordance with the law.