TRANSFER OF APPEALS FROM ONE BENCH TO ANOTHER BENCH OF APPELLATE TRIBUNAL UNDER INCOME TAX ACT, 1961

[Mr. M. GOVINDARAJAN]

Appeal to Appellate Tribunal

Section 253 of the Income Tax Act, 1961 (‘Act’ for short) provides for filing appeal before the Income Tax Appellate Tribunal (‘ITAT’ for short) against the order of Commissioner (Appeals)/Joint Commissioner (Appeals) within 60 days  of the date of the order.

Section 255(1) of the Act provides that the powers and functions of the ITAT may be exercised and discharged by Benches constituted by the President of the ITAT from among the members thereof.   The powers of the ITAT are enumerated in Section 255(5) of the Act which provides that  the ITAT shall have power to regulate its own procedure and the procedure of Benches thereof in all matters arising out of the exercise of its powers or of the discharge of its functions, including the places at which the Benches shall hold their sittings.

Rule  4(1) of Income Tax Rules provides that a Bench shall hear and determine such appeals and applications made under the Act as the President may by general or special order direct. Rule 4(2) provides that where there are two or more Benches of the Tribunal working at any headquarters, the President or, in his absence, the senior Vice President or Vice President of the concerned zone or in his absence the senior most member of the station present at the headquarters may transfer an appeal or an application from any one of such Benches to any other.   While sub rule (1) empowers the President to direct hearing of appeals by a Bench by a general or special order, sub rule (2) is more specific. It deals with a situation where there are more than two Benches of the Tribunal at any headquarter; when there are multiple Benches in a headquarter, the President or, in his absence the senior Vice President etc. may transfer an appeal or an application from one of such Benches to any other. Meaning thereby it is a transfer of an appeal or an application from one Bench to another Bench within the same headquarters. 

Case laws

In PR. COMMISSIONER OF INCOME TAX – I, CHANDIGARH VERSUS M/S. ABC PAPERS LIMITED - 2022 (8) TMI 863 - SUPREME COURT the Supreme Court observed that  in exercise of power under sub-Section (5) of Section 255, the ITAT notified the Income Tax (Appellate Tribunal), Rules 1963. As per Rule 3  a bench shall hold its sittings at its headquarters or at such other place or places as may be authorized by the President, a Bench shall hold its sittings at its headquarters or at such other place as authorized by the President. Rule-4 provides that a  Bench shall hear and determine such appeals and applications made under the Act as the President may be general or special order direct, a Bench shall hear and determine such appeals as the President may by order direct.

ITAT is a unified forum functioning in the form of Benches at the administrative discretion of the President. Jurisdiction exercised by the Benches of the ITAT does not follow the structure contemplated in Article 1 of the Constitution, which divides the Union into States and Union Territories. Instead, Benches are sometimes constituted in a way that their jurisdiction encompasses territories of more than one state. For example, the Allahabad Bench includes parts of Uttarakhand. The Amritsar Bench has within its jurisdiction the entire State of Jammu & Kashmir. Delhi Bench includes parts of Haryana and U.P. The Guwahati Bench comprises of Arunachal Pradesh, Meghalaya, Mizoram, Assam, Manipur, Nagaland and Tripura. Further, the Bangalore Bench excludes large parts of Karnataka such as Belgaum, Mangalore, Karwar and North Kanara, and these excluded districts form part of the Panaji Bench which includes Goa. Therefore, Benches are not State or U.T. centric, but are based on the administrative discretion of the President of the ITAT.

The petitioner is the appellant in all the four subject appeals before the Bangalore Bench of the Tribunal. In other words it is the petitioner who had filed the appeals. The petitioner did not want the appeals to be transferred from Bangalore to Mumbai and wants to prosecute the appeals at Bangalore where it was found that the appeals were rightly filed. Ordinarily if a court has jurisdiction to hear a case, the case ought to proceed in that court only. This principle can certainly be extended to appeals before the Tribunal. In such circumstances transfer cannot be forced upon the appellant i.e. the petitioner against its express objection.

In ‘DCIT, CIRCLE-11 (1) , KOLKATA VERSUS M/S. K.K. PATEL FINANCE LTD. AND (VICE-VERSA) - 2023 (7) TMI 613 - ITAT KOLKATA, the assessment order was passed by the Assistant Commissioner of Income Tax, Circle-5(1), Indore. Therefore the jurisdiction over the assessee is in Indore.   In Assessment Year 2009-10, the revenue has challenged the order of the ld. CIT(A) vide ITA No. 988/Ind/2019 before the ITAT Indore Bench whereas, the cross appeal has been preferred by the assessee before the ITAT Kolkata Bench.  During the course of the proceeding it was pointed out that pointed out that the appellate jurisdiction of the Tribunal will be the geographical area where the Assessing Officer is situated.  In this case the Assessing Officer is situated at Indore, therefore, appellate jurisdiction of ITAT as well as of the High Court will rest at Indore.  In response to this the assessee prayed that these appeals may be transferred to Indore Bench for adjudication. 

The ITAT, Kolkata relied on the judgment rendered by the Bombay High Court in  MSPL LIMITED, VERSUS PRINCIPAL COMMISSIONER OF INCOME TAX-1, MUMBAI, INCOME TAX APPELLATE TRIBUNAL, MUMBAI, UNION OF INDIA, THROUGH THE SECRETARY, MINISTRY OF FINANCE, GOVERNMENT OF INDIA - 2021 (5) TMI 739 - BOMBAY HIGH COURT.  In the said judgment the Bombay High Court held that the President, ITAT, has no power to transfer appeal/s between one headquarters to other. The power of transfer available with the President is only qua a particular headquarters where large number of Benches is involved. For example in Kolkata there are three functioning Benches, then an appeal from Bench 1 to Bench 3 can be transferred by the President but it cannot be transferred from Kolkata to any other place in the country.   The plea that records were transferred from Bangalore to Mumbai and that it would be convenient for the revenue if the appeals are heard at Mumbai cannot be a valid ground for transfer. Cases are transferred to serve the ends of justice and justice must not only be done but must be seen to have been done, that too, from the perspective of the litigant.

Considering the above said case law the ITAT held that the appeals are not maintainable in the present form before the ITAT Kolkata.  The assessee as well as the revenue is at liberty to approach the competent authority, namely, Indore.   In case appeals are being filed before the Indore Bench of the ITAT, then the period consumed in litigating at Kolkata benches be excluded from the period of limitation.   The ITAT gave two months time to the parties for approaching ITAT, Indore bench after receipt of this order.