TMI Blog2022 (8) TMI 863X X X X Extracts X X X X X X X X Extracts X X X X ..... hin its territorial jurisdiction. The power of transfer exercisable under Section 127 is relatable only to the jurisdiction of the Income Tax Authorities. It has no bearing on the ITAT, much less on a High Court. If we accept the submission, it will have the effect of the executive having the power to determine the jurisdiction of a High Court. This can never be the intention of the Parliament. The jurisdiction of a High Court stands on its own footing by virtue of Section 260A read with Section 269 of the Act. While interpreting a judicial remedy, a Constitutional Court should not adopt an approach where the identity of the appellate forum would be contingent upon or vacillates subject to the exercise of some other power. Such an interpretation will clearly be against the interest of justice. Under Section 127, the authorities have the power to transfer a case either upon the request of an assessee or for their own reasons. Though the decision under Section 127 is subject to judicial review or even an appellate scrutiny, this Court for larger reasons would avoid an interpretation that would render the appellate jurisdiction of a High Court dependent upon the executive power. As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Assessing Officer, Delhi. - CIVIL APPEAL NO. 4252 OF 2022 ARISING OUT OF SLP (C) NO. 23352 OF 2019 CIVIL APPEAL NO. 4253 OF 2022 ARISING OUT OF SLP (C) NO. 25541/2019 WITH CIVIL APPEAL NO. 3480 OF 2022 ARISING OUT OF SLP (C) NO. 8146/2022 - - - Dated:- 18-8-2022 - JUSTICE UDAY UMESH LALIT, JUSTICE S. RAVINDRA BHAT And JUSTICE PAMIDIGHANTAM SRI NARASIMHA For the Appellant : Mr. Pranay Ranjan, Adv. Mr. Raj Bahadur Yadav, AOR Mrs. Anil Katiyar, AOR For the Respondent : Mr. Rohit Jain, Adv. Mr. Aniket D. Agarwal, Adv. Ms. Kavita Jha, AOR JUDGMENT PAMIDIGHANTAM SRI NARASIMHA, J. 1. These appeals give rise to an important question concerning appellate jurisdiction of the High Courts under Section 260A of the Income Tax Act, 1961 hereinafter referred to as the Act against judgments of Income Tax Appellate Tribunals hereinafter referred to as ITAT / Tribunals . As Benches of the ITAT are constituted to exercise jurisdiction over more than one state, each state having a separate High Court, question arose as to which of the High Court is the appropriate Court for filing appeals under Section 260A. The question arose because Section 260A is open-textual a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Commissioner of Income Tax (Appeals) - IV, New Delhi, and by his order dated 16.02.2012, the Commissioner allowed the appeal. Against this appellate order, the Revenue carried the matter to ITAT, New Delhi. The ITAT, New Delhi, by its order dated 11.05.2017, upheld the order of the CIT (Appeals) - IV, New Delhi, and dismissed the appeal filed by the Revenue. Against this order of the ITAT, the Revenue filed ITA No. 517 of 2017 before the High Court of Punjab Haryana. 5. It is important to note certain events that overtook the above-referred proceedings. While the matter was pending appeal before the CIT (Appeals) - IV, New Delhi, as indicated above, a search operation under Section 132(1) of the Act was carried out on 04.05.2011 at the office and factory of the Assessee in Chandigarh and certain places in the State of Punjab, by the Directorate of Income Tax (Investigation), Ludhiana. Yet another development that took place after the search operation was that, by an order dated 26.06.2013 passed under Section 127 of the Act, the Commissioner of Income Tax (Central), Ludhiana, centralized the cases of the Assessee for the assessment years 2006-07 to 2013-14 and transferred th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... matter, the High Court dismissed the appeal as not maintainable. By the same judgment, the High Court also disposed of ITA No. 517 of 2017 filed by the Revenue against the decision of the ITAT, New Delhi, dated 11.05.2017, by adopting the same logic. Aggrieved by the decision of the High Court of Punjab Haryana refusing to entertain the appeals against the orders of the ITAT dated 11.05.2017 and 01.09.2017, the Revenue filed the present appeals, being Civil Appeal No. 4252 of 2022 (against the order of the High Court of Punjab Haryana in ITA No. 517 of 2017) and Civil Appeal No. 4253 of 2022 (against the order of the High Court of Punjab Haryana in ITA No. 130 of 2018) before this Court. 9. It is also important to mention here that against the very same order of the ITAT, New Delhi, dated 11.05.2017, the Revenue also filed an appeal, being ITA No. 515 of 2019 before the High Court of Delhi. The High Court of Delhi having noted the decision of the High Court of Punjab Haryana dated 07.02.2019 holding that it does not have jurisdiction, nevertheless, dismissed the appeal by its order dated 21.05.2019 on the ground of lack of territorial jurisdiction of the High Court of D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e entering into the merits of the dispute and our enquiry will be confined to the question as to which is the appropriate High Court for filing an appeal under Section 260A of the Act against a decision of the ITAT. Our enquiry will also extend to determining the appropriate High Court for appeals against order of ITAT where an order of transfer of case(s) from one Assessing Officer to another Assessing Officer even with respect to the same assessment year, has been passed under Section 127 of the Act. 11.3 Section 260A of the Act provides for a statutory appeal to the High Court against every order of the ITAT. As certain Benches of the ITAT exercise jurisdiction over more than one state, the primary question is before which High Court would an appeal lie? Should it be the High Court of the State in which the ITAT is physically located or the High Court of the State in which the Assessee is residing and/or doing its business or the High Court where the Assessing Officer who assessed the assessee is located. 11.4 For making the correct interpretative choice, it is necessary to refer to certain provisions of the Act. Legal Framework: 12. Chapter XIII of the Act deals w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orders to Deputy Commissioner (Appeals) and Commissioner (Appeals). Part B comprises of provision relating to appeals to the ITAT. ITAT is constituted by the Central Government under Section 252 Section 252. Appellate Tribunal (i) The Central Government shall constitute an Appellate Tribunal consisting of as many judicial and accountant members as it thinks fit to exercise the powers and discharge the functions conferred on the Appellate Tribunal by this Act. of the Act. Section 255 Section 255. Procedure of Appellate Tribunal (i) The powers and functions of the Appellate Tribunal may be exercised and discharged by Benches constituted by the President of the Appellate Tribunal from among the members thereof of the Act provides that the President of the ITAT may constitute Benches for exercising and discharging the powers and functions of the ITAT. Under Sub-Section (5) of Section 255, the ITAT, through its President, is empowered to regulate the procedure of the Benches, including the places at which the Benches shall hold their sittings. 13.2 In exercise of power under sub-Section (5) of Section 255, the ITAT notified the Income Tax (Appellate Tribunal), Rules 1963. As per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l question of law. 15. As is evident from the above, Section 260A is open textual and does not specify the High Court before which an appeal under Section 260A of the Act would lie. Even Section 269 269. Definition of High Court . - In this Chapter, - High Court means- (i) in relation to any State, the High Court for that State; (ii) in relation to the Union territory of Delhi, the High Court of Delhi; 2 [* * * * *] 3 [* * * * * ] (iv) in relation to the Union territory of the Andaman and Nicobar Islands, the High Court at Calcutta; (v) in relation to the Union territory of [Lakshadweep], the High Court of Kerala; [(va) in relation to the Union territory of Chandigarh, the High Court of Punjab and Haryana;] [(vi) in relation to the Union territories of Dadra and Nagar Haveli and *** Daman and Diu, the High Court at Bombay; and (vii) in relation to the Union territory of Pondicherry, the High Court at Madras.] which defines High Court merely relates the High Court in any State with the High Court for that State and further prescribes specific High Courts for each of the U.T. It is this uncertainty about identification of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) In view of the doctrine of precedents and the rule of binding efficacy of law laid down by a High Court within its territorial jurisdiction, a question of law arsing for decision in a reference should be determined by the High Court which exercises territorial jurisdiction over the situs of the Assessing Officer (Suresh Desai). 18. The principle laid in Seth Banarasi Dass is followed in Suresh Desai Associates v. Commissioner of Income Tax (1998) 230 ITR 912 (Del), Birla Cotton Spinning and Weaving Mills Ltd. v. Commissioner of Income Tax (1980) 123 ITR 354 (Del), Commissioner of Income Tax v. Digvijay Chemicals Ltd. (2007) 294 ITR 359 (Del). 21 supra (note 7) and Commissioner of Income Tax v. Motorola India Ltd.21 It is interesting to note that this basic principle is accepted and abided as a precedent even in the two subsequent judgments of the High Court of Delhi in Sahara and Aar Bee. Thus, it is well-settled that the appellate jurisdiction of a High Court under Section 260A is exercisable by a High Court within whose territorial jurisdiction the assessing officer is located. 19. However, our enquiry does not stop here. A further question that arises in these batch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re and a further appeal was also decided by the ITAT in Bangalore. At this stage, the case was transferred under Section 127 of the Act from Assessing Officer, Bangalore, to Assessing Officer, Gurgaon. It is in this context that the assessee objected to the appeal filed by the Revenue before the High Court of Punjab Haryana and the High Court accepted the contention and dismissed the appeal on the ground that Punjab Haryana High Court has no jurisdiction. It was held that even if it is the same assessment year, the appropriate High Court would be the High Court of Karnataka. Unlike Suresh Desai and Digvijay Chemicals, in this case, the records of the same assessment years were transferred. The revenue relied on the Explanation to Section 127 of the Act to argue that the expression cases in the explanation shall cover proceedings filed/to be filed before a High Court as well. The High Court of Punjab Haryana negatived this contention by holding that: 12. The reliance of the Revenue on the Explanation to section 127 of the Act with regard to the meaning of the expression case is wholly misplaced and is liable to be rejected because section 120 of the Act does not dea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under Section 127(2) of the Act clearly relates to the case of the assessee mentioned in the schedule, and by virtue of the Explanation, all future proceedings that may be taken under the Act (obviously including an appeal under section 260A thereof) would now have to be in harmony with the order passed under section 127(2) of the Act. Consequently, the jurisdiction in respect of the case and the assessee having been shifted from Lucknow to Delhi, the Revenue could file the appeal under section 260A of the Act only in Delhi and it could not have filed an appeal in the Lucknow Bench of the Allahabad High Court. .. 17. . the effect of the transfer of jurisdiction from Lucknow to Delhi specifically arises in the present case and we are of the view that the jurisdiction in respect of the assessee having been transferred to Delhi lock, stock and barrel and all the records of the assessee also having been transferred from Lucknow to Delhi, it is only the High Court in Delhi that can entertain an appeal under section 260A of the Act directed against the order passed by the Tribunal on July 22, 2005. Our conclusion follows from a plain reading of the Explanation to sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g adopted by the High Court of Delhi in Sahara is based only on the meaning that it attributed to the expression cases in the Explanation to Section 127(4) of the Act. The High Court of Delhi was of the view that cases must include within its sweep, not only the cases pending before the Authorities enlisted under Section 116 of the Act, but also the proceedings before the ITAT as well as a High Court. We are of the opinion that the High Court of Delhi has misread the scope and ambit of Section 127. 26. We will explain this in detail. Section 127 occurs in Chapter XIII of the Act which relates to Income Tax Authorities. In the same chapter, Section 116 enlists the Income Tax Authorities and Section 120 specifies the jurisdiction of such Authorities. While Section 124 specifically speaks of the jurisdiction of Assessing Officers, Section 127 enables a higher authority to transfer a case from one Assessing Officer to another Assessing Officer. All these provisions in Chapter XIII only relate to the executive or administrative powers of Income Tax Authorities. We have no hesitation in our mind that the vesting of appellate jurisdiction has no bearing on judicial remedies provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a proposition of law. If it is the accepted principle to determine the jurisdiction of a High Court under Section 260A of the Act on the basis of the location of the Assessing Officer who assessed the case, then, by the strength of the very same logic, upon transfer of a case to another Assessing Officer under Section 127, the jurisdiction under Section 260A must be with the High Court in whose jurisdiction the new Assessing Officer is located. A logical extension of this argument is that, once the case is transferred to an Assessing Officer situated outside the jurisdiction of the existing High Court, the entire files relating to the case should now be in the possession and custody of the new Assessing Officer. It could be argued that the Assessing Officer who exercised the jurisdiction before its transfer will not be in a position to assist the High Court, further, he cannot implement the decision of that High Court, after it decides the question of law as he is no more the Assessing Officer. We will now proceed to deal with these arguments. 29. The binding nature of decisions of an appellate court established under a statute on subordinate courts and tribunals within the terr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wer. Such an interpretation will clearly be against the interest of justice. Under Section 127, the authorities have the power to transfer a case either upon the request of an assessee or for their own reasons. Though the decision under Section 127 is subject to judicial review or even an appellate scrutiny, this Court for larger reasons would avoid an interpretation that would render the appellate jurisdiction of a High Court dependent upon the executive power. As a matter of principle, transfer of a case from one judicial forum to another judicial forum, without the intervention of a Court of law is against the independence of judiciary. This is true, particularly, when such a transfer can occur in exercise of pure executive power. This is a yet another reason for rejecting the interpretation adopted in the case of Sahara. 32. For the reasons stated above, we hold that the decision of the High Court of Delhi in Sahara and Aar Bee do not lay down the correct law and therefore, we overrule these judgments. 33. In conclusion, we hold that appeals against every decision of the ITAT shall lie only before the High Court within whose jurisdiction the Assessing Officer who passed t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich Civil Appeal No. 4252 of 2022 was filed before this Court. The said Civil Appeal is dismissed by upholding the order dated 07.02.2019 passed by the High Court of Punjab Haryana, with a direction that the appropriate High Court for disposal of the appeal would be the High Court of Delhi as the case was assessed by the Assessing Officer, Delhi. 35.3 The other Civil Appeal arises out of an order passed by the Assessing Officer, Ghaziabad dated 31.03.2015, against which an appeal was decided by CIT (Appeals) IV, Kanpur on 20.12.2016, against which the ITAT, New Delhi disposed of an appeal on 01.09.2017, against which an appeal was filed in the High Court of Punjab Haryana which it disposed of by order dated 07.02.2019, against which Civil Appeal No. 4253 of 2022 was filed before this Court. The said Civil Appeal is dismissed by upholding the order dated 07.02.2019 passed by the High Court of Punjab and Haryana with a direction that the correct High Court to dispose of the appeal would be the Lucknow Bench of the Allahabad High Court. 35.4 Against the decision of the ITAT, New Delhi dated 11.05.2017, the Revenue had filed an appeal before the High Court of Delhi which w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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