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TMI Blog2022 (8) TMI 863X X X X Extracts X X X X X X X X Extracts X X X X ..... h 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 and does not specify the High Court before which an appeal would lie in cases where Tribunals operated for plurality of States. This question came to be conclusively answered by the High Court of Delhi in the case of Seth Banarsi Dass Gupta v. Commissioner of Income Tax (1978) 113 ITR 817 (Del), wherein it was held that the appropriate High Court would be the one where the Assessing Authority is situated. This judgment continuous to hold the field. 2. In these appeals, a further question that arise for consideration is the jurisdiction of the High Court consequent upon administrative order of transfer of a 'case' under Section 127 of the Act from one Assessing Authority to another Assessing Officer located in a different State. The Punjab & Haryana High Court took the view that such a transfer would not change the principle laid down in Seth Banarasi Dass Gupta. However, the Delhi High Court in CIT v. Sahara India Financial Corporation Ltd. (2007) 294 ITR 363 (Del) and CIT v. Aar Bee Industries Ltd. (2013) 357 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, the Commissioner of Income Tax (Central), Ludhiana, centralized the cases of the Assessee for the assessment years 2006-07 to 2013-14 and transferred the same to Central Circle, Ghaziabad. 6. In view of the above transfer under Section 127, the Deputy Commissioner of Income Tax, Central Circle, Ghaziabad, proceeded further and passed an assessment order on 31.03.2015. Aggrieved by that order, the Assessee filed an appeal which came to be allowed by the Commissioner of Income Tax (Appeals) - IV, Kanpur, on 20.12.2016. Against this appellate order, the Revenue preferred an appeal to ITAT, New Delhi. As the decision of the ITAT dated 11.05.2017 in the case of the Assessee with respect to an earlier assessment year was already available, the ITAT, New Delhi, followed the said judgment and dismissed the appeal filed by the Revenue by its order dated 01.09.2017. It is against this order that the Revenue filed ITA No. 130 of 2018 before the High Court of Punjab & Haryana. 7. In fact, before the Revenue could file an appeal against the orders of the ITAT dated 11.05.2017 (arising out of the original proceedings) and 01.09.2017 (arising out of proceedings after transfer under Section 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iction, nevertheless, dismissed the appeal by its order dated 21.05.2019 on the ground of lack of territorial jurisdiction of the High Court of Delhi. For arriving at the conclusion that the High Court of Delhi would not have territorial jurisdiction, the decision of its own Court in the case of Sahara supra (note 4) and Aar Bee supra (note 5) were relied upon. In those two decisions, the High Court of Delhi had taken a view that when an order of transfer under Section 127 of the Act is passed, the jurisdiction gets transferred to the High Court within whose jurisdiction the situs of the transferee officer is located. Aggrieved by the decision of the High Court of Delhi, the Revenue preferred appeal to this Court being, Civil Appeal No. 3480 of 2022. 10. The above referred facts clearly evidence that in the case of the very same Assessee, the High Court of Punjab & Haryana as well as the High Court of Delhi have refused to entertain the appeals on the ground that they lack territorial jurisdiction. Both the High Court relied on decisions of their own Courts which have taken diametrically opposite perspectives. We are thus tasked to resolve the issue as to which High Court would ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... choice, it is necessary to refer to certain provisions of the Act. Legal Framework: 12. Chapter XIII of the Act deals with Income Tax Authorities. Section 116, occurring in this Chapter enlists the classes of Income Tax Authorities who would be administering the provisions of the Act. Section 120, which deals with the Jurisdiction of the Income Tax Authorities provides that the Authorities shall exercise the powers and functions conferred or assigned to them under the Act. Section 124 is important. It relates to the jurisdiction of Assessing Officers in particular. It is a departure from the previous regime under the 1922 Act in Section 64, as per which the place of assessment was the place where the assessee carries on business, profession or vocation. Section 124 inverts the position, and instead empowers an Assessing Officer to exercise jurisdiction over any area that has been entrusted to him/her under Section 120 of the Act. The Assessing Officer will, therefore, have the power and jurisdiction with respect to any person carrying on a business or profession in that area. Another provision that we need to take note of is Section 127, which empowers senior income tax authoriti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sub-Section (5) of Section 255, the ITAT notified the Income Tax (Appellate Tribunal), Rules 1963. As per Rule 3 Rule-3. Sittings of Bench 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. Under Rule 4 Rule-4. Powers of Bench (1) 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. 13.3 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 do 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 include parts of Uttarakhand. The Amritsar Bench has within its jurisdiction the entire State of Jammu & Kas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e U.T. It is this uncertainty about identification of the appropriate High Court for filing an appeal against an order of the ITAT exercising jurisdiction over more than one state that, we are called upon to decipher and declare. 16. A judicial remedy must be effective, independent and at the same time certain. Certainty of forum would involve unequivocal vesting of jurisdiction to adjudicate and determine the dispute in a named forum. 17. Keeping the above principle in mind, we will now return to the inquiry into the appropriate High Court for filing an appeal against an order of a bench of the ITAT exercising jurisdiction over more than one state. We notice that the issue has already fallen for consideration before a Division Bench of the High Court of Delhi way back in 1978 in the case of Seth Banarsi Dass Gupta. Having considered the matter in detail, the High Court of Delhi held that the "most appropriate" High Court for filing an appeal would be the one where the Assessing Officer is located. The decision was followed in Suresh Desai (supra) by Justice Lahoti (as he then was) and provided additional reasons in support of the same view. The interpretative choices are based o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her question that arises in these batch of appeals is in the context of an order of transfer under Section 127 of the Act, whereby the case of an assessee gets transferred from an Assessing Officer in one State to another Assessing Officer, situated in another state under the jurisdiction of a different High Court. The real question is whether the jurisdiction of a High Court would also change following an order of transfer under Section 127. For example, in this very case, where the assessment order was passed by the Assessing Officer in Ghaziabad, the appeal therefrom was decided by the CIT (Appeals) IV, Kanpur and the appeal to the Tribunal was decided by ITAT, New Delhi, should the Lucknow Bench of the Allahabad High Court have jurisdiction or should the jurisdiction vest with the Punjab & Haryana High Court in whose territorial limits the transferee Assessing Officer is located. 20. In Suresh Desai, the question relating to the consequences upon an order of transfer under Section 127 did arise for consideration. Apart from holding that the transfer order did not involve the assessment year with respect to which the appeals are concerned, the High Court of Delhi made an import ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 120 of the Act does not deal with jurisdiction of the Tribunal or the High Court.... 13. A conjoint reading of the aforementioned provisions makes it evident that the Director General or Chief Commissioner or Commissioner is empowered to transfer any case from one or more accessing officers subordinate to him to any other Assessing Officer. It also deals with the procedure when the case is transferred from one Accessing Officer subordinate to a Director General or Chief Commissioner or Commissioner to an Assessing Officer who is not subordinate to the same Director General, Chief Commissioner or Commissioner. The aforementioned situation and the definition of the expression "case" in relation to jurisdiction of an Assessing Officer is quite understandable but it has got nothing to do with the territorial jurisdiction of the Tribunal or High Courts merely because section 127 of the Act dealing with transfer has been incorporated in the same Chapter. Therefore, the argument raised is completely devoid of substance and we have no hesitation to reject the same." 22. We will now refer to the decision of the High Court of Delhi in the case of Sahara, where the Court has taken ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Explanation to section 127(4) of the Act as well as from the effect of the order dated July 29, 2005, passed by the Commissioner of Income-tax (Central), Kanpur, under section 127(2) of the Act. Consequently, with effect from September 29, 2005, (the date from which the order passed under section 127(2) of the Act is enforced) the jurisdiction in respect of the assessee for future proceedings under section 260A of the Act is with the Delhi High Court. Admittedly, the present appeals have been filed after September 29, 2005, and so they would be maintainable in this court and no other High Court." 24. The decision in the case of Sahara is followed by a subsequent Bench of the High Court of Delhi in Aar Bee. In this case, the assessment order was passed in Jammu, an appeal against that order was decided by CIT (Appeals), Jammu, and thereafter, an appeal came to be decided by ITAT, Amritsar. Immediately after the ITAT order, the records of the assessee came to be transferred from Jammu to New Delhi by an order under Section 127 of the Act. Hence, an appeal against the ITAT order was filed before the High Court of Delhi. When the matter came up before the High Court of Delhi, it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... medies provided in Chapter XX of the Act before the ITAT and the High Court. The mistake committed by the High Court was in assuming that the expression "case" in the Explanation to Sub-Section 4 of Section 127 has an overarching effect and would include the proceedings pending before the ITAT as well as a High Court. This fundamental error has led the Division Bench of the High Court of Delhi to come to a conclusion that an order of transfer made under Section 127 would have the effect of transferring the case "lock, stock and barrel" not only from the jurisdiction of the ITAT, but also from that of the High Court in which the Assessing Officer was located, and vest it in the High Court having jurisdiction over the transferee Assessing Officer. This erroneous interpretation was in fact advanced before other High Courts as well, but they were rejected straightaway. One instant example is the case of CIT v. Parke Davis (India) Ltd. (1999) 239 ITR 820 (AP)., where the Andhra Pradesh High Court held: - "...The interpretation sought to be placed on the Explanation to section 127 leads to incongruous results quite contrary to the scheme of the Act and has the effect of investing the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... territorial jurisdiction of the State, is a larger principle involving consistency, certainty and judicial discipline, and it has a direct bearing on the rule of law. This 'need for order' and consistency in decision making must inform our interpretation of judicial remedies. An important reason adopted in the case of Seth Banarasi Dass Gupta, further highlighted by Justice Lahoti in Suresh Desai, is that a decision of a High Court is binding on subordinate courts as well as tribunals operating within its territorial jurisdiction. It is for this very reason that the Assessing Officer, Commissioner of Appeals and the ITAT operate under the concerned High Court as one unit, for consistency and systematic development of the law. It is also important to note that the decisions of the High Court in whose jurisdiction the transferee Assessing Officer is situated do not bind the Authorities or the ITAT which had passed orders before the transfer of the case has taken place. This creates an anomalous situation, as the erroneous principle adopted by the authority or the ITAT, even if corrected by the High Court outside its jurisdiction, would not be binding on them. 30. The legal structur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment order is situated. Even if the case or cases of an assessee are transferred in exercise of power under Section 127 of the Act, the High Court within whose jurisdiction the Assessing Officer has passed the order, shall continue to exercise the jurisdiction of appeal. This principle is applicable even if the transfer is under Section 127 for the same assessment year(s). 34. We will now deal with the decisions of certain High Court which have taken a view that the jurisdiction of the High Court must be based on the location of the ITAT. These judgments are CIT v. Parke Davis (India) Ltd. ibid, CIT v. A.B.C. India Ltd. (2003) 126 Taxman 18 (Cal), CIT v. J.L. Marrison (India) Ltd. (2005) 272 ITR 321 (Cal), CIT v. Akzo Nobel India Ltd. (2014) 47 Taxmann.com 372 (Cal), Pr. CIT v. Sungard Solutions (I) Pvt. Ltd. (2019) 415 ITR 294 (Bom) and CIT v. Shree Ganapati Rolling Mills (P) Ltd. (2013) 356 ITR 586 (Gau) We have examined these cases in detail and found that the Assessing Officers in each of these cases were in fact not located within the territorial jurisdiction of these High Courts. For this reason, the aforesaid decisions are correct to the extent of these High Courts no ..... X X X X Extracts X X X X X X X X Extracts X X X X
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