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2022 (8) TMI 863 - SC - Income TaxAppropriate High Court for filing appeals u/s 260A - appropriate High Court for filing an appeal against an order of a bench of the ITAT exercising jurisdiction over more than one state - meaning attributed to the expression cases in the Explanation to Section 127(4) of the Act - whether appellate jurisdiction of the High Court stands on its own foundation and cannot be subject to the exercise of executive power to transfer a case from one Assessing Officer to another Assessing Officer? - HELD THAT - The legal structure under the Income Tax Act commencing with Assessing Officer, the Commissioner of Appeals, ITAT and finally the High Court under Section 260A must be seen as a lineal progression of judicial remedies. Culmination of all these proceedings in question of law jurisdiction of the High Court under Section 260A of the Act is of special significance as it depicts the overarching judicial superintendence of the High Court over Tribunals and other Authorities operating within 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 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. For the reasons stated above, we hold that the decision of the High Court of Delhi in Sahara 2007 (5) TMI 208 - DELHI HIGH COURT and Aar Bee 2013 (7) TMI 94 - DELHI HIGH COURT do not lay down the correct law and therefore, we overrule these judgments. 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 the 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). While returning the files to be represented in the appropriate court, certain observations were made stating that the appeals could be filed in the High Court which exercises territorial jurisdiction over the concerned ITAT. These observations are only obiter. In any event they did not preclude the party from filing the appeal before the appropriate High Court where the Assessing Officers exercised jurisdiction. However, we are reiterating for clarity and certainty that the jurisdiction of a High Court is not dependent on the location of the ITAT, as sometimes a Bench of the ITAT exercises jurisdiction over plurality of states. Order passed by the Assessing Officer, Delhi against which an appeal was decided by CIT (Appeals) IV, New Delhi against which the ITAT, New Delhi disposed of an appeal against which an appeal was filed in the High Court of Punjab Haryana which it disposed of by order against which Civil Appeal was filed before this Court. The said Civil Appeal is dismissed by upholding the order 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.
Issues Involved:
1. Appellate jurisdiction of High Courts under Section 260A of the Income Tax Act, 1961. 2. Jurisdiction of High Courts consequent upon administrative transfer of a 'case' under Section 127 of the Act. Issue-wise Detailed Analysis: 1. Appellate Jurisdiction of High Courts under Section 260A: The primary issue addressed was the determination of the appropriate High Court for filing appeals under Section 260A of the Income Tax Act, 1961, when the Income Tax Appellate Tribunal (ITAT) exercises jurisdiction over more than one state. The judgment reaffirmed the principle established in Seth Banarsi Dass Gupta v. Commissioner of Income Tax (1978) 113 ITR 817 (Del), which held that the appropriate High Court for filing an appeal is the one where the Assessing Authority is situated. This principle was followed in subsequent cases like Suresh Desai & Associates v. Commissioner of Income Tax (1998) 230 ITR 912 (Del) and Commissioner of Income Tax v. Digvijay Chemicals Ltd. (2007) 294 ITR 359 (Del). The court emphasized that the appellate jurisdiction of a High Court under Section 260A is exercisable by the High Court within whose territorial jurisdiction the assessing officer is located. This ensures consistency, certainty, and judicial discipline, as the decisions of a High Court are binding on subordinate courts and tribunals within its territorial jurisdiction. 2. Jurisdiction of High Courts Post-Administrative Transfer under Section 127: The second issue was whether the jurisdiction of a High Court changes following an administrative order of transfer of a 'case' under Section 127 of the Act from one Assessing Officer to another located in a different state. The Punjab & Haryana High Court held that such a transfer does 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 ITR 542 (Del) held that an administrative order of transfer of cases would also transfer the jurisdiction of the High Court. The Supreme Court, reversing the judgments of the Delhi High Court in Sahara and Aar Bee, held that the appellate jurisdiction of the High Court stands on its own foundation and cannot be subject to the exercise of executive power to transfer a 'case' from one Assessing Officer to another. The court clarified that the jurisdiction of a High Court is not dependent on the location of the ITAT, as sometimes a Bench of the ITAT exercises jurisdiction over multiple states. Facts and Conclusion: The case involved M/s. ABC Papers Ltd., which had its income tax returns for the assessment year 2008-09 filed before the Assessing Officer in New Delhi. Subsequent appeals were decided by the Commissioner of Income Tax (Appeals) - IV, New Delhi, and the ITAT, New Delhi. However, the Revenue filed appeals before the High Court of Punjab & Haryana, which dismissed the appeals as not maintainable, citing lack of territorial jurisdiction. The Supreme Court concluded that appeals against every decision of the ITAT shall lie only before the High Court within whose jurisdiction the Assessing Officer who passed the assessment order is situated. Even if the case(s) of an assessee are transferred under Section 127 of the Act, the High Court within whose jurisdiction the original Assessing Officer passed the order shall continue to exercise the jurisdiction of appeal. Separate Judgments Delivered: The Supreme Court delivered separate judgments for the different appeals involved: 1. Civil Appeal No. 4252 of 2022 was dismissed, upholding the order of 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. 2. Civil Appeal No. 4253 of 2022 was dismissed, upholding the order of the High Court of Punjab & Haryana, with a direction that the correct High Court to dispose of the appeal would be the Lucknow Bench of the Allahabad High Court. 3. Civil Appeal No. 3480 of 2022 was allowed, setting aside the order of the High Court of Delhi, and directing the High Court of Delhi to entertain and dispose of the appeal as per law. The parties were directed to bear their own costs.
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