Summary
ABC Papers was assessed in Delhi for one year and, after a Section 127 transfer, in Ghaziabad for another, with the ITAT, New Delhi deciding both appeals. The cases were later re-transferred to Chandigarh. Both the Punjab and Haryana High Court and the Delhi High Court declined jurisdiction over the Revenue's Section 260A appeals. The Court held that an appeal under Section 260A lies only to the High Court within whose jurisdiction the Assessing Officer who passed the assessment order is located. A Section 127 transfer, even for the same assessment year, does not shift that jurisdiction, because executive transfer powers cannot determine a High Court's appellate jurisdiction. Sahara India Financial and Aar Bee Industries were overruled. Each appeal was directed to the correct High Court.
Issues
- Which High Court has jurisdiction under Section 260A of the Income Tax Act, 1961 over an order of an ITAT Bench that covers more than one State.
- Whether a transfer of an assessee's case under Section 127 to an Assessing Officer in another State shifts the High Court's appellate jurisdiction, including for the same assessment year.
Provisions considered
- Sections 260A and 269, Income Tax Act, 1961Section 260A does not name the High Court. Read with Section 269 and the binding effect of a High Court's decisions within its territory, the appeal lies to the High Court within whose jurisdiction the assessing officer is located, not where the ITAT Bench sits. (¶¶ 14, 15, 17, 18, 33, 34)
- Section 127 and Explanation to Section 127(4), Income Tax Act, 1961Section 127 sits in Chapter XIII on income tax authorities. The word case in the Explanation covers proceedings before those authorities, not judicial remedies before the ITAT or High Court in Chapter XX, so a transfer does not move appellate jurisdiction. (¶¶ 12, 25, 26, 31)
Held
- Some ITAT Benches cover territory in more than one State, and Section 260A does not name the High Court. Endorsing Seth Banarsi Dass Gupta and the decisions following it, the Court held that an appeal lies to the High Court within whose territorial jurisdiction the assessing officer is located. The location of the ITAT Bench is irrelevant. (¶¶ 13.3, 15, 17, 18, 34)
- Section 127 is an administrative power relating only to the jurisdiction of income tax authorities. The word case in the Explanation to Section 127(4) does not extend to proceedings before the ITAT or a High Court. Reading it otherwise would let the executive decide a High Court's jurisdiction and transfer matters between judicial forums without a court's intervention. (¶¶ 25, 26, 31)
- The assessing officer, Commissioner (Appeals) and ITAT operate under the concerned High Court as one unit, bound by its decisions. A decision of the High Court over the transferee officer would not bind the authorities that decided the case before the transfer. Sahara India Financial and Aar Bee Industries were overruled. (¶¶ 29, 30, 32)
- Appeals from every ITAT decision lie only to the High Court within whose jurisdiction the assessing officer who passed the assessment order is situated. That High Court retains jurisdiction even if the cases are later transferred under Section 127, including for the same assessment year. (¶ 33)
Result
Appeals disposed of. The Punjab and Haryana High Court's refusals were upheld, with the Delhi-assessed appeal directed to the Delhi High Court and the Ghaziabad-assessed appeal to the Lucknow Bench of the Allahabad High Court. The Revenue's appeal was allowed and the Delhi High Court directed to decide its appeal on merits; parties to bear their own costs.