Paragraph numbers below are the court’s original numbering, recovered from the source text.
22. We will now refer to the decision of the High Court of Delhi in the case of Sahara,where the Court has taken a view that upon an order of transfer under Section 127 of the Act, the case of the assessee would get transferred “lock, stock and barrel” including the High Court. As per this decision, the High Court having jurisdiction over the situs of the transferee Assessing Officer alone would have jurisdiction.
23. The facts involved the case of Sahara are that the assessment order was passed by Assessing Officer, Lucknow. Appeal against that order was decided by CIT (Appeals), Lucknow, and a further appeal was decided by ITAT, Lucknow. Pursuant to the ITAT order, an appeal was filed before the Lucknow Bench of the Allahabad High Court. During the pendency of this appeal, the records of the assessee came to be transferred from Lucknow to New Delhi. Hence, an appeal came to be filed before the High Court of Delhi as well. A preliminary objection was raised that the High Court of Delhi lacks jurisdiction as the Assessing Officer was situated in Lucknow. Departing from the long-standing decisions from Seth Banarasi Dass onwards, the Court rejected the contention and held that the High Court of Delhi had the jurisdiction to entertain the appeal. The relevant portion of the judgment is as under:- “13. The order passed 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 PR. COMM’R OF INCOME TAX – I, CHANDIGARH v. M/S. ABC PAPERS LTD. [PAMIDIGHANTAM SRI NARASIMHA, J.] 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 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 was contended that the High Court of Delhi did not have jurisdiction to entertain the appeal in as much as the situs of the Assessing Officer was in Jammu. In support, the decision of the High Court of Punjab & Haryana in Motorola,was relied upon. Rejecting the contention, differing with Motorola and following the judgment of its own Court in Sahara, it was held as under: – “15. We are afraid and with respect we say so that we are unable to agree with the views expressed by the Punjab & Haryana High Court and are bound to follow the decision of this court in Sahara India (supra). We are not inclined to accept the view taken by the High Punjab & Haryana High Court, because while it is true that the reference to the case is with regard to the jurisdiction of an income-tax authority, it is also true that the jurisdiction of the High Court is determined by the situs of the Assessing Officer. When the Assessing Officer itself has been changed from one place to another, the High Court exercising jurisdiction in respect of the territory covered by the transferee Assessing Officer would be the one which would have jurisdiction to hear the appeal under Section 260-A. …” Analysis:
25. The reasoning 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 provided in Chapter XX of the Actbefore 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.22, where the Andhra Pradesh High Court held: – 22 (1999) 239 ITR 820 (AP). PR. COMM’R OF INCOME TAX – I, CHANDIGARH v. M/S. ABC PAPERS LTD. [PAMIDIGHANTAM SRI NARASIMHA, J.] “…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 prescribed authorities with the power to virtually interfere with the territorial jurisdiction of the concerned High Court.
27. With a slight digression from the main issue, we may note that the Assessee as well as the Revenue are on the same page in these appeals, taking the view that the decision of the High Court of Delhi in Sahara is not correctly decided. They may be right. However, as there was no serious contest at the bar, the principle suggested by the Assessee as accepted by the Revenue did not suffer strict scrutiny as is always the case in any contested case, and therefore, the Court is left to imagine the contrary proposition in support of the view taken in Sahara.We had no difficulty in conceptualising that, since every judge had once been a lawyer. We have raised and dealt with them in the following paragraphs.
28. Returning to the analyses in the decision in Sahara, we have noticed that the Division Bench of the High Court of Delhi sought to distinguish the two decisions of the very same High Court in Suresh Desaiand Digvijay Chemicalson the ground that those cases did not involve the transfer of cases of the very same assessment year. We will reformulate this as 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 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 structure under the Income Tax Act commencing withAssessing 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.
31. 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 PR. COMM’R OF INCOME TAX – I, CHANDIGARH v. M/S. ABC PAPERS LTD. [PAMIDIGHANTAM SRI NARASIMHA, J.] 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 theexecutive 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 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).
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.23, CIT v. A.B.C. India Ltd.24, CIT v. J.L. Marrison (India) Ltd.25, CIT v. Akzo Nobel India Ltd.26, Pr. CIT v. Sungard Solutions (I) Pvt. Ltd.27and CIT v. Shree Ganapati Rolling Mills (P) Ltd.28 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 correctto the extent of these High Courts not exercising jurisdiction. However, while returning the files to be represented in the appropriate court, certain observationswere made stating that the 23 ibid. 24 (2003) 126 Taxman 18 (Cal). 25 (2005) 272 ITR 321 (Cal). 26 (2014) 47 Taxmann.com 372 (Cal). 27 (2019) 415 ITR 294 (Bom). 28 (2013) 356 ITR 586 (Gau). 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. 35.1 For the reasons and principles that we have laid down, we dispose of these Civil Appeals with the following directions. 35.2 We will first deal with the order passed by the Assessing Officer, Delhi dated 30.12.2010, against which an appeal was decided by CIT (Appeals) – IV, New Delhi on 16.02.2012, against which the ITAT, New Delhi disposed of an appeal on 11.05.2017, 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. 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 was disposed of by the High Court of Delhi on 21.05.2019, against which Civil Appeal No. 3480 of 2022 has been filed before this Court. We allow the said Civil Appeal by setting aside the order dated 21.05.2019 PR. COMM’R OF INCOME TAX – I, CHANDIGARH v. M/S. ABC PAPERS LTD. [PAMIDIGHANTAM SRI NARASIMHA, J.] passed by the High Court of Delhi refusing to exercise jurisdiction and direct the High Court of Delhi to entertain the appeal and dispose of the appeal as per law. 36. Parties shall bear their own costs. Divya Pandey Appeals disposed of. (Assisted by : Rituja Chouksey, LCRA)