Seat of ITAT not AO decides jurisdiction of High Court to which appeal would lie. High Court explains the law on jurisdiction over ITAT
ABCAUS Case Law Citation:
ABCAUS 2834 (2019) (03) HC
Important Case Laws Cited/relied upon by the parties
CIT Vs. Sahara India Financial Corp. Ltd. 294 ITR 363 (Delhi)
CIT Vs. AAR Bee Industries 357 ITR 542 (Delhi)
CIT Vs. Motorola India Ltd (2010) 326 ITR 156
CIT V.s J.L. Morrison (India) Ltd (2005) 272 ITR 321
In the instant appeal was filed by the Revenue under Section 260 A of the Income Tax Act, 1961 (the Act) challenging the order passed by the Income Tax Appellate Tribunal (ITAT).
However, the respondent assessee raised a preliminary objection about the maintainability of the appeal filed by the Revenue before the High Court on jurisdictional issue.
It was contended that in view of the Bench of the Tribunal who passed the impugned order, appeal from would lie before another High Court. In support of the submission, reliance was placed upon Chapter XX of the Act and, in particular Section 260A and 269 of the Act.
However, the Revenue stated that since after the order was passed by the said Bench of the Tribunal the case of the respondent assessee was transferred by an order passed under Section 127 of the Act to another Bench of the Tribunal which fall under the jurisdiction of the High Court hearing the instant appeal.
The Revenue contended that it is the situs of the Assessing Officer (AO) which will alone determine the High Court which would have jurisdiction over the orders of the Tribunal under Section 260-A of the Act. In this case, the seat of the Assessing Officer at the time of filing this appeal was within the jurisdiction of the High Court. Therefore, this Court would alone be the appropriate High Court to deal with this appeal.
The Revenue also relied upon decisions of Delhi High Court wherein it was held that consequent to transfer of the assessment proceedings under Section 127 of the Act, the orders of the Tribunal under Section 260A of the Act are to be challenged at the place where the transferee Assessing Officer exercises jurisdiction.
On the other hand the assessee contended that the appeal to the High Courts are governed by Chapter XX of the Act. In particular, Section 260A of the Act which provides for appeal to the High Court from every order passed in appeal by the Tribunal. Section 269 of the Act, for the purpose of Chapter XX of the Act defines the High Court of the State. Therefore, the above Section 269 of the Act would decide the High Court to which appeal would lie under Section 260A of the Act.
It was also submitted that Section 127 of the Act only deals with the jurisdiction of the authorities under the Act. It cannot control/ decide and/or determine which High Court will be the appellate forum to challenge the orders of the Tribunal.
The Hon’ble High Court observed that the Chapter XIII of the Act deals with the Income Tax Authorities and Section 116 of the Act exhaustively lists out the classes of Income Tax Authorities under the Act. The Tribunal and the High Court do not find mention as Income Tax Authorities.
The Hon’ble High Court opined that the provisions of Section 120, 124 and 127 of the Act will also apply only to the Authorities listed in Section 119 of the Act. The Tribunal and the High Court are not listed in Section 116 of the Act as Income Tax Authorities under the Act. Therefore, Sections 124 and 127 of the Act being relied upon by the Revenue can have no bearing while dealing with the issue of which High Court will have jurisdiction over the orders of the Tribunal.
The Hon’ble High Court further opined that the jurisdiction of the Court which will hear appeals from the orders passed by the Tribunal, would be governed by the provisions of Chapter XX of the Act which is a specific provision dealing with appeals, amongst others to the High Court. In particular Section 260A and 269 of the Act, when read together would mean that the High Court referred to in Section 260A of the Act will be the High Court as provided/ defined in Section 269 of the Act i.e. in relation to any State, the High Court of that State.
The Hon’ble High Court held that the seat of the Tribunal (in which State) would decide the jurisdiction of the High Court to which the appeal would lie under the Act.
The Hon’ble High Court rejected the submission on behalf of the Revenue that the seat of the Assessing Officer alone would decide the jurisdiction of the High Court on the basis of Section 127 of the Act.
The Hon’ble High Court pointed out that it is for this reason that, the Income Tax Appellate Tribunal (ITAT) Rules specifically provides in Rule 4(i) thereof, the Bench which shall hear the appeals, filed before it in terms of Section 253 of the Act, shall be decided by the President of the Tribunal. Therefore, which bench / seat of the Tribunal will hear the appeals is not decided by the seat of the Assessing Officer as provided in Section 127 of the Act, as it does not apply in case of the Tribunal as it is not an Income Tax Authority under the Act.
The Hon’ble High Court explained that it was the President of the Tribunal in exercise of his powers under Rule 4(1) of the ITAT Rules, issued a standing order No. 63/97 dated 2.7.2013 as amended, inter alia, providing the jurisdiction of the bench dependent upon the areas from where the impugned orders have originated. In the above standing order, Note 4 specifically stated that the jurisdiction of a bench will not be determined by the place of business or residence of the assessee but by the location of the office of the Assessing Officer.
The Hon’ble High Court pointed out that if the seat of the Assessing Officer were in terms of Section 127 of the Act, to govern/ control the jurisdiction of the Authorities other than those listed in Section 116 of the Act, then a specific provision in terms of Note 4 in the standing order issued by the President of the Tribunal was not called for / required. Thus in terms, the above standing order where an assessment proceedings have been transferred from one place to another under Section 127 of the Act, then the bench of the Tribunal before which appeals would lie, may shift with the seat of the Assessing Officer before the filing/ hearing of the appeal.
The Hon’ble High Court also pointed out that the provisions is also supported by jurisdictional / constitutional principles. The Tribunal which passes orders is bound by the orders passed by the jurisdictional High Court where the Tribunal is situated. Since the the Tribunal which passed the impugned order was under the jurisdiction of another High Court.
The Hon’ble High Court explained that it is likely that there could be divergence of opinion between two High Courts on a particular issue, one view by the Court where the Tribunal is situated and the other view by the Court where the Assessing Officer is situated, leading to an incongruous situation. The Hon’ble High Court stated that the Parliament keeping in view the fact that, all Authorities/ Tribunals functioning within a particular State are bound by the view of the High Court of that State. This has been so provided in terms of Section 260A read with 269 of the Act. It is, therefore, for the above reason that the orders passed by the Tribunal are subject to an appeal before the High Court under which it exercises jurisdiction.
The Hon’ble High Court opined that If the submission of the Revenue is to be accepted, then there would have a peculiar situation where the powers under Articles 226 and 227 of the Constitution, would be exercised by the Court which exercises jurisdiction over the seat of the Tribunal which is passing the order while for the purposes of appeal under the Act, the Court which would entertain the appeal would be a Court different from the Court which would exercise jurisdiction under Articles 226 and 227 of the Constitution. It is to be noted that, for relief under Article 226 of the Constitution, no part of the case of action would have arisen here giving rise to the jurisdiction of this Court.
Thus, harmonious reading of the various provisions of law would require that the appeal from the order of the Tribunal is to be filed to the Court which exercises jurisdiction over the seat of the Tribunal.
The Hon’ble High Court disagreed with the view of Hon’ble the Delhi High Court and expressed agreement with the views of the Hon’ble Punjab & Haryana High Court and the Hon’ble Calcutta High Court.
Accordingly, the Hon’ble High Court upheld the preliminary objections of the respondent and held that it was lacking jurisdiction to entertain the appeal in question.
