Which is Jurisdictional High Court on transfer of case u/s 127 to AO in different State – SC settles

Which is Jurisdictional High Court upon transfer of case u/s 127 of the Income Tax Act, 1961 from one AO to another Assessing Officer located in a different State – Supreme Court settles the issue

ABCAUS Case Law Citation
ABCAUS 3608 (2022) (08) SC

Important Case Laws involved:
Seth Banarsi Dass Gupta v. Commissioner of Income Tax (1978) 113 ITR 817 (Del)
CIT vs. Sahara India Financial Corporation Ltd. (2007) 294 ITR 363 (Del)
CIT v. Aar Bee Industries Ltd. (2013) 357 ITR 542 (Del)

The question involved in this appeal was as to which High Court has the jurisdiction for filing appeals u/s 260A against the benches of Income Tax Appellate Tribunals (ITATs) in view of the fact that these benches of ITAT are constituted to exercise jurisdiction over more than one state, each state having a separate High Court.

Earlier, the Hon’ble Delhi High Court had held that the appropriate High Court would be the one where the Assessing Authority is situated. This judgment continuous to hold the field.

However, a related question arose for consideration by the Full Bench of the Hon’ble Supreme Court was the jurisdiction of the High Court consequent upon administrative order of transfer of a case under Section 127 of the Income Tax Act, 1961 (the Act) from one Assessing Authority to another Assessing Officer located in a different State.

On this aspect, both the Punjab & Haryana High Court has given a conflicting verdict.

Which is the appropriate High Court for appeal against orders of ITAT ?

The Hon’ble Supreme Court stated that 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.

Their Lordships held that the decision of the High Court of Delhi does not lay down the correct law and therefore, it was overruled.

Appropriate High Court is within whose jurisdiction the AO who passed order is situated

The Hon’ble Supreme Court held 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 assesseeare 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).

The Hon’ble Supreme Court reiterated 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.

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