By: Harshit Joshi
An attraction was introduced earlier than the Supreme Courtroom during which each the Delhi Excessive Courtroom and the Punjab & Haryana Excessive Courtroom refused to have territorial jurisdiction over the dispute resulting from a distinction of opinion and dismissed appeals filed earlier than them. The Supreme Courtroom solved the conundrum regarding the appellate jurisdiction of the Excessive Courts underneath Part 260A of the Earnings Tax Act, 1961 (hereinafter ‘Act’) in its judgment dated 18 August 2022 within the case of Pr. Commissioner of Earnings Tax-I, Chandigarh v. M/s. ABC Papers Restricted. One other query that the Supreme Courtroom resolved is the jurisdiction of the Excessive Courtroom consequent upon an administrative choice transferring a ‘case’ underneath Part 127 of the Act from one Assessing Authority to a different Assessing Officer (hereinafter ‘AO’) positioned in a unique State.
The courtroom dominated that the jurisdiction of the Excessive Courtroom stands by itself basis and can’t be prone to the manager energy of transferring a matter. The Apex Courtroom additionally overturned the discovering rendered by the Excessive Courtroom of Delhi in CIT v. Sahara India Monetary Company Ltd. (hereinafter ‘Saharan’) and CIT v. Aar Bee Industries Ltd. (hereinafter ‘Aar Bee’) holding they don’t lay down the right regulation. On this submit, we will dissect and analyze the judgment of the Supreme Courtroom.
The Appellant M/s. ABC Papers Ltd. (hereinafter ‘Assessee’)an organization engaged within the manufacture of printing paper filed its revenue tax returns earlier than AO, New Delhi in 2008. The Deputy Commissioner of Earnings Tax (hereinafter ‘DCIT’), New Delhi, issued a discover of evaluation underneath Part 143 (2) of the Act and adopted it up with an order. Aggrieved by that order, the Assessee most popular an attraction to the Commissioner of Earnings Tax (hereinafter ‘CIT’) (Appeals) – IV, New Delhi who allowed the attraction. The ITAT, New Delhi, by its order dated 11.05.2017, upheld the order of the CIT (Appeals) – IV, New Delhi, and dismissed the attraction filed by the Income.
In the meantime, by an order of switch handed underneath Part 127 of the Act, the CIT (Central), Ludhiana, centralized the circumstances of the assessee and transferred the identical to Ghaziabad. The DCIT, Ghaziabad, handed one other evaluation order aggrieved by which, the Assessee filed an attraction which got here to be allowed by the CIT (Appeals) – IV, Kanpur. In opposition to this appellate order, the Income most popular an attraction to ITAT, New Delhi which was additionally dismissed by its order dated 01.09.2017.
The circumstances of the Assessee have been re-transferred underneath Part 127 of the Act to the DCIT, Chandigarh, wef 13.07.2017. Income determined to file appeals, being ITA No. 517 of 2017 (towards the order of the ITAT dated 11.05.2017) and ITA No. 130 of 2018 (towards the order of the ITAT dated 01.09.2017) earlier than the Excessive Courtroom of Punjab & Haryana. The Excessive Courtroom by its judgment dated 07.02.2019, disposed of each the appeals by holding that, however the order underneath Part 127 which transferred the circumstances of the Assessee, the Excessive Courtroom of Punjab & Haryana wouldn’t have jurisdiction because the AO who handed the preliminary evaluation order is located exterior the jurisdiction of the Excessive Courtroom.
The Income additionally filed an attraction, being ITA No. 515 of 2019 earlier than the Excessive Courtroom of Delhi. The Excessive Courtroom of Delhi had taken a view that when an order of switch underneath Part 127 of the Act is handed, the jurisdiction will get transferred to the Excessive Courtroom inside whose jurisdiction the positioning of the transferee officer is positioned and dismissed the attraction. The query got here up earlier than the Supreme courtroom to resolve the problem as to which Excessive Courtroom would have the jurisdiction to entertain an attraction towards a call of a Bench of the ITAT exercising jurisdiction over multiple state.
JURISPRUDENCE OF APPEAL FROM ITAT
Given that every state has its personal Excessive Courtroom and that ITATs are designed to train jurisdiction over a number of states, the query of which Excessive Courtroom is the suitable courtroom for submitting appeals underneath Part 260A emerged. The query arose as a result of Part 260A is open-textual and doesn’t specify the Excessive Courtroom earlier than which an attraction would lie in circumstances the place Tribunals operated for a plurality of states. The construction established in Article 1 of the Structure will not be adopted by the jurisdiction the ITAT Benches train. Benches are typically constituted in a approach that their jurisdiction covers territories of multiple state. The Allahabad Bench, for instance, contains areas of Uttarakhand. The Amritsar Bench has jurisdiction over the complete state of Jammu and Kashmir.
An AO is given the authority and jurisdiction over anybody conducting enterprise or exercising a occupation in any space that has been assigned to them by advantage of Part 124. A case could also be transferred from one AO to a different AO underneath Part 127 on the discretion of a better authority. These clauses are all positioned in Chapter XIII of the Act and completely relate to the manager or administrative authority of the Earnings Tax Authorities.
The difficulty relating to the suitable Excessive Courtroom for submitting an attraction is properly settled since when it fell for consideration earlier than a Division Bench of the Excessive Courtroom of Delhi approach again in 1978 within the case of Seth Banarsi Dass Gupta v. Commissioner of Earnings Tax. It was held that probably the most applicable Excessive Courtroom for submitting an attraction can be the one the place the AO is positioned. This was held in order that the authorities can be sure to observe the choice of the involved Excessive Courtroom and has been adopted and abided in subsequent judgments of the Excessive Courtroom of Delhi. Nonetheless, the query within the on the spot case is within the context of an order of switch underneath Part 127 of the Act, which transfers the case of an assessee from an AO in a single State to a different AO, located in one other state underneath the jurisdiction of a unique Excessive Courtroom.
ANALYSIS OF PREVIOUS HIGH COURT FINDINGS
The AO, Lucknow, issued the evaluation order within the case of Sahara. An attraction towards that order was determined by CIT (Appeals), Lucknow, and an extra attraction was determined by ITAT, Lucknow. An attraction was introduced earlier than the Lucknow Bench of the Allahabad Excessive Courtroom in response to the ITAT order. The data of the assessee have been finally transferred from Lucknow to New Delhi whereas this attraction was pending. Subsequently, an attraction was introduced earlier than the Delhi Excessive Courtroom which departed from the long-standing selections and held that upon order of switch underneath Part 127 of the Act, the case of the assessee would get transferred ‘lock, inventory and barrel’ together with the Excessive Courtroom.
The choice within the case of Sahara is adopted by a subsequent Bench of the Excessive Courtroom of Delhi in Aar Bee. The courtroom denied agreeing with the view of the Punjab and Haryana Excessive Courtroom of their judgment of Commissioner of Earnings Tax v. Motorola India Ltd. based mostly on the which means that it’s attributed to the expression ‘circumstances’ within the clarification to Part 127(4) of the Act. Using expression ‘circumstances’ was used to contend that the expression shall cowl proceedings filed earlier than a Excessive Courtroom as properly. This rivalry was negatived and held as wholly misplaced by the Punjab and Haryana Excessive courtroom within the case of Motorola India Ltd.
DECISION OF THE SUPREME COURT
As a matter of precept, it’s towards the independence of the judiciary to maneuver a case from one authorized discussion board to a different with out the intervention of a courtroom of regulation. In keeping with Part 127, the authorities could switch a case on the request of the assessee or for different functions. The ability of switch granted by Part 127 applies solely to the jurisdiction of the Earnings Tax Authorities and has no affect on the jurisdiction of Excessive Courts. The courtroom should keep away from any interpretation that might make the appellate jurisdiction of the Excessive Courtroom depending on the manager department. Such an interpretation will clearly be towards the curiosity of justice.
For these causes, the courtroom overruled the judgments in Sahara and Aar Bee and held that the one Excessive Courtroom to which appeals towards any ITAT choice could also be introduced is the one whose jurisdiction contains the AO who issued the evaluation order. Even when an assessee’s case or circumstances are transferred in accordance with Part 127 of the Act, the Excessive Courtroom in whose jurisdiction the AO made the order will proceed to train its appellate jurisdiction. This precept is relevant even when the switch is underneath Part 127 for a similar evaluation yr(s).
It’s past dispute that it’s the prerogative of the Superior Courts to interpret the regulation constantly and methodically to keep away from ambiguity. The clarification by the Supreme Courtroom is completely essential and progressive steps have been taken to get rid of such anomalies and interpret the regulation in a constant jurisprudential method. A judicial treatment should be efficient, unbiased, and likewise sure, and the Supreme Courtroom made the right alternative on this case. Certainty of the discussion board would contain unequivocal vesting of jurisdiction to adjudicate and decide the dispute in a named discussion board.
The courtroom additionally took cognizance of arguments and was proper in noting that the selections of the Excessive Courtroom in whose jurisdiction the transferee AO is located won’t bind the Authorities or the ITAT which had handed orders earlier than the switch of the case has taken place. The courtroom prevented an anomaly state of affairs the place, even when the Excessive Courtroom corrected the faulty order by the Authorities, it will not have been binding on the authorities as they might be exterior the jurisdiction of the Excessive Courtroom. The Apex Courtroom has additionally rightly clarified the in any other case open-textual and ambiguous scope of Part 260A. The courtroom nonetheless didn’t determine the deserves of the case and ordered the Delhi Excessive Courtroom and the Lucknow Bench of Allahabad Excessive Courtroom to determine the two appeals.
(Harshit Joshi is a Fifth-year BALL.B. scholar at Vivekananda Institute of Skilled Research. He could also be contacted by way of mail at electronic [email protected])
Cite as: Harshit Joshi, ‘Supreme Courtroom Settles Jurisdictional Conundrum for Appeals from ITAT Orders’ (The Rmlnlu Legislation Overview Weblog, 07 October 2022)