By: Harshit Joshi
An enchantment was introduced earlier than the Supreme Court docket during which each the Delhi Excessive Court docket and the Punjab & Haryana Excessive Court docket refused to have territorial jurisdiction over the dispute attributable to a distinction of opinion and dismissed appeals filed earlier than them. The Supreme Court docket solved the conundrum in regards to the appellate jurisdiction of the Excessive Courts beneath 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 Court docket resolved is the jurisdiction of the Excessive Court docket consequent upon an administrative determination transferring a ‘case’ beneath Part 127 of the Act from one Assessing Authority to a different Assessing Officer (hereinafter ‘AO’) situated in a unique State.
The court docket dominated that the jurisdiction of the Excessive Court docket stands by itself basis and can’t be inclined to the manager energy of transferring a matter. The Apex Court docket additionally overturned the discovering rendered by the Excessive Court docket 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 proper regulation. On this submit, we will dissect and analyze the judgment of the Supreme Court docket.
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 beneath Part 143 (2) of the Act and adopted it up with an order. Aggrieved by that order, the Assessee most well-liked an enchantment to the Commissioner of Earnings Tax (hereinafter ‘CIT’) (Appeals) – IV, New Delhi who allowed the enchantment. The ITAT, New Delhi, by its order dated 11.05.2017, upheld the order of the CIT (Appeals) – IV, New Delhi, and dismissed the enchantment filed by the Income.
In the meantime, by an order of switch handed beneath Part 127 of the Act, the CIT (Central), Ludhiana, centralized the instances of the assessee and transferred the identical to Ghaziabad. The DCIT, Ghaziabad, handed one other evaluation order aggrieved by which, the Assessee filed an enchantment which got here to be allowed by the CIT (Appeals) – IV, Kanpur. Towards this appellate order, the Income most well-liked an enchantment to ITAT, New Delhi which was additionally dismissed by its order dated 01.09.2017.
The instances of the Assessee had been re-transferred beneath 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 Court docket of Punjab & Haryana. The Excessive Court docket by its judgment dated 07.02.2019, disposed of each the appeals by holding that, however the order beneath Part 127 which transferred the instances of the Assessee, the Excessive Court docket of Punjab & Haryana wouldn’t have jurisdiction because the AO who handed the preliminary evaluation order is located exterior the jurisdiction of the Excessive Court docket.
The Income additionally filed an enchantment, being ITA No. 515 of 2019 earlier than the Excessive Court docket of Delhi. The Excessive Court docket of Delhi had taken a view that when an order of switch beneath Part 127 of the Act is handed, the jurisdiction will get transferred to the Excessive Court docket inside whose jurisdiction the positioning of the transferee officer is situated and dismissed the enchantment. The query got here up earlier than the Supreme court docket to resolve the problem as to which Excessive Court docket would have the jurisdiction to entertain an enchantment 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 Court docket and that ITATs are designed to train jurisdiction over a number of states, the query of which Excessive Court docket is the suitable court docket for submitting appeals beneath Part 260A emerged. The query arose as a result of Part 260A is open-textual and doesn’t specify the Excessive Court docket earlier than which an enchantment would lie in instances 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 means that their jurisdiction covers territories of multiple state. The Allahabad Bench, for instance, includes areas of Uttarakhand. The Amritsar Bench has jurisdiction over the whole state of Jammu and Kashmir.
An AO is given the authority and jurisdiction over anybody conducting enterprise or exercising a career 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 beneath Part 127 on the discretion of a better authority. These clauses are all situated in Chapter XIII of the Act and completely relate to the manager or administrative authority of the Earnings Tax Authorities.
The problem relating to the suitable Excessive Court docket for submitting an enchantment is properly settled since when it fell for consideration earlier than a Division Bench of the Excessive Court docket of Delhi means again in 1978 within the case of Seth Banarsi Dass Gupta v. Commissioner of Earnings Tax. It was held that essentially the most applicable Excessive Court docket for submitting an enchantment can be the one the place the AO is situated. This was held in order that the authorities can be certain to observe the choice of the involved Excessive Court docket and has been adopted and abided in subsequent judgments of the Excessive Court docket of Delhi. Nevertheless, the query within the instantaneous case is within the context of an order of switch beneath 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 beneath the jurisdiction of a unique Excessive Court docket.
ANALYSIS OF PREVIOUS HIGH COURT FINDINGS
The AO, Lucknow, issued the evaluation order within the case of Sahara. An enchantment towards that order was determined by CIT (Appeals), Lucknow, and an extra enchantment was determined by ITAT, Lucknow. An enchantment was introduced earlier than the Lucknow Bench of the Allahabad Excessive Court docket in response to the ITAT order. The data of the assessee had been ultimately transferred from Lucknow to New Delhi whereas this enchantment was pending. Due to this fact, an enchantment was introduced earlier than the Delhi Excessive Court docket which departed from the long-standing selections and held that upon order of switch beneath Part 127 of the Act, the case of the assessee would get transferred ‘lock, inventory and barrel’ together with the Excessive Court docket.
The choice within the case of Sahara is adopted by a subsequent Bench of the Excessive Court docket of Delhi in Aar Bee. The court docket denied agreeing with the view of the Punjab and Haryana Excessive Court docket of their judgment of Commissioner of Earnings Tax v. Motorola India Ltd. primarily based on the that means that it’s attributed to the expression ‘instances’ within the rationalization to Part 127(4) of the Act. The usage of expression ‘instances’ was used to contend that the expression shall cowl proceedings filed earlier than a Excessive Court docket as properly. This competition was negatived and held as wholly misplaced by the Punjab and Haryana Excessive court docket 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 court docket of regulation. In response to Part 127, the authorities could switch a case on the request of the assessee or for different functions. The facility 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 court docket should avoid any interpretation that may make the appellate jurisdiction of the Excessive Court docket depending on the manager department. Such an interpretation will clearly be towards the curiosity of justice.
For these causes, the court docket overruled the judgments in Sahara and Aar Bee and held that the one Excessive Court docket to which appeals towards any ITAT determination could also be introduced is the one whose jurisdiction consists of the AO who issued the evaluation order. Even when an assessee’s case or instances are transferred in accordance with Part 127 of the Act, the Excessive Court docket in whose jurisdiction the AO made the order will proceed to train its appellate jurisdiction. This precept is relevant even when the switch is beneath 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 persistently and methodically to keep away from ambiguity. The clarification by the Supreme Court docket is totally needed and progressive steps have been taken to eradicate such anomalies and interpret the regulation in a constant jurisprudential method. A judicial treatment should be efficient, impartial, and likewise sure, and the Supreme Court docket made the right selection 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 court docket additionally took cognizance of arguments and was proper in noting that the choices of the Excessive Court docket in whose jurisdiction the transferee AO is located is not going to bind the Authorities or the ITAT which had handed orders earlier than the switch of the case has taken place. The court docket prevented an anomaly scenario the place, even when the Excessive Court docket 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 Court docket. The Apex Court docket has additionally rightly clarified the in any other case open-textual and ambiguous scope of Part 260A. The court docket nevertheless didn’t resolve the deserves of the case and ordered the Delhi Excessive Court docket and the Lucknow Bench of Allahabad Excessive Court docket to resolve the two appeals.
(Harshit Joshi is a Fifth-year BALL.B. pupil at Vivekananda Institute of Skilled Research. He could also be contacted through mail at [email protected])
Cite as: Harshit Joshi, ‘Supreme Court docket Settles Jurisdictional Conundrum for Appeals from ITAT Orders’ (The Rmlnlu Legislation Assessment Weblog, 07 October 2022)