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Pr. Commissioner of Income Tax-1 vs M/s ABC Papers Limited

Civil Appeal · 2022 INSC 844Decided 18 Aug 2022
Civil Appeal No. 4252 of 2022
Uday Umesh Lalit · S. Ravindra Bhat · Pamidighantam Sri Narasimha

Background

The assessee, a paper manufacturing company, was originally assessed by an Assessing Officer in New Delhi, but its tax cases were later administratively transferred, under Section 127 of the Income Tax Act, to Ghaziabad and then back to Chandigarh. When the tax department later tried to appeal against Income Tax Appellate Tribunal (ITAT) rulings in this case, both the Punjab & Haryana High Court and the Delhi High Court refused to hear the appeals, each holding it lacked territorial jurisdiction, leaving the tax department unable to get any High Court to accept its appeals at all. The core legal question was which High Court has jurisdiction to hear a Section 260A appeal from an ITAT order when the case involves an administrative transfer of the assessee's file between tax officers in different states.

Decision Breakdown

The Supreme Court held that a High Court's appellate jurisdiction under Section 260A of the Income Tax Act is a judicial remedy that stands on its own footing and cannot be altered by a purely executive/administrative transfer of a "case" between Assessing Officers under Section 127, allowing the executive to shift judicial jurisdiction this way would be an affront to judicial independence. The Court overruled the Delhi High Court's contrary view in CIT v. Sahara India Financial Corp. and CIT v. Aar Bee Industries, and reaffirmed the rule from Seth Banarsi Dass Gupta v. CIT that the correct forum for an appeal is always the High Court within whose territory the Assessing Officer who actually passed the original assessment order is located, not the location of the ITAT bench, and not wherever the case is later administratively transferred to. Applying this to the three connected appeals, the Court directed that one matter (assessed in Delhi) must go to the Delhi High Court, another (assessed in Ghaziabad) must go to the Lucknow Bench of the Allahabad High Court, and directed the Delhi High Court to entertain and decide the appeal it had wrongly refused.

Lesson Learnt

Which High Court can hear a tax appeal depends on where the original Assessing Officer sat when the assessment was made: a later administrative transfer of the case file to a different tax office does not shift that jurisdiction, ensuring taxpayers and the department always have a clear, stable forum for appeal.

Official source (sci.gov.in)View Judgment (PDF)

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