ABCDEFGH1059 Tax v. Motorola India Ltd. (2010) 326 ITR 156 (P&H);Commissioner of Income Tax (Central)

ABCDEFGH1059Tax v. Motorola India Ltd. (2010) 326 ITR 156 (P&H);Commissioner of Income Tax (Central), Gurgaon v.M/s Parabolic Drugs Limited ITA No. 49 of 2012(P&H); Ajay Gandhi v. B Singh (2004) 2 SCC 120:2004 (1) SCR 164; The President, Income Tax AppellateTribunal v. A Kalyanasundaram (2005) 279 ITR 305(Mad); Suresh Desai & Associates v. Commissioner ofIncome Tax; (1998) 230 ITR 912 (Del); Birla CottonSpinning and Weaving Mills Ltd. v. Commissioner ofIncome Tax (1980) 123 ITR 354 (Del); Commissionerof Income Tax v. Digvijay Chemicals Ltd. (2007) 294ITR 359 (Del); CIT v. Parke Davis (India) Ltd (1999)239 ITR 820 (AP) – referred to.Case Law Reference2004 (1) SCR 164referred toPara 13.3CIVIL APPELLATE JURISDICTION : Civil Appeal No.4252of 2022.From the Judgment and Order dated 07.02.2019 of the High Courtof Punjab and Haryana at Chandigarh in Income Tax Appeal No.517 of2017.WithCivil Appeal Nos.4253 And 3480 of 2022.N. Venkataraman, ASG, Kumar Shashank, Amit Kumar, SridharPotaraju, Pranay Ranjan, Sughosh Subramaniyam, Raj Bahadur Yadav,Advs. for the Appellant.Rohit Jain, Aniket D. Agarwal, Ms. Kavita Jha, Advs. for theRespondent.The Judgment of the Court was delivered byPAMIDIGHANTAM SRI NARASIMHA, J.1. These appeals give rise to an important question concerningappellate jurisdiction of the High Courts under Section 260A of the IncomeTax Act, 19611 against judgments of Income Tax Appellate Tribunals2.AsBenches of the ITAT are constituted to exercise jurisdiction1 hereinafter referred to as ‘the Act’.2 hereinafter referred to as ‘ITAT’ / ‘Tribunals’.PR. COMM’R OF INCOME TAX – I, CHANDIGARH v. M/S.ABC PAPERS LTD. ABCDEFGH1060SUPREME COURT REPORTS[2022] 17 S.C.R.over more than one state, each state having a separate High Court,questionarose as to which of the High Court is the appropriate Court for filingappeals under Section 260A. The question arose because Section 260Ais open-textual and does not specify the High Court before which anappeal would lie in cases where Tribunals operated for plurality of States.This question came to be conclusively answered by the High Court ofDelhi in the case of Seth Banarsi Dass Gupta v. Commissioner ofIncome Tax3,wherein it was held that the appropriate High Court wouldbe the one where the Assessing Authority is situated. This judgmentcontinuous to hold the field.2. In these appeals,a further question that arise for considerationis the jurisdiction of the High Court consequent upon administrative orderof transfer of a ‘case’ under Section 127 of the Act from one AssessingAuthority to another Assessing Officer located in a different State. ThePunjab & Haryana High Court took the view that such a transfer wouldnot change the principle laid down in Seth Banarasi Dass Gupta.However, the Delhi High Court in CIT v. Sahara India FinancialCorporation Ltd.4 and CIT v. Aar Bee Industries Ltd.5 has taken adifferent view. The Delhi High Court held that an administrative orderof transfer of cases will also have the consequence of transferring eventhe jurisdiction of the High Court. As there is a difference of opinionbetween the High Court of Punjab & Haryana on the one hand and theHigh Court of Delhi on the other, we are called upon to determine anddeclarethe appropriate High Court for filing an appeal in such cases.3. Having considered the matter in detail, and while reversing thejudgments of the Delhi High Court in Sahara and Aar Bee,we have alsoheld that the appellate jurisdiction of the High Court stands on its ownfoundation and cannot be subject to the exercise of executive power totransfer a ‘case’ from one Assessing Officer to another AssessingOfficer.Facts of the case:4. The Appellant herein, M/s. ABC Papers Ltd.6 is a companyengaged in the manufacture of writing and printing paper. For theassessment year 2008-09, the Assessee filed its income tax returns before3 (1978) 113 ITR 817 (Del).4 (2007) 294 ITR 363 (Del).5 (2013) 357 ITR 542 (Del).6 hereinafter referred to as ‘the Assessee’. ABCDEFGH1061the Assessing Officer, New Delhi, on 30.09.2008. The DeputyCommissioner of Income Tax, Circle-1(1), New Delhi, issued a noticeunder Section 143 (2) of the Act and followed it up by an order ofassessment dated 30.12.2010.Aggrieved by that order, the Assesseepreferred an appeal to the Commissioner of Income Tax (Appeals) - IV,New Delhi, and by his order dated 16.02.2012, the Commissioner allowedthe appeal. Against this appellate order, the Revenue carried the matterto ITAT, New Delhi. The ITAT, New Delhi, by its order dated 11.05.2017,upheld the order of the CIT (Appeals) - IV, New Delhi, and dismissedthe appeal filed by the Revenue. Against this order of the ITAT, theRevenue filed ITA No. 517 of 2017 before the High Court of Punjab &Haryana.5. It is important to note certain events that overtook the above-referred proceedings. While the matter was pending appeal before theCIT (Appeals) - IV, New Delhi, as indicated above, a search operationunder Section 132(1) of the Act was carried out on 04.05.2011 at theoffice and factory of the Assessee in Chandigarh and certain places inthe State of Punjab, by the Directorate of Income Tax (Investigation),Ludhiana. Yet another development that took place after the searchoperation was that, by an order dated 26.06.2013 passed under Section127 of the Act, the Commissioner of Income Tax (Central), Ludhiana,centralized the cases of the Assessee for the assessment years 2006-07to 2013-14 and transferred the same to Central Circle, Ghaziabad.6. In view of the above transfer under Section 127, the DeputyCommissioner of Income Tax, Central Circle, Ghaziabad, proceededfurther and passed an assessment order on 31.03.2015. Aggrieved bythat order, the Assessee filed an appeal which came to be allowed bythe Commissioner of Income Tax (Appeals) – IV, Kanpur, on 20.12.2016.Against this appellate order, the Revenue preferred an appeal to ITAT,New Delhi. As the decision of the ITAT dated 11.05.2017 in the case ofthe Assessee with respect to an earlier assessment year was alreadyavailable, the ITAT, New Delhi, followed the said judgment and dismissedthe appeal filed by the Revenue by its order dated 01.09.2017. It isagainst this order that the Revenue filed ITA No. 130 of 2018 before theHigh Court of Punjab & Haryana.7. In fact, before the Revenue could file an appeal against theorders of the ITAT dated 11.05.2017 (arising out of the originalproceedings) and 01.09.2017 (arising out of proceedings after transferPR. COMM’R OF INCOME TAX – I, CHANDIGARH v. M/S.ABC PAPERS LTD. [PAMIDIGHANTAM SRI NARASIMHA, J.] ABCDEFGH1062SUPREME COURT REPORTS[2022] 17 S.C.R.under Section 127), the cases of the Assessee were re-transferred underSection 127 of the Act to the Deputy Commissioner of Income Tax,Circle-1(1), Chandigarh, w.e.f. 13.07.2017. Though this order is not onrecord and has also not been referred to in any of the proceedings, areference to the said order has been made in the written submissionsfiled before us. Perhaps it is on the basis of the said transfer that theRevenue took a decision to file appeals, being ITA No. 517 of 2017(against the order of the ITAT dated 11.05.2017) and ITA No. 130 of2018 (against the order of the ITAT dated 01.09.2017) before the HighCourt of Punjab & Haryana.8. The High Court of Punjab & Haryana by its judgment dated07.02.2019, disposed of ITA No. 130 of 2018 by holding that,notwithstanding the order under Section 127 of the Act which transferredthe cases of the Assessee to Chandigarh, the High Court of Punjab &Haryana would not have jurisdiction as the Assessing Officer who passedthe initial assessment order is situated outside the jurisdiction of the HighCourt. For arriving at this conclusion, the High Court followed the decisionin the case of Commissioner of Income Tax v. Motorola India Ltd.7andCommissioner of Income Tax (Central), Gurgaon v. M/s ParabolicDrugs Limited8.With this view of the matter, the High Court dismissedthe appeal as not maintainable. By the same judgment, the High Courtalso disposed of ITA No. 517 of 2017 filed by the Revenue against thedecision of the ITAT, New Delhi, dated 11.05.2017, by adopting the samelogic. Aggrieved by the decision of the High Court of Punjab & Haryanarefusing to entertain the appeals against the orders of the ITAT dated11.05.2017 and 01.09.2017, the Revenue filed the present appeals, beingCivil Appeal No. 4252 of 2022 (against the order of the High Court ofPunjab & Haryana in ITA No. 517 of 2017) and Civil Appeal No. 4253of 2022 (against the order of the High Court of Punjab & Haryana inITA No. 130 of 2018) before this Court.9. It is also important to mention here that against the very sameorder of the ITAT, New Delhi, dated 11.05.2017, the Revenue also filedan appeal, being ITA No. 515 of 2019 before the High Court of Delhi.The High Court of Delhi having noted the decision of the High Court ofPunjab & Haryana dated 07.02.2019 holding that it does not havejurisdiction, nevertheless, dismissed the appeal by its order dated7 (2010) 326 ITR 156 (P&H).8 ITA No. 49 of 2012 (P&H). ABCDEFGH106321.05.2019 on the ground of lack of territorial jurisdiction of the HighCourt of Delhi. For arriving at the conclusion that the High Court ofDelhi would not have territorial jurisdiction, the decision of its own Courtin the case of Sahara9 and Aar Bee10 were relied upon. In those twodecisions, the High Court of Delhi had taken a view that when an orderof transfer under Section 127 of the Act is passed, the jurisdiction getstransferred to the High Court within whose jurisdiction the situs of thetransferee officer is located. Aggrieved by the decision of the High Courtof Delhi, the Revenue preferred appeal to this Court being, Civil AppealNo. 3480 of 2022.10. The above referred facts clearly evidence that in the case ofthe very same Assessee, the High Court of Punjab & Haryana as wellas the High Court of Delhi have refused to entertain the appeals on theground that they lack territorial jurisdiction. Both the High Court reliedon decisions of their own Courts which have taken diametrically oppositeperspectives. We are thus tasked to resolve the issue as to which HighCourt would have the jurisdiction to entertain an appeal against a decisionof a Bench of the ITAT exercising jurisdiction over more than one state,particularly when case(s) of same assessment year are transferred underSection 127 of the Act.Contention of the Parties and the issue arising forconsideration:11.1 Though the Revenue is the Appellant in these batch of matters,Shri N. Venkatraman, learned Additional Solicitor General representingthe Union of India, graciously consented to the learned counsel for theAssessee Sh. Rohit Jain to open the case. Sh. N. Venkatraman alsoobserved that Mr. Jain had copiously prepared a compilation of all thejudgments on the subject and a note for assisting the Court. Further, andmore importantly, Sh. N. Venkatraman has also supported the legalsubmission advanced by Sh. Rohit Jain in so far as the issue of jurisdictionis concerned. We appreciate the approach adopted by the learned LawOfficer, as precious time of the Court could be saved by avoiding repetitionof arguments. We were greatly benefited by the compilation of theprecedents on the subject and the written note of Shri Rohit Jain and histeam. We place on record the valuable assistance rendered by them.9 supra (note 4)10 supra (note 5)PR. COMM’R OF INCOME TAX – I, CHANDIGARH v. M/S.ABC PAPERS LTD. [PAMIDIGHANTAM SRI NARASIMHA, J.] ABCDEFGH1064SUPREME COURT REPORTS[2022] 17 S.C.R.11.2 There is another aspect. As the High Courts have notpronounced upon the merits of the matter, we will not be entering intothe merits of the dispute and our enquiry will be confined to the questionas to which is the appropriate High Court for filing an appeal underSection 260A of the Act against a decision of the ITAT. Our enquiry willalso extend to determining the appropriate High Court for appeals againstorder of ITAT where an order of transfer of case(s) from one AssessingOfficer to another Assessing Officer even with respect to the sameassessment year, has been passed under Section 127 of the Act.11.3 Section 260A of the Act provides for a statutory appeal tothe High Court against every order of the ITAT. As certain Benches ofthe ITAT exercise jurisdiction over more than one state, the primaryquestion is before which High Court would an appeal lie? Should it bethe High Court of the State in which the ITAT is physically located orthe High Court of the State in which the Assessee is residing and/ordoing its business or the High Court where the Assessing Officer whoassessed the assessee is located.11.4 For making the correct interpretative choice, it is necessaryto refer to certain provisions of the Act.Legal Framework:12. Chapter XIII of the Act deals with Income Tax Authorities.Section 116, occurring in this Chapter enlists the classes of Income TaxAuthorities who would be administering the provisions of the Act. Section120, which deals with the Jurisdiction of the Income Tax Authoritiesprovides that the Authorities shall exercise the powers and functionsconferred or assigned to them under the Act. Section 124 is important. Itrelates to the jurisdiction of Assessing Officers in particular. It is adeparture from the previous regime under the 1922 Act in Section 64, asper which the place of assessment was the place where the assesseecarries on business, profession or vocation. Section 124 inverts theposition, and instead empowers an Assessing Officer to exercisejurisdiction over any area that has been entrusted to him/her underSection 120 of the Act. The Assessing Officer will, therefore, have thepower and jurisdiction with respect to any person carrying on a businessor profession in that area. Another provision that we need to take noteof is Section 127, which empowers senior income tax authorities totransfer any ‘case’ from one or more Assessing Officer to any otherAssessing Officer. Sub-section (4) of Section 127 provides that the ABCDEFGH1065transfer can be made at any stage. Explanation to Sub-section (4), whichis reproduced hereunder, for ready reference explains the expression‘case’ used in the Section: -“Section 127(4)- The transfer of a case under sub- section(1) or sub- section (2) may be made at any stage of theproceedings, and shall not render necessary the re- issue ofany notice already issued by the Assessing Officer or AssessingOfficers from whom the case is transferred.Explanation. - In section 120 and this section, the word“case”, in relation to any person whose name is specified inany order or direction issued thereunder, means allproceedings under this Act in respect of any year which maybe pending on the date of such order or direction or whichmay have been completed on or before such date, and includesalso all proceedings under this Act which may be commencedafter the date of such order or direction in respect of anyyear.”13.1 Another set of provisions relating to the judicial remediesprovided under the Act are equally important for us to note. Chapter XXdeals with Appeals and Revision. Part A of this Chapter provides forappeals against assessment orders to Deputy Commissioner (Appeals)and Commissioner (Appeals). Part B comprises of provision relating toappeals to the ITAT. ITAT is constituted by the Central Governmentunder Section 25211 of the Act. Section 25512 of the Act provides thatthe President of the ITAT may constitute Benches for exercising anddischarging the powers and functions of the ITAT. Under Sub-Section(5) of Section 255, the ITAT, through its President, is empowered toregulate the procedure of the Benches, including the places at which theBenches shall hold their sittings.11 Section 252. Appellate Tribunal(i) The Central Government shall constitute an Appellate Tribunalconsisting of as many judicial and accountant members as it thinks fit toexercise the powers and discharge the functions conferred on the AppellateTribunal by this Act.12 Section 255. Procedure of Appellate Tribunal(i) The powers and functions of the Appellate Tribunal may be exercisedand discharged by Benches constituted by the President of the AppellateTribunal from among the members thereof.PR. COMM’R OF INCOME TAX – I, CHANDIGARH v. M/S.ABC PAPERS LTD. [PAMIDIGHANTAM SRI NARASIMHA, J.] ABCDEFGH1066SUPREME COURT REPORTS[2022] 17 S.C.R.13.2 In exercise of power under sub-Section (5) of Section 255,the ITAT notified the Income Tax (Appellate Tribunal), Rules 1963.As per Rule 313, a Bench shall hold its sittings at its headquarters or atsuch other place as authorized by the President. Under Rule 414, a Benchshall hear and determine such appeals as the President may by orderdirect.13.3 ITAT is a unified forum functioning in the form of Benchesat the administrative discretion of the President. Jurisdiction exercisedby the Benches of the ITAT do not follow the structure contemplated inArticle 1 of the Constitution, which divides the Union into States andUnion Territories. Instead, Benches are sometimes constituted in a waythat their jurisdiction encompasses territories of more than one state.For example, the Allahabad Bench include parts of Uttarakhand. TheAmritsar Bench has within its jurisdiction the entire State of Jammu &Kashmir. Delhi Bench includes parts of Haryana and U.P. The GuwahatiBench comprises of Arunachal Pradesh, Meghalaya, Mizoram, Assam,Manipur, Nagaland and Tripura. Further, the Bangalore Bench excludeslarge parts of Karnataka such as Belgaum, Mangalore, Karwar andNorth Kanara, and these excluded districts form part of the Panaji Benchwhich includes Goa. Therefore, Benches are not State or U.T. centric,but are based on the administrative discretion of the President of theITAT. This Court in Ajay Gandhi v. B Singh15and the Madras HighCourt in The President, Income Tax Appellate Tribunal v. AKalyanasundaram16 have upheld the powers of the President withrespect to posting and transfer of members and also the power to decidethe constitution of Benches and the places of sitting of the members.14. In so far as appeal to a High Court is concerned, it is Section260A which provides that an appeal shall lie from every order of theITAT. Section 260A, to the extent relevant is as under:13 Rule-3. Sittings of Bench A bench shall hold its sittings at its headquarters or at such other place orplaces as may be authorized by the President.14 Rule-4. Powers of Bench(1) A Bench shall hear and determine such appeals and applicationsmade under the Act as the President may be general or special orderdirect.15 (2004) 2 SCC 120.16 (2005) 279 ITR 305 (Mad). ABCDEFGH1067“260A. Appeal to High Court. (1) An appeal shall lie to theHigh Court from every order passed in appeal by theAppellate Tribunal before the date of establishment of theNational Tax Tribunal, if the High Court is satisfied that thecase involves a substantial question of law.”15. As is evident from the above, Section 260A is open textualand does not specify the High Court before which an appeal under Section260A of the Act would lie. Even Section 26917 which defines ‘High Court’merely relates the High Court in any State with the High Court for thatState and further prescribes specific High Courts for each of the U.T. Itis this uncertainty about identification of the appropriate High Court forfiling an appeal against an order of the ITAT exercising jurisdiction overmore than one state that, we are called upon to decipher and declare.16. A judicial remedy must be effective, independent and at thesame time certain. Certainty of forum would involve unequivocal vestingof jurisdiction to adjudicate and determine the dispute in a named forum.17. Keeping the above principle in mind, we will now return to theinquiry into the appropriate High Court for filing an appeal against anorder of a bench of the ITAT exercising jurisdiction over more than onestate. We notice that the issue has already fallen for consideration beforea Division Bench of the High Court of Delhi way back in 1978 in thecase of Seth Banarsi Dass Gupta. Having considered the matter indetail, the High Court of Delhi held that the “most appropriate” HighCourt for filing an appeal would be the one where the Assessing Officeris located. The decision was followed in Suresh Desai (supra) by Justice17 269. Definition of “High Court”. —In this Chapter, —“High Court” means—(i)in relation to any State, the High Court for that State;(ii) in relation to the Union territory of Delhi, the High Court of Delhi;2 [* * * * *]3 [* * * * * ](iv)in relation to the Union territory of the Andaman and NicobarIslands, the High Court at Calcutta;(v)in relation to the Union territory of [Lakshadweep], the High Courtof Kerala;[(va)in relation to the Union territory of Chandigarh, the High Court ofPunjab and Haryana;][(vi)in relation to the Union territories of Dadra and Nagar Haveli and ***Daman and Diu, the High Court at Bombay; and(vii)in relation to the Union territory of Pondicherry, the High Court atMadras.]PR. COMM’R OF INCOME TAX – I, CHANDIGARH v. M/S.ABC PAPERS LTD. [PAMIDIGHANTAM SRI NARASIMHA, J.] ABCDEFGH1068SUPREME COURT REPORTS[2022] 17 S.C.R.Lahoti (as he then was) and provided additional reasons in support ofthe same view. The interpretative choices are based on the followingreasons, which we have reformulated as under:(I) As benches of the ITAT exercise jurisdiction over more thanone state, Explanation to Standing Order No. 1 of 1954 andStanding Order No. 1 of 1967 issued under the Rules prescribethat, the jurisdiction of the ITAT should be based on the locationof the Assessing Officer. The same principle should apply fordetermining the jurisdiction of the High Court for an appeal againstthe decision of the ITAT.(II) It would be appropriate for the ITAT to refer a question oflaw to the High Court within whose jurisdiction the AssessingOfficer or the CIT which has decided the case is located, asthese authorities would be bound to follow the decision of theconcerned High Court.(III) This interpretation will also be in consonance with theexpression “in relation with any State, the High Court of that State”provided in the definition of the “High Court” in Section 66(8)(under the present 1961 Act, it is Section 269).(IV) The appeals and references cannot be made to a High Courtonly on the basis that a bench of the ITAT is located within thejurisdiction of the said High Court, as it will create an anomaloussituation for that as well as other High Courts.(V) In view of the doctrine of precedents and the rule of bindingefficacy of law laid down by a High Court within its territorialjurisdiction,a question of law arsing for decision in a referenceshould be determined by the High Court which exercises territorialjurisdiction over the situs of the Assessing Officer (Suresh Desai).18. The principle laid in Seth Banarasi Dass is followed in SureshDesai & Associates v. Commissioner of Income Tax18, Birla CottonSpinning and Weaving Mills Ltd. v. Commissioner of Income Tax19,Commissioner of Income Tax v. Digvijay Chemicals Ltd.20andCommissioner of Income Tax v. Motorola India Ltd.21It is interesting18 (1998) 230 ITR 912 (Del).19 (1980) 123 ITR 354 (Del).20 (2007) 294 ITR 359 (Del).21 supra (note 7) ABCDEFGH1069to note that this basic principle is accepted and abided as a precedenteven in the two subsequent judgments of the High Court of Delhi inSahara and Aar Bee. Thus, it is well-settled that the appellate jurisdictionof a High Court under Section 260A is exercisable by a High Courtwithin whose territorial jurisdiction the assessing officer is located.19. However, our enquiry does not stop here. A further questionthat arises in these batch of appeals is in the context of an order oftransfer under Section 127 of the Act, whereby the case of an assesseegets transferred from an Assessing Officer in one State to anotherAssessing Officer, situated in another state under the jurisdiction of adifferent High Court. The real question is whether the jurisdiction of aHigh Court would also change following an order of transfer under Section127. For example, in this very case, where the assessment order waspassed by the Assessing Officer in Ghaziabad, the appeal therefromwas decided by the CIT (Appeals) IV, Kanpur and the appeal to theTribunal was decided by ITAT, New Delhi, should the Lucknow Benchof the Allahabad High Court have jurisdiction or should the jurisdictionvest with the Punjab & Haryana High Court in whose territorial limitsthe transferee Assessing Officer is located.20. In Suresh Desai, the question relating to the consequencesupon an order of transfer under Section 127 did arise for consideration.Apart from holding that the transfer order did not involve the assessmentyear with respect to which the appeals are concerned, the High Court ofDelhi made an important observation that “it is not that the jurisdictionto make assessment in respect of matters arising at Bombay havebeen conferred or transferred to Delhi by a reference to territoryor persons or class of persons or incomes or class of income orcases or class of cases as contemplated by Section 120 of the Act”.This view is also in consonance with the four principles laid down inSeth BanarasiDassand it is further strengthened by the additionalreasoning given by Justice Lahoti in Suresh Desai case.The sameapproach was adopted by the High Court of Delhi in Digvijay Chemicalswhere despite an order of transfer from Assessing Officer, Bulandshahar,to Assessing Officer, New Delhi, the High Court of Delhi held that itdoes not have the jurisdiction as the Assessing Officer was situated inBulandshahar. Pertinently, even in Digvijay Chemicals, the transferorder related to a different assessment year.PR. COMM’R OF INCOME TAX – I, CHANDIGARH v. M/S.ABC PAPERS LTD. [PAMIDIGHANTAM SRI NARASIMHA, J.] ABCDEFGH1070SUPREME COURT REPORTS[2022] 17 S.C.R.21. In Motorola India Ltd., a case decided by the High Court ofPunjab & Haryana,the assessment year which was the subject of appealwas also the subject of a transfer order passed under Section 127 of theAct. In that case, the assessment took place in Bangalore, the appealtherefrom came to be decided in Bangalore and a further appeal wasalso decided by the ITAT in Bangalore. At this stage, the case wastransferred under Section 127 of the Act from Assessing Officer,Bangalore, to Assessing Officer, Gurgaon. It is in this context that theassessee objected to the appeal filed by the Revenue before the HighCourt of Punjab & Haryana and the High Court accepted the contentionand dismissed the appeal on the ground that Punjab & Haryana HighCourt has no jurisdiction. It was held that even if it is the same assessmentyear, the appropriate High Court would be the High Court of Karnataka.Unlike Suresh Desai and Digvijay Chemicals, in this case, the recordsof the same assessment years were transferred. The revenue relied onthe Explanation to Section 127 of the Act to argue that the expression“cases” in the explanation shall cover proceedings filed to be filed beforea High Court as well. The High Court of Punjab & Haryana negativedthis contention by holding that:“12. … The reliance of the Revenue on the Explanation tosection 127 of the Act with regard to the meaning of theexpression “case” is wholly misplaced and is liable to berejected because section 120 of the Act does not deal withjurisdiction of the Tribunal or the High Court….13. A conjoint reading of the aforementioned provisions makesit evident that the Director General or Chief Commissioneror Commissioner is empowered to transfer any case from oneor more accessing officers subordinate to him to any otherAssessing Officer. It also deals with the procedure when thecase is transferred from one Accessing Officer subordinateto a Director General or Chief Commissioner or Commissionerto an Assessing Officer who is not subordinate to the sameDirector General, Chief Commissioner or Commissioner. Theaforementioned situation and the definition of the expression“case” in relation to jurisdiction of an Assessing Officer isquite understandable but it has got nothing to do with theterritorial jurisdiction of the Tribunal or High Courts merelybecause section 127 of the Act dealing with transfer has been ABCDEFGH1071incorporated in the same Chapter. Therefore, the argumentraised is completely devoid of substance and we have nohesitation to reject the same.”22. We will now refer to the decision of the High Court of Delhi inthe case of Sahara,where the Court has taken a view that upon anorder of transfer under Section 127 of the Act, the case of the assesseewould get transferred “lock, stock and barrel” including the High Court.As per this decision, the High Court having jurisdiction over the situs ofthe transferee Assessing Officer alone would have jurisdiction.23. The facts involved the case of Sahara are that the assessmentorder was passed by Assessing Officer, Lucknow. Appeal against thatorder was decided by CIT (Appeals), Lucknow, and a further appealwas decided by ITAT, Lucknow. Pursuant to the ITAT order, an appealwas filed before the Lucknow Bench of the Allahabad High Court. Duringthe pendency of this appeal, the records of the assessee came to betransferred from Lucknow to New Delhi. Hence, an appeal came to befiled before the High Court of Delhi as well. A preliminary objection wasraised that the High Court of Delhi lacks jurisdiction as the AssessingOfficer was situated in Lucknow. Departing from the long-standingdecisions from Seth Banarasi Dass onwards, the Court rejected thecontention and held that the High Court of Delhi had the jurisdiction toentertain the appeal. The relevant portion of the judgment is as under:-“13. The order passed under Section 127(2) of the Act clearlyrelates to the “case” of the assessee mentioned in the schedule,and by virtue of the Explanation, all future proceedings thatmay be taken under the Act (obviously including an appealunder section 260A thereof) would now have to be in harmonywith the order passed under section 127(2) of the Act.Consequently, the jurisdiction in respect of the “case” andthe assessee having been shifted from Lucknow to Delhi, theRevenue could file the appeal under section 260A of the Actonly in Delhi and it could not have filed an appeal in theLucknow Bench of the Allahabad High Court.…..17. …. the effect of the transfer of jurisdiction from Lucknowto Delhi specifically arises in the present case and we are ofthe view that the jurisdiction in respect of the assessee havingPR. COMM’R OF INCOME TAX – I, CHANDIGARH v. M/S.ABC PAPERS LTD. [PAMIDIGHANTAM SRI NARASIMHA, J.] ABCDEFGH1072SUPREME COURT REPORTS[2022] 17 S.C.R.been transferred to Delhi lock, stock and barrel and all therecords of the assessee also having been transferred fromLucknow to Delhi, it is only the High Court in Delhi that canentertain an appeal under section 260A of the Act directedagainst the order passed by the Tribunal on July 22, 2005.Our conclusion follows from a plain reading ofthe Explanation to section 127(4) of the Act as well as fromthe effect of the order dated July 29, 2005, passed by theCommissioner of Income-tax (Central), Kanpur, under section127(2) of the Act. Consequently, with effect from September29, 2005, (the date from which the order passed under section127(2) of the Act is enforced) the jurisdiction in respect ofthe assessee for future proceedings under section 260A ofthe Act is with the Delhi High Court. Admittedly, the presentappeals have been filed after September 29, 2005, and sothey would be maintainable in this court and no other HighCourt.”24. The decision in the case of Sahara is followed by a subsequentBench of the High Court of Delhi in Aar Bee.In this case, the assessmentorder was passed in Jammu, an appeal against that order was decidedby CIT (Appeals), Jammu, and thereafter, an appeal came to be decidedby ITAT, Amritsar. Immediately after the ITAT order, the records of theassessee came to be transferred from Jammu to New Delhi by an orderunder Section 127 of the Act. Hence, an appeal against the ITAT orderwas filed before the High Court of Delhi. When the matter came upbefore the High Court of Delhi, it was contended that the High Court ofDelhi did not have jurisdiction to entertain the appeal in as much as thesitus of the Assessing Officer was in Jammu. In support, the decision ofthe High Court of Punjab & Haryana in Motorola,was relied upon.Rejecting the contention, differing with Motorola and following thejudgment of its own Court in Sahara, it was held as under: -“15. We are afraid and with respect we say so that we areunable to agree with the views expressed by the Punjab &Haryana High Court and are bound to follow the decision ofthis court in Sahara India (supra). We are not inclined toaccept the view taken by the High Punjab & Haryana HighCourt, because while it is true that the reference to the case iswith regard to the jurisdiction of an income-tax authority, itis also true that the jurisdiction of the High Court isdetermined by the situs of the Assessing Officer. When the ABCDEFGH1073Assessing Officer itself has been changed from one place toanother, the High Court exercising jurisdiction in respect ofthe territory covered by the transferee Assessing Officer wouldbe the one which would have jurisdiction to hear the appealunder Section 260-A. ...”Analysis:25. The reasoning adopted by the High Court of Delhi in Saharais based only on the meaning that it attributed to the expression ‘cases’in the Explanation to Section 127(4) of the Act. The High Court ofDelhi was of the view that ‘cases’ must include within its sweep, notonly the cases pending before the Authorities enlisted under Section 116of the Act, but also the proceedings before the ITAT as well as a HighCourt. We are of the opinion that the High Court of Delhi has misreadthe scope and ambit of Section 127.26. We will explain this in detail. Section 127 occurs in ChapterXIII of the Act which relates to Income Tax Authorities. In the samechapter, Section 116 enlists the Income Tax Authorities and Section 120specifies the jurisdiction of such Authorities. While Section 124 specificallyspeaks of the jurisdiction of Assessing Officers, Section 127 enables ahigher authority to transfer a ‘case’ from one Assessing Officer to anotherAssessing Officer. All these provisions in Chapter XIII only relate to theexecutive or administrative powers of Income Tax Authorities. We haveno hesitation in our mind that the vesting of appellate jurisdiction has nobearing on judicial remedies provided in Chapter XX of the Actbeforethe ITAT and the High Court. The mistake committed by the High Courtwas in assuming that the expression “case” in the Explanation to Sub-Section 4 of Section 127 has an overarching effect and would includethe proceedings pending before the ITAT as well as a High Court. Thisfundamental error has led the Division Bench of the High Court of Delhito come to a conclusion that an order of transfer made under Section127 would have the effect of transferring the case “lock, stock andbarrel” not only from the jurisdiction of the ITAT, but also from that ofthe High Court in which the Assessing Officer was located, and vest itin the High Court having jurisdiction over the transferee AssessingOfficer. This erroneous interpretation was in fact advanced before otherHigh Courts as well, but they were rejected straightaway. One instantexample is the case of CIT v. Parke Davis (India) Ltd.22, where theAndhra Pradesh High Court held: -22 (1999) 239 ITR 820 (AP).PR. COMM’R OF INCOME TAX – I, CHANDIGARH v. M/S.ABC PAPERS LTD. [PAMIDIGHANTAM SRI NARASIMHA, J.] ABCDEFGH1074SUPREME COURT REPORTS[2022] 17 S.C.R.“…The interpretation sought to be placed on the Explanationto section 127 leads to incongruous results quite contrary tothe scheme of the Act and has the effect of investing theprescribed authorities with the power to virtually interferewith the territorial jurisdiction of the concerned High Court.…”27. With a slight digression from the main issue, we may note thatthe Assessee as well as the Revenue are on the same page in theseappeals, taking the view that the decision of the High Court of Delhi inSahara is not correctly decided. They may be right. However, as therewas no serious contest at the bar, the principle suggested by the Assesseeas accepted by the Revenue did not suffer strict scrutiny as is alwaysthe case in any contested case, and therefore, the Court is left to imaginethe contrary proposition in support of the view taken in Sahara.We hadno difficulty in conceptualising that, since every judge had once been alawyer. We have raised and dealt with them in the following paragraphs.28. Returning to the analyses in the decision in Sahara, we havenoticed that the Division Bench of the High Court of Delhi sought todistinguish the two decisions of the very same High Court in SureshDesaiand Digvijay Chemicalson the ground that those cases did notinvolve the transfer of cases of the very same assessment year. We willreformulate this as a proposition of law. If it is the accepted principle todetermine the jurisdiction of a High Court under Section 260A of the Acton the basis of the location of the Assessing Officer who assessed thecase, then, by the strength of the very same logic, upon transfer of acase to another Assessing Officer under Section 127, the jurisdictionunder Section 260A must be with the High Court in whose jurisdictionthe new Assessing Officer is located. A logical extension of this argumentis that, once the case is transferred to an Assessing Officer situatedoutside the jurisdiction of the existing High Court, the entire files relatingto the case should now be in the possession and custody of the newAssessing Officer. It could be argued that the Assessing Officer whoexercised the jurisdiction before its transfer will not be in a position toassist the High Court, further, he cannot implement the decision of thatHigh Court, after it decides the question of law as he is no more theAssessing Officer. We will now proceed to deal with these arguments.29. The binding nature of decisions of an appellate court establishedunder a statute on subordinate courts and tribunals within the territorial ABCDEFGH1075jurisdiction of the State, is a larger principle involving consistency, certaintyand judicial discipline, and it has a direct bearing on the rule of law. This‘need for order’ and consistency in decision making must inform ourinterpretation of judicial remedies. An important reason adopted in thecase of Seth Banarasi Dass Gupta, further highlighted by Justice Lahotiin Suresh Desai, is that a decision of a High Court is binding onsubordinate courts as well as tribunals operating within its territorialjurisdiction. It is for this very reason that the Assessing Officer,Commissioner of Appeals and the ITAT operate under the concernedHigh Court as one unit, for consistency and systematic development ofthe law. It is also important to note that the decisions of the High Courtin whose jurisdiction the transferee Assessing Officer is situated do notbind the Authorities or the ITAT which had passed orders before thetransfer of the case has taken place. This creates an anomalous situation,as the erroneous principle adopted by the authority or the ITAT, even ifcorrected by the High Court outside its jurisdiction, would not be bindingon them.30. The legal structure under the Income Tax Act commencingwithAssessing Officer, the Commissioner of Appeals, ITAT and finallythe High Court under Section 260A must be seen as a lineal progressionof judicial remedies.Culmination of all these proceedings in question oflaw jurisdiction of the High Court under Section 260A of the Act is ofspecial significance as it depicts the overarching judicial superintendenceof the High Court over Tribunals and other Authorities operating withinits territorial jurisdiction.31. The power of transfer exercisable under Section 127 is relatableonly to the jurisdiction of the Income Tax Authorities. It has no bearingon the ITAT, much less on a High Court. If we accept the submission, itwill have the effect of the executive having the power to determine thejurisdiction of a High Court. This can never be the intention of theParliament. The jurisdiction of a High Court stands on its own footing byvirtue of Section 260A read with Section 269 of the Act. Whileinterpreting a judicial remedy, a Constitutional Court should not adopt anapproach where the identity of the appellate forum would be contingentupon or vacillates subject to the exercise of some other power. Such aninterpretation will clearly be against the interest of justice. Under Section127, the authorities have the power to transfer a case either upon therequest of an assessee or for their own reasons. Though the decisionPR. COMM’R OF INCOME TAX – I, CHANDIGARH v. M/S.ABC PAPERS LTD. [PAMIDIGHANTAM SRI NARASIMHA, J.] ABCDEFGH1076SUPREME COURT REPORTS[2022] 17 S.C.R.under Section 127 is subject to judicial review or even an appellate scrutiny,this Court for larger reasons would avoid an interpretation that wouldrender the appellate jurisdiction of a High Court dependent upontheexecutive power. As a matter of principle, transfer of a case fromone judicial forum to another judicial forum, without the intervention of aCourt of law is against the independence of judiciary. This is true,particularly, when such a transfer can occur in exercise of pure executivepower. This is a yet another reason for rejecting the interpretation adoptedin the case of Sahara.32. For the reasons stated above, we hold that the decision of theHigh Court of Delhi in Sahara and Aar Bee do not lay down the correctlaw and therefore, we overrule these judgments.33. In conclusion, we hold that appeals against every decision ofthe ITAT shall lie only before the High Court within whose jurisdictionthe Assessing Officer who passed the assessment order is situated. Evenif the case or cases of an assessee are transferred in exercise of powerunder Section 127 of the Act, the High Court within whose jurisdictionthe Assessing Officer has passed the order, shall continue to exercisethe jurisdiction of appeal. This principle is applicable even if the transferis under Section 127 for the same assessment year(s).34. We will now deal with the decisions of certain High Courtwhich have taken a view that the jurisdiction of the High Court must bebased on the location of the ITAT. These judgments are CIT v. ParkeDavis (India) Ltd.23, CIT v. A.B.C. India Ltd.24, CIT v. J.L. Marrison(India) Ltd.25, CIT v. Akzo Nobel India Ltd.26, Pr. CIT v. SungardSolutions (I) Pvt. Ltd.27and CIT v. Shree Ganapati Rolling Mills (P)Ltd.28 We have examined these cases in detail and found that theAssessing Officers in each of these cases were in fact not located withinthe territorial jurisdiction of these High Courts. For this reason, theaforesaid decisions are correctto the extent of these High Courts notexercising jurisdiction. However, while returning the files to be representedin the appropriate court, certain observationswere made stating that the23 ibid.24 (2003) 126 Taxman 18 (Cal).25 (2005) 272 ITR 321 (Cal).26 (2014) 47 Taxmann.com 372 (Cal).27 (2019) 415 ITR 294 (Bom).28 (2013) 356 ITR 586 (Gau). ABCDEFGH1077appeals could be filed in the High Court which exercises territorialjurisdiction over the concerned ITAT. These observations are only obiter.In any event they did not preclude the party from filing the appeal beforethe appropriate High Court where the Assessing Officers exercisedjurisdiction. However, we are reiterating for clarity and certainty thatthe jurisdiction of a High Court is not dependent on the location of theITAT, as sometimes a Bench of the ITAT exercises jurisdiction overplurality of states.35.1 For the reasons and principles that we have laid down, wedispose of these Civil Appeals with the following directions.35.2 We will first deal with the order passed by the AssessingOfficer, Delhi dated 30.12.2010, against which an appeal was decidedby CIT (Appeals) – IV, New Delhi on 16.02.2012, against which theITAT, New Delhi disposed of an appeal on 11.05.2017, against which anappeal was filed in the High Court of Punjab & Haryana which it disposedof by order dated 07.02.2019, against which Civil Appeal No. 4252 of2022 was filed before this Court. The said Civil Appeal is dismissed byupholding the order dated 07.02.2019 passed by the High Court of Punjab& Haryana,with a direction that the appropriate High Court for disposalof the appeal would be the High Court of Delhi as the case was assessedby the Assessing Officer, Delhi.35.3 The other Civil Appeal arises out of an order passed by theAssessing Officer, Ghaziabad dated 31.03.2015, against which an appealwas decided by CIT (Appeals) – IV, Kanpur on 20.12.2016, againstwhich the ITAT, New Delhi disposed of an appeal on 01.09.2017, againstwhich an appeal was filed in the High Court of Punjab & Haryana whichit disposed of by order dated 07.02.2019, against which Civil Appeal No.4253 of 2022 was filed before this Court. The said Civil Appeal isdismissed by upholding the order dated 07.02.2019 passed by the HighCourt of Punjab and Haryana with a direction that the correct HighCourt to dispose of the appeal would be the Lucknow Bench of theAllahabad High Court.35.4 Against the decision of the ITAT, New Delhi dated 11.05.2017,the Revenue had filed an appeal before the High Court of Delhi whichwas disposed of by the High Court of Delhi on 21.05.2019, against whichCivil Appeal No. 3480 of 2022 has been filed before this Court. Weallow the said Civil Appeal by setting aside the order dated 21.05.2019PR. COMM’R OF INCOME TAX – I, CHANDIGARH v. M/S.ABC PAPERS LTD. [PAMIDIGHANTAM SRI NARASIMHA, J.] ABCDEFGH1078SUPREME COURT REPORTS[2022] 17 S.C.R.passed by the High Court of Delhi refusing to exercise jurisdiction anddirect the High Court of Delhi to entertain the appeal and dispose of theappeal as per law.36. Parties shall bear their own costs.Divya PandeyAppeals disposed of.(Assisted by : Rituja Chouksey, LCRA)