Holding

Appeals against ITAT orders lie only before the High Court within whose territorial jurisdiction the Assessing Officer who passed the assessment order is situated, and this jurisdiction is unaffected by a transfer under Section 127.

Summary

M/s ABC Papers Ltd. challenged assessment orders for assessment years 2008-09 to 2013-14, which led to a series of appeals before the Commissioner of Income Tax (Appeals), the Income Tax Appellate Tribunal (ITAT) and two High Courts (Punjab & Haryana and Delhi). The core dispute was which High Court has jurisdiction under Section 260A of the Income Tax Act to hear appeals against ITAT orders when the ITAT bench exercises jurisdiction over multiple states and when the case is transferred under Section 127 to a different Assessing Officer. The Delhi High Court held that a transfer under Section 127 also transfers the appellate jurisdiction, whereas the Punjab & Haryana High Court held that jurisdiction remains with the High Court of the Assessing Officer who made the original assessment. The Supreme Court examined the statutory scheme, the definition of "High Court" in Section 269, and the principle that appellate jurisdiction cannot be altered by an executive transfer of a case. It concluded that the appropriate High Court is the one within whose territorial jurisdiction the Assessing Officer who passed the assessment order is situated, and this does not change even after a Section 127 transfer. Accordingly, the Supreme Court dismissed the appeals that sought to overturn the Punjab & Haryana High Court's orders and directed the Delhi High Court to entertain the pending appeal, clarifying the law on appellate jurisdiction.

Issues considered

The appropriate High Court for filing an appeal under Section 260A against an ITAT order when the ITAT bench covers more than one state.
Whether a transfer of a case under Section 127 of the Income Tax Act changes the High Court having jurisdiction to entertain a Section 260A appeal.

Legislation cited

Income Tax Act, 1961s. 116, s. 120, s. 124, s. 127, s. 252, s. 255, s. 260A, s. 269

Subjects

Income TaxSection 260ASection 127Appellate jurisdictionHigh CourtITATTransfer of casePrecedentTax assessment

Judgment

1058 [2022]
SUPREME COURT 17 S.C.R. 1058
REPORTS [2022] 17 S.C.R.

A PR. COMMISSIONER OF INCOME TAX – I, CHANDIGARH
v.
M/S. ABC PAPERS LIMITED
(Civil Appeal No. 4252 of 2022)
B AUGUST 18, 2022
[UDAY UMESH LALIT, S. RAVINDRA BHAT AND
PAMIDIGHANTAM SRI NARASIMHA JJ.]
IncomeTax Act, 1961– ss.260A, 127– Appellate jurisdiction
of the High Courts u/s.260A against judgments of Income Tax
C
Appellate Tribunals – Jurisdiction of the High Court consequent
upon administrative order of transfer of a ‘case’ u/s.127from one
Assessing Authority to another Assessing Officer located in a
different State – Held: Appeals against every decision of the ITAT
shall lie only before the High Court within whose jurisdiction the
D Assessing Officer who passed the assessment order is situated –
Even if the case or cases of an assessee are transferred in exercise
of power u/s.127, 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 u/s.127 for the same assessment year(s) – Jurisdiction of
E
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.
Precedent – Held: Binding nature of decisions of an appellate
court established under a statute on subordinate courts and tribunals
F
within the territorial jurisdiction of the State, is a larger principle
involving consistency, certainty and judicial discipline, and it has
a direct bearing on the rule of law – This ‘need for order’ and
consistency in decision making must inform our interpretation of
judicial remedies.
G CIT v. Sahara India Financial Corporation Ltd. (2007)
294 ITR 363 (Del); CIT v. Aar Bee Industries Ltd. (2013)
357 ITR 542 (Del) – overruled.
Seth Banarsi Dass Gupta v. Commissioner of Income
Tax (1978) 113 ITR 817 (Del); Commissioner of Income
H
1058
PR. COMM’R OF INCOME TAX – I, CHANDIGARH v. M/S. 1059
ABC PAPERS LTD.

Tax v. Motorola India Ltd. (2010) 326 ITR 156 (P&H); A
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 Appellate
Tribunal v. A Kalyanasundaram (2005) 279 ITR 305
B
(Mad); Suresh Desai & Associates v. Commissioner of
Income Tax; (1998) 230 ITR 912 (Del); Birla Cotton
Spinning and Weaving Mills Ltd. v. Commissioner of
Income Tax (1980) 123 ITR 354 (Del); Commissioner
of Income Tax v. Digvijay Chemicals Ltd. (2007) 294
ITR 359 (Del); CIT v. Parke Davis (India) Ltd (1999) C
239 ITR 820 (AP) – referred to.
Case Law Reference
2004 (1) SCR 164 referred to Para 13.3
CIVIL APPELLATE JURISDICTION : Civil Appeal No.4252 D
of 2022.
From the Judgment and Order dated 07.02.2019 of the High Court
of Punjab and Haryana at Chandigarh in Income Tax Appeal No.517 of
2017.
With E
Civil Appeal Nos.4253 And 3480 of 2022.
N. Venkataraman, ASG, Kumar Shashank, Amit Kumar, Sridhar
Potaraju, Pranay Ranjan, Sughosh Subramaniyam, Raj Bahadur Yadav,
Advs. for the Appellant.
F
Rohit Jain, Aniket D. Agarwal, Ms. Kavita Jha, Advs. for the
Respondent.
The Judgment of the Court was delivered by
PAMIDIGHANTAM SRI NARASIMHA, J.
G
1. These appeals give rise to an important question concerning
appellate jurisdiction of the High Courts under Section 260A of the Income
Tax Act, 19611 against judgments of Income Tax Appellate Tribunals2.As
Benches of the ITAT are constituted to exercise jurisdiction
1
hereinafter referred to as ‘the Act’.
2
hereinafter referred to as ‘ITAT’ / ‘Tribunals’. H
1060 SUPREME COURT REPORTS [2022] 17 S.C.R.

A over more than one state, each state having a separate High Court,question
arose as to which of the High Court is the appropriate Court for filing
appeals under Section 260A. The question arose because Section 260A
is open-textual and does not specify the High Court before which an
appeal would lie in cases where Tribunals operated for plurality of States.
This question came to be conclusively answered by the High Court of
B
Delhi in the case of Seth Banarsi Dass Gupta v. Commissioner of
Income Tax3,wherein it was held that the appropriate High Court would
be the one where the Assessing Authority is situated. This judgment
continuous to hold the field.
2. In these appeals,a further question that arise for consideration
C is the jurisdiction of the High Court consequent upon administrative order
of transfer of a ‘case’ under Section 127 of the Act from one Assessing
Authority to another Assessing Officer located in a different State. The
Punjab & Haryana High Court took the view that such a transfer would
not change the principle laid down in Seth Banarasi Dass Gupta.
D However, the Delhi High Court in CIT v. Sahara India Financial
Corporation Ltd.4 and CIT v. Aar Bee Industries Ltd.5 has taken a
different view. The Delhi High Court held that an administrative order
of transfer of cases will also have the consequence of transferring even
the jurisdiction of the High Court. As there is a difference of opinion
between the High Court of Punjab & Haryana on the one hand and the
E High Court of Delhi on the other, we are called upon to determine and
declarethe appropriate High Court for filing an appeal in such cases.
3. Having considered the matter in detail, and while reversing the
judgments of the Delhi High Court in Sahara and Aar Bee,we have also
held that the appellate jurisdiction of the High Court stands on its own
F foundation and cannot be subject to the exercise of executive power to
transfer a ‘case’ from one Assessing Officer to another Assessing
Officer.
Facts of the case:

G 4. The Appellant herein, M/s. ABC Papers Ltd.6 is a company
engaged in the manufacture of writing and printing paper. For the
assessment year 2008-09, the Assessee filed its income tax returns before
3
(1978) 113 ITR 817 (Del).
4
(2007) 294 ITR 363 (Del).
5
(2013) 357 ITR 542 (Del).
6
hereinafter referred to as ‘the Assessee’.
H
PR. COMM’R OF INCOME TAX – I, CHANDIGARH v. M/S. 1061
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the Assessing Officer, New Delhi, on 30.09.2008. The Deputy A
Commissioner of Income Tax, Circle-1(1), New Delhi, issued a notice
under Section 143 (2) of the Act and followed it up by an order of
assessment dated 30.12.2010.Aggrieved by that order, the Assessee
preferred an appeal to the Commissioner of Income Tax (Appeals) - IV,
New Delhi, and by his order dated 16.02.2012, the Commissioner allowed
B
the appeal. Against this appellate order, the Revenue carried the matter
to 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 dismissed
the appeal filed by the Revenue. Against this order of the ITAT, the
Revenue filed ITA No. 517 of 2017 before the High Court of Punjab &
Haryana. C
5. It is important to note certain events that overtook the above-
referred proceedings. While the matter was pending appeal before the
CIT (Appeals) - IV, New Delhi, as indicated above, a search operation
under Section 132(1) of the Act was carried out on 04.05.2011 at the
office and factory of the Assessee in Chandigarh and certain places in D
the State of Punjab, by the Directorate of Income Tax (Investigation),
Ludhiana. Yet another development that took place after the search
operation was that, by an order dated 26.06.2013 passed under Section
127 of the Act, the Commissioner of Income Tax (Central), Ludhiana,
centralized the cases of the Assessee for the assessment years 2006-07
to 2013-14 and transferred the same to Central Circle, Ghaziabad. E

6. In view of the above transfer under Section 127, the Deputy
Commissioner of Income Tax, Central Circle, Ghaziabad, proceeded
further and passed an assessment order on 31.03.2015. Aggrieved by
that order, the Assessee filed an appeal which came to be allowed by
the Commissioner of Income Tax (Appeals) – IV, Kanpur, on 20.12.2016. F
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 of
the Assessee with respect to an earlier assessment year was already
available, the ITAT, New Delhi, followed the said judgment and dismissed
the appeal filed by the Revenue by its order dated 01.09.2017. It is G
against this order that the Revenue filed ITA No. 130 of 2018 before the
High Court of Punjab & Haryana.
7. In fact, before the Revenue could file an appeal against the
orders of the ITAT dated 11.05.2017 (arising out of the original
proceedings) and 01.09.2017 (arising out of proceedings after transfer H
1062 SUPREME COURT REPORTS [2022] 17 S.C.R.

A under Section 127), the cases of the Assessee were re-transferred under
Section 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 on
record and has also not been referred to in any of the proceedings, a
reference to the said order has been made in the written submissions
filed before us. Perhaps it is on the basis of the said transfer that the
B
Revenue 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 of
2018 (against the order of the ITAT dated 01.09.2017) before the High
Court of Punjab & Haryana.
8. The High Court of Punjab & Haryana by its judgment dated
C 07.02.2019, disposed of ITA No. 130 of 2018 by holding that,
notwithstanding the order under Section 127 of the Act which transferred
the cases of the Assessee to Chandigarh, the High Court of Punjab &
Haryana would not have jurisdiction as the Assessing Officer who passed
the initial assessment order is situated outside the jurisdiction of the High
D Court. For arriving at this conclusion, the High Court followed the decision
in the case of Commissioner of Income Tax v. Motorola India Ltd.7and
Commissioner of Income Tax (Central), Gurgaon v. M/s Parabolic
Drugs Limited8.With this view of the matter, the High Court dismissed
the appeal as not maintainable. By the same judgment, the High Court
also disposed of ITA No. 517 of 2017 filed by the Revenue against the
E decision of the ITAT, New Delhi, dated 11.05.2017, by adopting the same
logic. Aggrieved by the decision of the High Court of Punjab & Haryana
refusing to entertain the appeals against the orders of the ITAT dated
11.05.2017 and 01.09.2017, the Revenue filed the present appeals, being
Civil Appeal No. 4252 of 2022 (against the order of the High Court of
F Punjab & Haryana in ITA No. 517 of 2017) and Civil Appeal No. 4253
of 2022 (against the order of the High Court of Punjab & Haryana in
ITA No. 130 of 2018) before this Court.
9. It is also important to mention here that against the very same
order of the ITAT, New Delhi, dated 11.05.2017, the Revenue also filed
G an 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 of
Punjab & Haryana dated 07.02.2019 holding that it does not have
jurisdiction, nevertheless, dismissed the appeal by its order dated
7
(2010) 326 ITR 156 (P&H).
8
ITA No. 49 of 2012 (P&H).
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21.05.2019 on the ground of lack of territorial jurisdiction of the High A
Court of Delhi. For arriving at the conclusion that the High Court of
Delhi would not have territorial jurisdiction, the decision of its own Court
in the case of Sahara9 and Aar Bee10 were relied upon. In those two
decisions, the High Court of Delhi had taken a view that when an order
of transfer under Section 127 of the Act is passed, the jurisdiction gets
B
transferred to the High Court within whose jurisdiction the situs of the
transferee officer is located. Aggrieved by the decision of the High Court
of Delhi, the Revenue preferred appeal to this Court being, Civil Appeal
No. 3480 of 2022.
10. The above referred facts clearly evidence that in the case of
the very same Assessee, the High Court of Punjab & Haryana as well C
as the High Court of Delhi have refused to entertain the appeals on the
ground that they lack territorial jurisdiction. Both the High Court relied
on decisions of their own Courts which have taken diametrically opposite
perspectives. We are thus tasked to resolve the issue as to which High
Court would have the jurisdiction to entertain an appeal against a decision D
of a Bench of the ITAT exercising jurisdiction over more than one state,
particularly when case(s) of same assessment year are transferred under
Section 127 of the Act.
Contention of the Parties and the issue arising for
consideration: E
11.1 Though the Revenue is the Appellant in these batch of matters,
Shri N. Venkatraman, learned Additional Solicitor General representing
the Union of India, graciously consented to the learned counsel for the
Assessee Sh. Rohit Jain to open the case. Sh. N. Venkatraman also
observed that Mr. Jain had copiously prepared a compilation of all the F
judgments on the subject and a note for assisting the Court. Further, and
more importantly, Sh. N. Venkatraman has also supported the legal
submission advanced by Sh. Rohit Jain in so far as the issue of jurisdiction
is concerned. We appreciate the approach adopted by the learned Law
Officer, as precious time of the Court could be saved by avoiding repetition
of arguments. We were greatly benefited by the compilation of the G
precedents on the subject and the written note of Shri Rohit Jain and his
team. We place on record the valuable assistance rendered by them.
9
supra (note 4)
10
supra (note 5)
H
1064 SUPREME COURT REPORTS [2022] 17 S.C.R.

A 11.2 There is another aspect. As the High Courts have not
pronounced upon the merits of the matter, we will not be entering into
the merits of the dispute and our enquiry will be confined to the question
as to which is the appropriate High Court for filing an appeal under
Section 260A of the Act against a decision of the ITAT. Our enquiry will
also extend to determining the appropriate High Court for appeals against
B
order of ITAT where an order of transfer of case(s) from one Assessing
Officer to another Assessing Officer even with respect to the same
assessment year, has been passed under Section 127 of the Act.
11.3 Section 260A of the Act provides for a statutory appeal to
the High Court against every order of the ITAT. As certain Benches of
C the ITAT exercise jurisdiction over more than one state, the primary
question is before which High Court would an appeal lie? Should it be
the High Court of the State in which the ITAT is physically located or
the High Court of the State in which the Assessee is residing and/or
doing its business or the High Court where the Assessing Officer who
D assessed the assessee is located.
11.4 For making the correct interpretative choice, it is necessary
to refer to certain provisions of the Act.
Legal Framework:

E 12. Chapter XIII of the Act deals with Income Tax Authorities.
Section 116, occurring in this Chapter enlists the classes of Income Tax
Authorities who would be administering the provisions of the Act. Section
120, which deals with the Jurisdiction of the Income Tax Authorities
provides that the Authorities shall exercise the powers and functions
conferred or assigned to them under the Act. Section 124 is important. It
F relates to the jurisdiction of Assessing Officers in particular. It is a
departure from the previous regime under the 1922 Act in Section 64, as
per which the place of assessment was the place where the assessee
carries on business, profession or vocation. Section 124 inverts the
position, and instead empowers an Assessing Officer to exercise
G jurisdiction over any area that has been entrusted to him/her under
Section 120 of the Act. The Assessing Officer will, therefore, have the
power and jurisdiction with respect to any person carrying on a business
or profession in that area. Another provision that we need to take note
of is Section 127, which empowers senior income tax authorities to
transfer any ‘case’ from one or more Assessing Officer to any other
H Assessing Officer. Sub-section (4) of Section 127 provides that the
PR. COMM’R OF INCOME TAX – I, CHANDIGARH v. M/S. 1065
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transfer can be made at any stage. Explanation to Sub-section (4), which A
is 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 the
proceedings, and shall not render necessary the re- issue of B
any notice already issued by the Assessing Officer or Assessing
Officers 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 in
any order or direction issued thereunder, means all C
proceedings under this Act in respect of any year which may
be pending on the date of such order or direction or which
may have been completed on or before such date, and includes
also all proceedings under this Act which may be commenced
after the date of such order or direction in respect of any
year.” D

13.1 Another set of provisions relating to the judicial remedies
provided under the Act are equally important for us to note. Chapter XX
deals with Appeals and Revision. Part A of this Chapter provides for
appeals against assessment orders to Deputy Commissioner (Appeals)
and Commissioner (Appeals). Part B comprises of provision relating to E
appeals to the ITAT. ITAT is constituted by the Central Government
under Section 25211 of the Act. Section 25512 of the Act provides that
the President of the ITAT may constitute Benches for exercising and
discharging the powers and functions of the ITAT. Under Sub-Section
(5) of Section 255, the ITAT, through its President, is empowered to F
regulate the procedure of the Benches, including the places at which the
Benches shall hold their sittings.

11
Section 252. Appellate Tribunal
(i) The Central Government shall constitute an Appellate Tribunal
consisting of as many judicial and accountant members as it thinks fit to G
exercise the powers and discharge the functions conferred on the Appellate
Tribunal by this Act.
12
Section 255. Procedure of Appellate Tribunal
(i) The powers and functions of the Appellate Tribunal may be exercised
and discharged by Benches constituted by the President of the Appellate
Tribunal from among the members thereof.
H
1066 SUPREME COURT REPORTS [2022] 17 S.C.R.

A 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 at
such other place as authorized by the President. Under Rule 4 14, a Bench
shall hear and determine such appeals as the President may by order
direct.
B
13.3 ITAT is a unified forum functioning in the form of Benches
at the administrative discretion of the President. Jurisdiction exercised
by the Benches of the ITAT do not follow the structure contemplated in
Article 1 of the Constitution, which divides the Union into States and
Union Territories. Instead, Benches are sometimes constituted in a way
C that their jurisdiction encompasses territories of more than one state.
For example, the Allahabad Bench include parts of Uttarakhand. The
Amritsar Bench has within its jurisdiction the entire State of Jammu &
Kashmir. Delhi Bench includes parts of Haryana and U.P. The Guwahati
Bench comprises of Arunachal Pradesh, Meghalaya, Mizoram, Assam,
D Manipur, Nagaland and Tripura. Further, the Bangalore Bench excludes
large parts of Karnataka such as Belgaum, Mangalore, Karwar and
North Kanara, and these excluded districts form part of the Panaji Bench
which includes Goa. Therefore, Benches are not State or U.T. centric,
but are based on the administrative discretion of the President of the
ITAT. This Court in Ajay Gandhi v. B Singh15and the Madras High
E Court in The President, Income Tax Appellate Tribunal v. A
Kalyanasundaram16 have upheld the powers of the President with
respect to posting and transfer of members and also the power to decide
the 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 Section
F 260A which provides that an appeal shall lie from every order of the
ITAT. 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 or
places as may be
G authorized by the President.
14
Rule-4. Powers of Bench
(1) A Bench shall hear and determine such appeals and applications
made under the Act as the President may be general or special order
direct.
15
(2004) 2 SCC 120.
16
(2005) 279 ITR 305 (Mad).
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“260A. Appeal to High Court. (1) An appeal shall lie to the A
High Court from every order passed in appeal by the
Appellate Tribunal before the date of establishment of the
National Tax Tribunal, if the High Court is satisfied that the
case involves a substantial question of law.”
15. As is evident from the above, Section 260A is open textual B
and does not specify the High Court before which an appeal under Section
260A 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 that
State and further prescribes specific High Courts for each of the U.T. It
is this uncertainty about identification of the appropriate High Court for
filing an appeal against an order of the ITAT exercising jurisdiction over C
more than one state that, we are called upon to decipher and declare.
16. A judicial remedy must be effective, independent and at the
same time certain. Certainty of forum would involve unequivocal vesting
of jurisdiction to adjudicate and determine the dispute in a named forum.
D
17. Keeping the above principle in mind, we will now return to the
inquiry into the appropriate High Court for filing an appeal against an
order of a bench of the ITAT exercising jurisdiction over more than one
state. We notice that the issue has already fallen for consideration before
a Division Bench of the High Court of Delhi way back in 1978 in the
case of Seth Banarsi Dass Gupta. Having considered the matter in E
detail, the High Court of Delhi held that the “most appropriate” High
Court for filing an appeal would be the one where the Assessing Officer
is located. The decision was followed in Suresh Desai (supra) by Justice
17
269. Definition of “High Court”. —In this Chapter, —
“High Court” means—
F
(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 Nicobar
Islands, the High Court at Calcutta;
(v) in relation to the Union territory of [Lakshadweep], the High Court G
of Kerala;
[(va) in relation to the Union territory of Chandigarh, the High Court of
Punjab 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 at
Madras.] H
1068 SUPREME COURT REPORTS [2022] 17 S.C.R.

A Lahoti (as he then was) and provided additional reasons in support of
the same view. The interpretative choices are based on the following
reasons, which we have reformulated as under:
(I) As benches of the ITAT exercise jurisdiction over more than
one state, Explanation to Standing Order No. 1 of 1954 and
B Standing Order No. 1 of 1967 issued under the Rules prescribe
that, the jurisdiction of the ITAT should be based on the location
of the Assessing Officer. The same principle should apply for
determining the jurisdiction of the High Court for an appeal against
the decision of the ITAT.
C (II) It would be appropriate for the ITAT to refer a question of
law to the High Court within whose jurisdiction the Assessing
Officer or the CIT which has decided the case is located, as
these authorities would be bound to follow the decision of the
concerned High Court.

D (III) This interpretation will also be in consonance with the
expression “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 Court
E only on the basis that a bench of the ITAT is located within the
jurisdiction of the said High Court, as it will create an anomalous
situation for that as well as other High Courts.
(V) In view of the doctrine of precedents and the rule of binding
efficacy of law laid down by a High Court within its territorial
F jurisdiction,a question of law arsing for decision in a reference
should be determined by the High Court which exercises territorial
jurisdiction over the situs of the Assessing Officer (Suresh Desai).
18. The principle laid in Seth Banarasi Dass is followed in Suresh
Desai & Associates v. Commissioner of Income Tax18, Birla Cotton
G Spinning and Weaving Mills Ltd. v. Commissioner of Income Tax19,
Commissioner of Income Tax v. Digvijay Chemicals Ltd. 20 and
Commissioner of Income Tax v. Motorola India Ltd.21It is interesting
18
(1998) 230 ITR 912 (Del).
19
(1980) 123 ITR 354 (Del).
20
(2007) 294 ITR 359 (Del).
21
supra (note 7)
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to note that this basic principle is accepted and abided as a precedent A
even in the two subsequent judgments of the High Court of Delhi in
Sahara and Aar Bee. Thus, it is well-settled that the appellate jurisdiction
of a High Court under Section 260A is exercisable by a High Court
within whose territorial jurisdiction the assessing officer is located.
19. However, our enquiry does not stop here. A further question B
that arises in these batch of appeals is in the context of an order of
transfer under Section 127 of the Act, whereby the case of an assessee
gets transferred from an Assessing Officer in one State to another
Assessing Officer, situated in another state under the jurisdiction of a
different High Court. The real question is whether the jurisdiction of a
C
High Court would also change following an order of transfer under Section
127. For example, in this very case, where the assessment order was
passed by the Assessing Officer in Ghaziabad, the appeal therefrom
was decided by the CIT (Appeals) IV, Kanpur and the appeal to the
Tribunal was decided by ITAT, New Delhi, should the Lucknow Bench
of the Allahabad High Court have jurisdiction or should the jurisdiction D
vest with the Punjab & Haryana High Court in whose territorial limits
the transferee Assessing Officer is located.
20. In Suresh Desai, the question relating to the consequences
upon an order of transfer under Section 127 did arise for consideration.
Apart from holding that the transfer order did not involve the assessment E
year with respect to which the appeals are concerned, the High Court of
Delhi made an important observation that “it is not that the jurisdiction
to make assessment in respect of matters arising at Bombay have
been conferred or transferred to Delhi by a reference to territory
or persons or class of persons or incomes or class of income or
F
cases or class of cases as contemplated by Section 120 of the Act”.
This view is also in consonance with the four principles laid down in
Seth BanarasiDassand it is further strengthened by the additional
reasoning given by Justice Lahoti in Suresh Desai case.The same
approach was adopted by the High Court of Delhi in Digvijay Chemicals
where despite an order of transfer from Assessing Officer, Bulandshahar, G
to Assessing Officer, New Delhi, the High Court of Delhi held that it
does not have the jurisdiction as the Assessing Officer was situated in
Bulandshahar. Pertinently, even in Digvijay Chemicals, the transfer
order related to a different assessment year.
H
1070 SUPREME COURT REPORTS [2022] 17 S.C.R.

A 21. In Motorola India Ltd., a case decided by the High Court of
Punjab & Haryana,the assessment year which was the subject of appeal
was also the subject of a transfer order passed under Section 127 of the
Act. In that case, the assessment took place in Bangalore, the appeal
therefrom came to be decided in Bangalore and a further appeal was
also decided by the ITAT in Bangalore. At this stage, the case was
B
transferred under Section 127 of the Act from Assessing Officer,
Bangalore, to Assessing Officer, Gurgaon. It is in this context that the
assessee objected to the appeal filed by the Revenue before the High
Court of Punjab & Haryana and the High Court accepted the contention
and dismissed the appeal on the ground that Punjab & Haryana High
C Court has no jurisdiction. It was held that even if it is the same assessment
year, the appropriate High Court would be the High Court of Karnataka.
Unlike Suresh Desai and Digvijay Chemicals, in this case, the records
of the same assessment years were transferred. The revenue relied on
the Explanation to Section 127 of the Act to argue that the expression
“cases” in the explanation shall cover proceedings filed to be filed before
D
a High Court as well. The High Court of Punjab & Haryana negatived
this contention by holding that:
“12. … The reliance of the Revenue on the Explanation to
section 127 of the Act with regard to the meaning of the
expression “case” is wholly misplaced and is liable to be
E rejected because section 120 of the Act does not deal with
jurisdiction of the Tribunal or the High Court….
13. A conjoint reading of the aforementioned provisions makes
it evident that the Director General or Chief Commissioner
or Commissioner is empowered to transfer any case from one
F or more accessing officers subordinate to him to any other
Assessing Officer. It also deals with the procedure when the
case is transferred from one Accessing Officer subordinate
to a Director General or Chief Commissioner or Commissioner
to an Assessing Officer who is not subordinate to the same
G Director General, Chief Commissioner or Commissioner. The
aforementioned situation and the definition of the expression
“case” in relation to jurisdiction of an Assessing Officer is
quite understandable but it has got nothing to do with the
territorial jurisdiction of the Tribunal or High Courts merely
because section 127 of the Act dealing with transfer has been
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incorporated in the same Chapter. Therefore, the argument A
raised is completely devoid of substance and we have no
hesitation to reject the same.”
22. We will now refer to the decision of the High Court of Delhi in
the case of Sahara,where the Court has taken a view that upon an
order of transfer under Section 127 of the Act, the case of the assessee B
would get transferred “lock, stock and barrel” including the High Court.
As per this decision, the High Court having jurisdiction over the situs of
the transferee Assessing Officer alone would have jurisdiction.
23. The facts involved the case of Sahara are that the assessment
order was passed by Assessing Officer, Lucknow. Appeal against that C
order was decided by CIT (Appeals), Lucknow, and a further appeal
was decided by ITAT, Lucknow. Pursuant to the ITAT order, an appeal
was filed before the Lucknow Bench of the Allahabad High Court. During
the pendency of this appeal, the records of the assessee came to be
transferred from Lucknow to New Delhi. Hence, an appeal came to be
filed before the High Court of Delhi as well. A preliminary objection was D
raised that the High Court of Delhi lacks jurisdiction as the Assessing
Officer was situated in Lucknow. Departing from the long-standing
decisions from Seth Banarasi Dass onwards, the Court rejected the
contention and held that the High Court of Delhi had the jurisdiction to
entertain the appeal. The relevant portion of the judgment is as under:- E
“13. The order passed under Section 127(2) of the Act clearly
relates to the “case” of the assessee mentioned in the schedule,
and by virtue of the Explanation, all future proceedings that
may be taken under the Act (obviously including an appeal
under section 260A thereof) would now have to be in harmony F
with the order passed under section 127(2) of the Act.
Consequently, the jurisdiction in respect of the “case” and
the assessee having been shifted from Lucknow to Delhi, the
Revenue could file the appeal under section 260A of the Act
only in Delhi and it could not have filed an appeal in the
Lucknow Bench of the Allahabad High Court. G
…..
17. …. the effect of the transfer of jurisdiction from Lucknow
to Delhi specifically arises in the present case and we are of
the view that the jurisdiction in respect of the assessee having
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1072 SUPREME COURT REPORTS [2022] 17 S.C.R.

A been transferred to Delhi lock, stock and barrel and all the
records of the assessee also having been transferred from
Lucknow to Delhi, it is only the High Court in Delhi that can
entertain an appeal under section 260A of the Act directed
against the order passed by the Tribunal on July 22, 2005.
Our conclusion follows from a plain reading of
B the Explanation to section 127(4) of the Act as well as from
the effect of the order dated July 29, 2005, passed by the
Commissioner of Income-tax (Central), Kanpur, under section
127(2) of the Act. Consequently, with effect from September
29, 2005, (the date from which the order passed under section
C 127(2) of the Act is enforced) the jurisdiction in respect of
the assessee for future proceedings under section 260A of
the Act is with the Delhi High Court. Admittedly, the present
appeals have been filed after September 29, 2005, and so
they would be maintainable in this court and no other High
Court.”
D
24. The decision in the case of Sahara is followed by a subsequent
Bench of the High Court of Delhi in Aar Bee.In this case, the assessment
order was passed in Jammu, an appeal against that order was decided
by CIT (Appeals), Jammu, and thereafter, an appeal came to be decided
by ITAT, Amritsar. Immediately after the ITAT order, the records of the
E assessee came to be transferred from Jammu to New Delhi by an order
under Section 127 of the Act. Hence, an appeal against the ITAT order
was filed before the High Court of Delhi. When the matter came up
before the High Court of Delhi, it was contended that the High Court of
Delhi did not have jurisdiction to entertain the appeal in as much as the
situs of the Assessing Officer was in Jammu. In support, the decision of
F the High Court of Punjab & Haryana in Motorola,was relied upon.
Rejecting the contention, differing with Motorola and following the
judgment of its own Court in Sahara, it was held as under: -
“15. We are afraid and with respect we say so that we are
unable to agree with the views expressed by the Punjab &
G Haryana High Court and are bound to follow the decision of
this court in Sahara India (supra). We are not inclined to
accept the view taken by the High Punjab & Haryana High
Court, because while it is true that the reference to the case is
with regard to the jurisdiction of an income-tax authority, it
is also true that the jurisdiction of the High Court is
H determined by the situs of the Assessing Officer. When the
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Assessing Officer itself has been changed from one place to A
another, the High Court exercising jurisdiction in respect of
the territory covered by the transferee Assessing Officer would
be the one which would have jurisdiction to hear the appeal
under Section 260-A. ...”
Analysis:
B
25. The reasoning adopted by the High Court of Delhi in Sahara
is 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 of
Delhi was of the view that ‘cases’ must include within its sweep, not
only the cases pending before the Authorities enlisted under Section 116
of the Act, but also the proceedings before the ITAT as well as a High C
Court. We are of the opinion that the High Court of Delhi has misread
the scope and ambit of Section 127.
26. We will explain this in detail. Section 127 occurs in Chapter
XIII of the Act which relates to Income Tax Authorities. In the same
chapter, Section 116 enlists the Income Tax Authorities and Section 120 D
specifies the jurisdiction of such Authorities. While Section 124 specifically
speaks of the jurisdiction of Assessing Officers, Section 127 enables a
higher authority to transfer a ‘case’ from one Assessing Officer to another
Assessing Officer. All these provisions in Chapter XIII only relate to the
executive or administrative powers of Income Tax Authorities. We have
no hesitation in our mind that the vesting of appellate jurisdiction has no E
bearing on judicial remedies provided in Chapter XX of the Actbefore
the ITAT and the High Court. The mistake committed by the High Court
was in assuming that the expression “case” in the Explanation to Sub-
Section 4 of Section 127 has an overarching effect and would include
the proceedings pending before the ITAT as well as a High Court. This
F
fundamental error has led the Division Bench of the High Court of Delhi
to come to a conclusion that an order of transfer made under Section
127 would have the effect of transferring the case “lock, stock and
barrel” not only from the jurisdiction of the ITAT, but also from that of
the High Court in which the Assessing Officer was located, and vest it
in the High Court having jurisdiction over the transferee Assessing G
Officer. This erroneous interpretation was in fact advanced before other
High Courts as well, but they were rejected straightaway. One instant
example is the case of CIT v. Parke Davis (India) Ltd.22, where the
Andhra Pradesh High Court held: -
22
(1999) 239 ITR 820 (AP). H
1074 SUPREME COURT REPORTS [2022] 17 S.C.R.

A “…The interpretation sought to be placed on the Explanation
to section 127 leads to incongruous results quite contrary to
the scheme of the Act and has the effect of investing the
prescribed authorities with the power to virtually interfere
with the territorial jurisdiction of the concerned High Court.
…”
B
27. With a slight digression from the main issue, we may note that
the Assessee as well as the Revenue are on the same page in these
appeals, taking the view that the decision of the High Court of Delhi in
Sahara is not correctly decided. They may be right. However, as there
was no serious contest at the bar, the principle suggested by the Assessee
C as accepted by the Revenue did not suffer strict scrutiny as is always
the case in any contested case, and therefore, the Court is left to imagine
the contrary proposition in support of the view taken in Sahara.We had
no difficulty in conceptualising that, since every judge had once been a
lawyer. We have raised and dealt with them in the following paragraphs.
D 28. Returning to the analyses in the decision in Sahara, we have
noticed that the Division Bench of the High Court of Delhi sought to
distinguish the two decisions of the very same High Court in Suresh
Desaiand Digvijay Chemicalson the ground that those cases did not
involve the transfer of cases of the very same assessment year. We will
E reformulate this as a proposition of law. If it is the accepted principle to
determine the jurisdiction of a High Court under Section 260A of the Act
on the basis of the location of the Assessing Officer who assessed the
case, then, by the strength of the very same logic, upon transfer of a
case to another Assessing Officer under Section 127, the jurisdiction
under Section 260A must be with the High Court in whose jurisdiction
F the new Assessing Officer is located. A logical extension of this argument
is that, once the case is transferred to an Assessing Officer situated
outside the jurisdiction of the existing High Court, the entire files relating
to the case should now be in the possession and custody of the new
Assessing Officer. It could be argued that the Assessing Officer who
G exercised the jurisdiction before its transfer will not be in a position to
assist the High Court, further, he cannot implement the decision of that
High Court, after it decides the question of law as he is no more the
Assessing Officer. We will now proceed to deal with these arguments.
29. The binding nature of decisions of an appellate court established
H under a statute on subordinate courts and tribunals within the territorial
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jurisdiction of the State, is a larger principle involving consistency, certainty A
and judicial discipline, and it has a direct bearing on the rule of law. This
‘need for order’ and consistency in decision making must inform our
interpretation of judicial remedies. An important reason adopted in the
case of Seth Banarasi Dass Gupta, further highlighted by Justice Lahoti
in Suresh Desai, is that a decision of a High Court is binding on
B
subordinate courts as well as tribunals operating within its territorial
jurisdiction. It is for this very reason that the Assessing Officer,
Commissioner of Appeals and the ITAT operate under the concerned
High Court as one unit, for consistency and systematic development of
the law. It is also important to note that the decisions of the High Court
in whose jurisdiction the transferee Assessing Officer is situated do not C
bind the Authorities or the ITAT which had passed orders before the
transfer of the case has taken place. This creates an anomalous situation,
as the erroneous principle adopted by the authority or the ITAT, even if
corrected by the High Court outside its jurisdiction, would not be binding
on them.
D
30. The legal structure under the Income Tax Act commencing
withAssessing Officer, the Commissioner of Appeals, ITAT and finally
the High Court under Section 260A must be seen as a lineal progression
of judicial remedies.Culmination of all these proceedings in question of
law jurisdiction of the High Court under Section 260A of the Act is of
special significance as it depicts the overarching judicial superintendence E
of the High Court over Tribunals and other Authorities operating within
its territorial jurisdiction.
31. 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. If we accept the submission, it F
will have the effect of the executive having the power to determine the
jurisdiction of a High Court. This can never be the intention of the
Parliament. The jurisdiction of a High Court stands on its own footing by
virtue of Section 260A read with Section 269 of the Act. While
interpreting a judicial remedy, a Constitutional Court should not adopt an G
approach where the identity of the appellate forum would be contingent
upon or vacillates subject to the exercise of some other power. Such an
interpretation will clearly be against the interest of justice. Under Section
127, the authorities have the power to transfer a case either upon the
request of an assessee or for their own reasons. Though the decision
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1076 SUPREME COURT REPORTS [2022] 17 S.C.R.

A under Section 127 is subject to judicial review or even an appellate scrutiny,
this Court for larger reasons would avoid an interpretation that would
render the appellate jurisdiction of a High Court dependent upon
theexecutive power. As a matter of principle, transfer of a case from
one judicial forum to another judicial forum, without the intervention of a
Court of law is against the independence of judiciary. This is true,
B
particularly, when such a transfer can occur in exercise of pure executive
power. This is a yet another reason for rejecting the interpretation adopted
in the case of Sahara.
32. For the reasons stated above, we hold that the decision of the
High Court of Delhi in Sahara and Aar Bee do not lay down the correct
C law and therefore, we overrule these judgments.
33. In conclusion, we hold 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 assessee are transferred in exercise of power
D 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).
34. We will now deal with the decisions of certain High Court
E which have taken a view that the jurisdiction of the High Court must be
based on the location of the ITAT. These judgments are CIT v. Parke
Davis (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. Sungard
Solutions (I) Pvt. Ltd.27and CIT v. Shree Ganapati Rolling Mills (P)
F Ltd.28 We have examined these cases in detail and found that the
Assessing Officers in each of these cases were in fact not located within
the territorial jurisdiction of these High Courts. For this reason, the
aforesaid decisions are correctto the extent of these High Courts not
exercising jurisdiction. However, while returning the files to be represented
in the appropriate court, certain observationswere made stating that the
G
23
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
H (2013) 356 ITR 586 (Gau).
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appeals could be filed in the High Court which exercises territorial A
jurisdiction over the concerned ITAT. These observations are only obiter.
In any event they did not preclude the party from filing the appeal before
the appropriate High Court where the Assessing Officers exercised
jurisdiction. However, we are reiterating for clarity and certainty that
the jurisdiction of a High Court is not dependent on the location of the
B
ITAT, as sometimes a Bench of the ITAT exercises jurisdiction over
plurality of states.
35.1 For the reasons and principles that we have laid down, we
dispose of these Civil Appeals with the following directions.
35.2 We will first deal with the order passed by the Assessing C
Officer, Delhi dated 30.12.2010, against which an appeal was decided
by CIT (Appeals) – IV, New Delhi on 16.02.2012, against which the
ITAT, New Delhi disposed of an appeal on 11.05.2017, against which an
appeal was filed in the High Court of Punjab & Haryana which it disposed
of by order dated 07.02.2019, against which Civil Appeal No. 4252 of
2022 was filed before this Court. The said Civil Appeal is dismissed by D
upholding the order dated 07.02.2019 passed by the High Court of Punjab
& Haryana,with a direction that the appropriate High Court for disposal
of the appeal would be the High Court of Delhi as the case was assessed
by the Assessing Officer, Delhi.
35.3 The other Civil Appeal arises out of an order passed by the E
Assessing Officer, Ghaziabad dated 31.03.2015, against which an appeal
was decided by CIT (Appeals) – IV, Kanpur on 20.12.2016, against
which the ITAT, New Delhi disposed of an appeal on 01.09.2017, against
which an appeal was filed in the High Court of Punjab & Haryana which
it disposed of by order dated 07.02.2019, against which Civil Appeal No. F
4253 of 2022 was filed before this Court. The said Civil Appeal is
dismissed by upholding the order dated 07.02.2019 passed by the High
Court of Punjab and Haryana with a direction that the correct High
Court to dispose of the appeal would be the Lucknow Bench of the
Allahabad High Court.
G
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 which
was disposed of by the High Court of Delhi on 21.05.2019, against which
Civil Appeal No. 3480 of 2022 has been filed before this Court. We
allow the said Civil Appeal by setting aside the order dated 21.05.2019
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1078 SUPREME COURT REPORTS [2022] 17 S.C.R.

A passed by the High Court of Delhi refusing to exercise jurisdiction and
direct the High Court of Delhi to entertain the appeal and dispose of the
appeal as per law.
36. Parties shall bear their own costs.

B Divya Pandey Appeals disposed of.
(Assisted by : Rituja Chouksey, LCRA)

C

D

E

F

G

H