INCOME TAX ACT, 1961

Section 127 Section 260A

Appeal [High Court] - Jurisdiction - Transfer of a case under section 127 -

Assessee' was a company engaged in manufacture of paper. For the assessment year 2008-09, Assessee filed its income tax returns before AO, New Delhi, on 30-9-2008. The Dy. CIT, Circle-1(1), New Delhi, issued notice under section 143 (2) and followed it up by an order of assessment, dated 30-12-2010. Aggrieved by that order, assessee preferred appeal to CIT(A)-IV, New Delhi, and by his Order, dated 16-2-2012, who allowed the appeal. Against this appellate order. While the matter was pending appeal before CIT(A)--IV, New Delhi, as indicated above, a search operation under section 132(1) was carried out on 4-5-2011 at the office and factory of Assessee in Chandigarh and certain places in the State of Punjab, by the Directorate of Income Tax (Investigations), Ludhiana. Yet another development that took place after the search operation was that, by an Order, dated 26-6-2013 passed under section 127, the Commissioner (Central), Ludhiana, centralized the cases of assessee for the assessment years 2006-07 to 2013-14 and transferred the same to Central Circle, Ghaziabad. In view of the above transfer under section 127, Dy. CIT, Central Circle, Ghaziabad, proceeded further and passed an assessment order on 31-3-2015. Aggrieved by that order, the assessee filed an appeal which came to be allowed by the CIT(A)-IV, Kanpur, on 20-12-2016. Against this appellate order, the revenue preferred an appeal to ITAT, New Delhi. As the decision of ITAT dated 11-5-2017 in case of assessee with respect to an earlier assessment year was already available, theTribunal, New Delhi, followed the said judgment and dismissed the appeal filed by the Revenue by its Order, dated 1-9-2017. It was against this order that revenue filed ITA No. 130 of 2018 before the High Court of Punjab & Haryana. The High Court of Punjab & Haryana by its Judgment, dated 7-2-2019, disposed of ITA No. 130 of 2018 by holding that, notwithstanding the order under section 127 which transferred the cases of assessee to Chandigarh, the High Court of Punjab & Haryana would not have jurisdiction as AO who passed the initial assessment order was situated outside the jurisdiction of the High Court. Revenue challenged this by way of appeal before Supreme Court. Held: 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 Tribunal, much less on a High Court. The executive having the power to determine the jurisdiction of a High Court, 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. While interpreting a judicial remedy, a Constitutional Court should not adopt an approach where identity of the appellate forum would be contingent upon or vacillates subject to the exercise of some other power. Such an interpretation would clearly be against the interest of justice. Under section 127, the authorities have power to transfer a case either upon request of an assessee or for their own reasons. As a matter of principle, transfer of a case from one judicial forum to another judicial forum, without intervention of a Court of law is against the independence of judiciary. This is true, particularly, when such a transfer can occur in exercise of pure executive power. Therefore, appeals against every decision of the ITAT would lie only before the High Court within whose jurisdiction the AO who passed the assessment order is situated. Even if case of an assessee is transferred in exercise of power under section 127, the High Court within whose jurisdiction, AO has passed the order, would 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). Therefore, Order, dated 7-2-2019 passed by the High Court of Punjab & Haryana, with a direction that ppropriate High Court for disposal of the appeal would be the High Court of Delhi as the case was assessed by AO, Delhi was upheld.

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