Principal Commissioner of In vs. M/s.Ojasvi Motor Finance Pvt

T.C.A. No. 231 of 2022 IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 05.09.2022 CORAM THE HON'BLE MR. JUSTICE S. VAIDYANATHAN AND THE HON'BLE MR. JUSTICE C. SARAVANAN T.C.A. No. 231 of 2022 Principal Commissioner of Income Tax, Central Circle 2(2), Chennai – 600 034. ..Appellant Vs. M/s. Ojasvi Motor Finance Pvt. Ltd., 6/13, North Avenue Kesava Perumal Puram, Chennai 600 028. PAN: AAACO2343M ..Respondent Prayer: Tax Case Appeal under Section 260A of The Income Tax Act, 1961 as against the order dated 05.02.2020 passed by the Income Tax Appellate Tribunal 'B' Bench, Kolkata in ITA No. 400/KOL/2018. For Appellant :: Mr.R.Karthik

https://www.mhc.tn.gov.in/judis T.C.A. No. 231 of 2022 J U D G M E N T S. VAIDYANATHAN,J. AND C. SARAVANAN,J. The present appeal has been preferred as against the order passed by the Income Tax Appellate Tribunal 'B' Bench, Kolkata in ITA No. 400/KOL/2018 dated 05.02.2020 by which the Tribunal allowed the appeal filed by the assessee besides quashing the assessment order dated 24.03.2014 passed by the Assessing Officer, ITO Ward-1(4), Kolkata. Aggrieved by the said order, the present appeal has been filed contending that it is maintainable before this Court. 2. The short facts are: The respondent/assessee suffered an assessment order dated 17.06.2010 under Section 143(3) read with 147 of the Income Tax Act, 1961 for the assessment year 2008-09. On appeal filed by the assessee before the Commissioner of Income Tax, Kolkata-1, Kolkata, the said order was set aside and the assessment was remitted to the file of the assessing https://www.mhc.tn.gov.in/judis T.C.A. No. 231 of 2022 officer for de novo consideration of the issue and to pass a speaking order after providing reasonable opportunity to the assessee. During the interregnum, an order came to be passed on 15.03.2013 by the Commissioner of Income Tax, Kolkata-1 whereby the Commissioner transferred the jurisdiction of the case from ITO, Wd-1(4), Kolkata to ACIT Central Circle-II(3), Chennai under Section 127 of the Income Tax Act, 1961. (b) Pursuant to the remand order dated 07.03.2013 passed by Commissioner of Income Tax, Kolkata-1, Kolkata, a fresh assessment order dated 24.03.2014 was passed by ITO, Ward-1(4), Kolkata making an addition of Rs.95,39,00,000/- on account of unexplained share capital applying Section 68 of the said Act, aggrieved by which the assessee filed an appeal in Appeal No.11111/CIT(A)-6/Kol/2014-15 before the Commissioner of Income Tax (Appeals) -6, Kolkata and by order dated 29.12.2017, the assessee's appeal came to be dismissed upholding the addition made by the assessing officer. Challenging the said order, the assessee filed an appeal before Income Tax Appellate Tribunal, Kolkata https://www.mhc.tn.gov.in/judis T.C.A. No. 231 of 2022 contending that the assessing officer has no jurisdiction to complete the assessment since the jurisdiction over the assessee was duly transferred to ACIT, Central Circle-2(3), Chennai on 15.03.2013, even before the assessment order came to be passed. By the impugned order, the assessee's appeal came to be allowed giving rise to the present tax case appeal. 3. According to the appellant herein, the jurisdiction aspect was not questioned by the assessee. However, the Tribunal passed an order on 05.02.2020 allowing the appeal filed by the assessee holding that the authority has no jurisdiction. According to the Tribunal, by the time second assessment order was passed, the matter had been transferred from Kolkata to Chennai. According to the appellant, though the order has been passed by the Tribunal at Kolkata, this Court has power to entertain the appeal and it has got jurisiction. It has been vehemently contended by the learned counsel for the appellant that the matter was posted for maintainability and this Court had accepted the contention and numbered the appeal and that the order passed by the Tribunal is a nullity and it has got to be set aside and the matter has got to be heard on merits by the Tribunal. https://www.mhc.tn.gov.in/judis T.C.A. No. 231 of 2022 4. A reading of Section 127 of the IT act read with Section 260A of the said Act would make it very clear that the High Court, under whose jurisdiction the assessing officer has passed the order will have the jurisdiction to entertain the appeal. The Apex Court, in a recent decision in Principal Commissioner of Income Tax-I, Chandigarh V. ABC papers Limited reported in 2022 SCC OnLine SC 1036 has held thus: "34. The binding nature of decisions of an appellate court established under a statute on subordinate courts and tribunals 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. 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 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 https://www.mhc.tn.gov.in/judis T.C.A. No. 231 of 2022 note that the decisions of the High Court in whose jurisdiction the transferee Assessing Officer is situated do not 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. 35. The legal structure under the Income Tax Act commencing with Assessing Officer, the Commissioner of Appeals, ITAT and finally the High Court under Section 260A must be seen as a lineal progression of judicial remedies. Culimination of all these proceedingsin 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 of the High Court over Tribunals and other Authorities operating within its territorial jurisdiction. 36. 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 will have the effect of the executive having the power to determine the jurisdiction of a High Court. This can never be the intention https://www.mhc.tn.gov.in/judis T.C.A. No. 231 of 2022 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 approach where the identity of the appellate forum would be contingent upon or vacillates subject to the exercise of some other power. Such a interpretation will clearly be against the interest of justice. Under Section 127, the authorities have the power to transfer a case either upon request of an assessee or for their own reasons. Though the decision 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 the executive 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, particularly, when such a transfer can occur in exercise of pure executive power. This is yet another reason for rejecting the interpretation adopted in the case of Sahara. 37. 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 law and therefore, we overrule these judgments. https://www.mhc.tn.gov.in/judis T.C.A. No. 231 of 2022 38. In conclusion, we hold that appeals against every decision of the ITAT shall be only beore 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 under Section 127 of the Act, the High Court within whose jurisdiction the Assessing Officer has passed the order, shal 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). 39. We will now deal with the decision of certain High Court 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. ((1999) 238 ITR 820 (AP)), CIT V. A.B.C. India Ltd. ((2003) 126 Taxman 18 (Cal)), CIT V. J.L. Marrison (India) Ltd. ((2005) 272 ITR 321 (Cal)), CIT V. Akzo Nobel India Ltd. ((2014) 47 Taxmann.com372 (Cal)), Pr.CIT V. Sungard Solutions (I) Pvt.Ltd. ((2019) 415 ITR 294 (Bom) and CIT V. Shree Ganapati Rolling Mills (P) Ltd ((2013) 356 ITR 586 (Gau)) 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 https://www.mhc.tn.gov.in/judis T.C.A. No. 231 of 2022 Courts. For this reason, the aforesaid decisions are correct to the extent of these High Courts not exercising jurisdiction. However, while returning the files to be represented in the appropriate court, certain observations were made stating that the appeals could be filed in the High Court which exercises territorial jurisdiction over the concerned ITAT. These observations are only obiter. In any event, they did not preclude the party from filing the appeal befor ethe appropriate High Court where the Assessing Officers exercise jurisdiction. However, we are reiterating for clarity and certainty that the jurisdiction of a High Court is not dependent on the location of the ITAT, as sometimes a Bench of the ITAT exercises jurisdiction over plurality of State." 5. Therefore, we are of the view that this Court has no jurisdiction and it is open to the appellant to work out its remedy before the High Court at Calcutta and get the issue redressed. Though it has been contended that the plea of limitation may be condoned by this Court, we are not inclined to pass any orders on it and it is open to the Court at Calcutta to decide the issue when the appeal is taken up for hearing. Therefore, the tax case appeal stands dismissed on the ground of forum conveniens in law as held https://www.mhc.tn.gov.in/judis T.C.A. No. 231 of 2022 S. VAIDYANATHAN,J. AND C. SARAVANAN,J. nv by the Hon'ble Supreme Court in M/s. Kusum Ingots & Alloys Ltd. V. Union of India and another reported in (2004) 6 SCC 254. No costs. (S.V.N.J.) (C.S.N.J.) nv 05.09.2022 T.C.A. No.231 of 2022 https://www.mhc.tn.gov.in/judis T.C.A. No. 231 of 2022 S. VAIDYANATHAN,J. AND C. SARAVANAN,J. nv W.A. No. 241 of 2019 05.09.2022 https://www.mhc.tn.gov.in/judis