Facts of the Case

The Revenue filed an appeal before the Delhi High Court under Section 260A of the Income-tax Act against an order passed by the Income Tax Appellate Tribunal (ITAT), Delhi. The respondent-assessee, M/s Digvijay Chemicals Ltd., raised a preliminary objection regarding the maintainability of the appeal before the Delhi High Court.

The assessments for Assessment Years 1993-94 and 1994-95 had originally been completed by the Assessing Officer at Bulandshahar, Uttar Pradesh. Appeals against the assessment orders were heard and decided by the Commissioner of Income Tax (Appeals), Meerut. Thereafter, further appeals were filed before the ITAT, Delhi, which exercised jurisdiction over the concerned territory at that time.

Subsequently, assessment records relating to certain other assessment years were transferred to Delhi under Section 127 of the Income-tax Act by an order dated 07.04.2003. The Revenue contended that this transfer entitled it to maintain the appeal before the Delhi High Court. The assessee disputed this contention and argued that jurisdiction lay with the Allahabad High Court. 

Issues Involved

  1. Whether an appeal under Section 260A against an order of the ITAT, Delhi, could be maintained before the Delhi High Court when the original assessment proceedings were completed in Bulandshahar and appellate proceedings before the CIT(A) were conducted in Meerut.
  2. Whether transfer of assessment records for certain other assessment years to Delhi under Section 127 altered the territorial jurisdiction of the High Court competent to hear the appeal.
  3. Whether the situs of the Assessing Officer and assessment proceedings or the location of the ITAT determines the jurisdiction of the High Court under Section 260A.

Petitioner’s Arguments (Revenue)

The Revenue argued that although the assessments for the years in question had been completed in Bulandshahar and appeals had been heard in Meerut, the assessment records stood transferred to Delhi by an order dated 07.04.2003.

It was contended that once the records were transferred to Delhi, any order passed by the ITAT in relation to the assessee became appealable before the Delhi High Court. According to the Revenue, the transfer of records was sufficient to confer jurisdiction upon the Delhi High Court for entertaining the appeal under Section 260A.

Respondent’s Arguments (Assessee)

The assessee submitted that jurisdiction for filing appeals under Section 260A is determined with reference to the situs of the Assessing Officer and the place where the assessment proceedings were conducted, and not by the location of the ITAT.

Reliance was placed upon the decisions of the Delhi High Court in CIT v. Seth Banarsi Dass Gupta (113 ITR 817) and Suresh Desai & Associates v. CIT (230 ITR 912).

It was argued that since the assessments were completed by the Assessing Officer at Bulandshahar and the first appellate proceedings were conducted by the CIT(A), Meerut, the appropriate High Court was the Allahabad High Court. The subsequent transfer of records relating to other years could not change the forum of appeal for completed assessments. Therefore, the appeal before the Delhi High Court was not maintainable. 

Court Order / Findings

The Delhi High Court upheld the preliminary objection raised by the assessee.

The Court held that the forum of appeal is determined by reference to the situs of the Assessing Officer and the place where the assessment proceedings were completed, and not by the location of the Income Tax Appellate Tribunal.

The Court relied upon its earlier judgments in Seth Banarsi Dass Gupta v. CIT and Suresh Desai & Associates v. CIT, observing that the principle applicable to references under the unamended law continues to apply to appeals under Section 260A.

The Court further held that:

  • The assessment proceedings for the relevant years were completed at Bulandshahar.
  • Appeals against those assessments were heard and disposed of by the CIT(A), Meerut.
  • Merely because the ITAT was situated in Delhi did not confer jurisdiction upon the Delhi High Court.
  • Transfer of records relating to other assessment years under Section 127 had no bearing on the territorial jurisdiction for appeals arising out of completed assessments.

Accordingly, the Court concluded that the appeal ought to have been filed before the Allahabad High Court and not before the Delhi High Court.

Important Clarification

The judgment clarifies that for the purpose of determining jurisdiction under Section 260A:

  • The relevant consideration is the location of the Assessing Officer and the territorial jurisdiction where the assessment proceedings were completed.
  • The location of the ITAT Bench passing the order is not decisive.
  • Subsequent transfer of assessment records under Section 127 for other assessment years does not shift the forum of appeal for completed assessments.
  • Territorial jurisdiction remains linked to the original assessment proceedings from which the appeal arises. 

Sections Involved:

Sections 260A, 127, 120 and 256(2) of the Income-tax Act, 1961. 

Link to download the order - https://delhihighcourt.nic.in/app/case_number_pdf/2006:DHC:25075-DB/61304042006ITA4522006_130141.pdf 

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