High Court quashes improper transfer of appeals, emphasizing natural justice and procedural fairness.

The High Court set aside and quashed the orders transferring appeals from the Bangalore Bench to the Mumbai Benches of the Income Tax Appellate Tribunal, holding them unsustainable in law. It was found that the President of the Tribunal lacked jurisdiction to make such transfers outside the headquarters. The court emphasized the importance of natural justice and procedural fairness, ruling that the transfer was unjustified. The writ petition filed before the Bombay High Court was deemed maintainable, and the appeals were directed to continue before the Bangalore Bench of the Tribunal.

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Issues Involved:
1. Validity of the transfer of appeals from the Bangalore Bench to the Mumbai Benches of the Income Tax Appellate Tribunal.
2. Authority and jurisdiction of the President of the Income Tax Appellate Tribunal to transfer appeals.
3. Compliance with principles of natural justice and procedural fairness.
4. Maintainability of the writ petition before the Bombay High Court.

Issue-wise Detailed Analysis:

1. Validity of the transfer of appeals from the Bangalore Bench to the Mumbai Benches of the Income Tax Appellate Tribunal:

By filing this petition under Article 226 of the Constitution of India, the petitioner sought quashing of the order dated 19.03.2020 passed by the Income Tax Appellate Tribunal, Bangalore Bench, and the order dated 20.08.2020 passed by the President of the Income Tax Appellate Tribunal, directing that the appeals be transferred from Bangalore to Mumbai.

It was argued that the transfer request was made to avoid compliance with the direction of the Bangalore Bench for the production of a satisfaction note authorizing the search and seizure. The contention was that the plea of transfer was not a serious plea but rather a casual submission. The Bangalore Bench of the Tribunal noted that the plea of transfer raised by the revenue was not serious, and the departmental representative failed to produce the satisfaction note as directed.

The High Court observed that the power to transfer pending appeals from one Bench to another Bench outside the headquarters in a different state is not traceable to section 255 of the Income Tax Act, 1961. The court found that the order dated 19.03.2020 passed by the Bangalore Bench of the Tribunal and the order dated 20.08.2020 passed by the President of the Tribunal were unsustainable in law and accordingly set them aside.

2. Authority and jurisdiction of the President of the Income Tax Appellate Tribunal to transfer appeals:

The Bangalore Bench of the Tribunal relied upon section 255(5) of the Act, which provides that the Appellate Tribunal shall have the power to regulate its own procedure and the procedure of Benches thereof, including the places at which the Benches shall hold their sittings. The High Court, however, held that this provision does not confer the President of the Tribunal with the jurisdiction to transfer a pending appeal from one Bench to another Bench outside the headquarters in a different state.

The President of the Tribunal exercised his power under rule 4 of the Income Tax Appellate Tribunal Rules, 1963, to direct that the appeals be heard and determined by the Mumbai Benches. The High Court found that rule 4(2) allows for the transfer of an appeal from one Bench to another within the same headquarters but does not authorize the transfer of appeals from one Bench in one state to another Bench in a different state.

3. Compliance with principles of natural justice and procedural fairness:

The petitioner contended that the transfer of appeals was made to avoid compliance with the direction of the Bangalore Bench for the production of the satisfaction note. The High Court noted that the petitioner had raised objections to the transfer and that the Bangalore Bench of the Tribunal had passed a speaking order dealing with the objections. However, the court found that the order of transfer was not justified and set it aside.

The court emphasized that the convenience of a party cannot be a criterion for transferring a case out of a state and that cases are transferred to serve the ends of justice. The court held that the transfer application was invalid as it was made by parties who were not respondents in the subject appeals.

4. Maintainability of the writ petition before the Bombay High Court:

Respondent No.2 argued that the writ petition should have been filed before the Karnataka High Court and that an appeal under section 260A of the Act ought to have been filed instead of a writ petition. The High Court rejected these objections, stating that the cause of action for filing the writ petition arose in Mumbai, and therefore, the writ petition filed before the Bombay High Court was maintainable.

The court further held that the order dated 19.03.2020 was not an order on the merit of the appeals but related to the transfer of the appeals. Therefore, an appeal under section 260A of the Act would not be applicable, and the writ petition was the appropriate remedy.

Conclusion:

The High Court set aside and quashed the orders dated 19.03.2020 and 20.08.2020, holding that they were unsustainable in law. The writ petition was allowed, and the appeals were directed to continue before the Bangalore Bench of the Tribunal.

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