2026 (1) TMI 466 - AT - Income Tax

Income tax appeal over Kolkata ITO assessment filed at wrong ITAT bench; Varanasi bench held no territorial jurisdiction, dismissed.

The dominant issue was whether the ITAT Varanasi Circuit Bench had territorial jurisdiction to adjudicate an appeal and cross-objection arising from an ... Varanasi, Circuit Bench of the Tribunal jurisdiction to hear and determine the appeal and CO arising from the impugned assessment order passed by ITO, Ward 5(2), Kolkata - difference of opinion between Hon'ble Judicial Member and Hon'ble Accountant Member - matter referred to third member - HELD THAT:- On conjoint reading of the aforesaid orders of Hon'ble Accountant Member, Hon'ble Judicial Member and Hon'ble Third Member along with aforesaid Questions of Difference referred to Hon'ble Third Member by Hon'ble Accountant Member and Hon'ble Judicial Member; we find that the Hon'ble Third Member, has held that Varanasi Bench of Income Tax Appellate Tribunal does not have jurisdiction over this appeal and therefore, the present appeal deserves to be dismissed being not maintainable. Hon'ble Third Member has also held that the parties will be at liberty to avail (of) the appropriate remedies, as per law. Hon'ble Third Member has also held that Revenue would be at liberty to approach the appropriate forum at appropriate place, if so advised. 1. ISSUES PRESENTED AND CONSIDERED (i) Whether the Varanasi Circuit Bench of the Tribunal had territorial jurisdiction to hear and determine an appeal and cross-objection arising from an assessment order passed by an Assessing Officer located in Kolkata. (ii) Whether, upon holding that it lacked territorial jurisdiction, the Varanasi Circuit Bench could nonetheless adjudicate the validity of the first appellate order or the merits of additions deleted therein. 2. ISSUE-WISE DETAILED ANALYSIS Issue (i): Territorial jurisdiction of the Tribunal to entertain the appeal and cross-objection Legal framework (as discussed by the Court): The Court applied the principle that appellate territorial jurisdiction is determined with reference to the location/situs of the Assessing Officer who passed the impugned assessment order. The Court also considered Rule 4(1) of the Tribunal's Rules and the standing orders allocating territorial jurisdiction among Benches. Interpretation and reasoning: Since the impugned assessment order was passed by an Assessing Officer stationed in Kolkata, the Bench having territorial jurisdiction over that Assessing Officer was the appropriate Tribunal Bench. The standing arrangement for allocation of Tribunal work placed matters arising from the relevant territory with the Kolkata Benches. The Court held that, in the absence of any special order conferring jurisdiction on the Varanasi Circuit Bench, the appeal filed at Varanasi was not competent. The Court further accepted that subsequent events (including any later administrative changes or alleged transfer-related considerations) did not confer territorial jurisdiction on a Bench that otherwise lacked it for an appeal arising from the assessment order passed at Kolkata. Conclusion: The Varanasi Circuit Bench lacked territorial jurisdiction; consequently, both the Revenue's appeal and the assessee's cross-objection were held to be not maintainable before that Bench and were dismissed on that ground. Issue (ii): Power of a Bench lacking jurisdiction to decide validity/merits of the impugned orders Legal framework (as discussed by the Court): The Court proceeded on the premise that a forum which lacks territorial jurisdiction to entertain an appeal cannot go beyond the jurisdictional bar to render findings on other issues, including merits, as those issues are to be examined only by the competent forum. Interpretation and reasoning: Having held that the Varanasi Circuit Bench had no jurisdiction to hear and determine the appeal arising from the assessment order, the Court reasoned that it could not adjudicate the validity of the first appellate order or the merits of the additions that had been deleted. Any such findings would have to be left to the appropriate Tribunal Bench having territorial jurisdiction. The Court therefore treated the remaining controversies (including questions relating to jurisdictional objections under the Income-tax Act, and merits of the additions) as redundant/academic in the present proceedings. Conclusion: The Court declined to decide the merits or other ancillary questions once lack of territorial jurisdiction was found, and limited the disposal to dismissal for non-maintainability, with liberty to the parties to pursue remedies before the appropriate forum.