2026 (1) TMI 1552 - HC - Income Tax

Territorial jurisdiction of Tribunal benches and transfer procedure clarified; Delhi Bench restored appeals to decide them on merits

Delhi Bench's dismissal of appeals for lack of territorial jurisdiction was held improper because the Bench should have placed the matters before the ... Territorial jurisdiction - legality or propriety of the Tribunal’s order rejecting the appeals on the ground of lack of territorial jurisdiction Delhi Bench was of the view that it lacked the territorial jurisdiction HELD THAT:- We are of the view that approach of the Tribunal, Delhi Bench in dismissing the appeals and directing the assessees and the department to file fresh appeals before Lucknow Bench of the Tribunal is erroneous but still we feel that even if the Delhi Bench was of the view that it lacked the territorial jurisdiction, it ought to have placed the matters before the President for passing appropriate orders for transferring these cases to Lucknow. This kind of practice showcases the Tribunal’s overzealousness of disposing more cases. We are informed that these (13 appeals) are not the only appeals, which Delhi Bench of the Tribunal has dismissed, there are many more. Ironically, by way of impugned order dated 20.11.2024, the Delhi Bench has been able to reduce its pendency by a number of cases but at the same time it has led to an automatic increase at Lucknow Bench and the Department & the assessee have been burdened with the onerous task of instituting fresh appeals before the Lucknow Bench, though otherwise not required. We, therefore, set aside all the orders impugned in these petitions and restore the matters back to their original number to the dockets of the Delhi Bench of the Tribunal, to be decided on merits. We are conscious of the fact that more than 200 appeals were transferred from the Lucknow Bench of the Tribunal to Delhi Bench of the Tribunal, by the order(s) of the President passed in 2006. Consequent to the order(s) of like nature passed by the Tribunal, the concerned parties might have filed appeals/cross-objections before the Lucknow Bench. If that be so, as a sequel to restoration of the appeals, hearing of such appeals, which have been filed at Lucknow Bench shall remain deferred. It is held that it is only the Delhi Bench of the Tribunal, which shall decide the appeals on merits. Once such appeals are finally decided by the Delhi Bench, upon production of a copy of order of disposal, the Lucknow Bench shall close those appeal(s) as having been decided by Delhi Bench of the Tribunal. Issues: (i) Whether the Income Tax Appellate Tribunal, Delhi Bench was justified in dismissing transferred appeals and cross-objections on the ground of lack of territorial jurisdiction despite prior administrative transfer orders by the President of the Tribunal; (ii) Whether the decision in PCIT v. M/s ABC Papers Ltd. governs the present dispute about jurisdiction and transfer by administrative orders.Issue (i): Whether the ITAT Delhi Bench could dismiss appeals transferred to it by the President of the Tribunal on the ground of lack of territorial jurisdiction instead of restoring or transferring them for adjudication.Analysis: The appeals were earlier transferred by administrative orders of the President of the Tribunal to the Delhi Bench. The Delhi Bench recorded awareness of those transfer orders yet dismissed the appeals for lack of territorial jurisdiction, giving parties liberty to file fresh appeals. The matter was examined in light of the President's administrative powers under the Rules of 1963 and the mechanics for handling transferred matters by a Bench when territorial jurisdiction is questioned.Conclusion: The dismissal of the transferred appeals by the Delhi Bench on the ground of territorial jurisdiction was unsustainable. The impugned orders are set aside and the matters are restored to the Delhi Bench of the Tribunal to be decided on merits; the Delhi Bench alone shall decide those appeals and corresponding matters filed at Lucknow shall remain deferred until decision by Delhi Bench.Issue (ii): Whether the Supreme Court's decision in PCIT v. M/s ABC Papers Ltd. applies to bar the Delhi Bench from deciding transferred appeals or justifies dismissal for want of territorial jurisdiction.Analysis: The precedent in PCIT v. M/s ABC Papers Ltd. addressed the forum for appeals under Section 260A where the supervisory High Court over the Assessing Officer was in question and did not concern administrative transfers by the President of the Tribunal. The facts and legal question in that case differ from matters involving administrative transfer under Section 127(2) and Rule 4, and therefore its principle is not directly applicable to justify dismissal of appeals already transferred by the President.Conclusion: The PCIT v. M/s ABC Papers Ltd. decision does not validate dismissal of appeals transferred by the President; reliance upon it by the Delhi Bench was misplaced.Final Conclusion: The impugned orders of the Tribunal dismissing the transferred appeals are set aside and the matters are restored to the Delhi Bench of the Tribunal for adjudication on merits; corresponding appeals pending at the Lucknow Bench shall be treated as deferred and may be closed upon production of final orders by the Delhi Bench.Ratio Decidendi: An administrative transfer of appeals by the President of the Tribunal under the Rules and Section 127(2) cannot be nullified by a Bench of the Tribunal by dismissing transferred matters for territorial jurisdiction; transferred matters must be adjudicated by the receiving Bench or appropriately reassigned only through the President's administrative authority.