Decision of jurisdictional High Court is binding, even if contrary view held by non-jurisdictional High Courts

It is well settled principle of law that if there is conflicting views rendered by different High Courts, the view taken by the jurisdictional High Court is binding in the jurisdictional area of the respective High Court.

The Hon’ble Bombay High Court in the case of Subramaniam -vs.- Siemens India Ltd. (1985) 156 ITR 11 (Bom.) held that so far as the legal position is concerned, the ITO would be bound by a decision of the Supreme Court as also by a decision of the High Court of the State within whose jurisdiction he is functioning, irrespective of the pendency of any appeal or special leave application against the judgment. He would equally be bound by a decision of another High Court on the point, because not to follow that decision would be to cause grave prejudice to the assessee. However, in the case where there is conflict of views between different High Courts, ITO must follow the decision of the High Court within whose jurisdiction he is functioning. The Court further added that in cases where there is a conflict between the decisions of non-jurisdictional High Courts, the ITO must take the view which is in favour of the assessee and not against him.

The Hon’ble Rajasthan High Court in the case of CIT -vs.- Sunil Kumar (1996) 212 ITR 238 (Raj.) held that the decision of the Jurisdictional High Court is binding on the Income tax Authorities and the Tribunal within the jurisdiction of the Court and the contrary decision of another High Court is not relevant, and that a point decided by the Jurisdictional High Court can no longer be considered to be a debatable issue.

Reliance is being placed on the judgment in the case of CIT -vs.- Smt. Aruna Luthra (2001) 252 ITR 76 (P&H)(FB), wherein the Full bench of the Hon’ble Punjab & Haryana High Court has held that once the jurisdictional High Court or Supreme Court decides a particular issue, the judgment of jurisdictional High Court/Supreme Court would relate back to the date when particular section was inserted in the Act.

Decision of jurisdictional High Court is binding on lower authorities (the assessing and appellate authorities)

The decision of the Hon’ble High Court is binding on the lower authorities within the jurisdiction of the High Court. In fact the decision of higher authorities is binding on sub-ordinate authorities in the judicial system. Accordingly, the decisions of the Jurisdictional High Court are binding on the lower authorities including the Ld. CIT(Appeals).

Reliance in this regard is placed on the decision in the case of UOI -vs.- Kamalakshi Finance Corporation AIR 1992 SC 711, wherein the Hon’ble Apex Court held that:

“The order of the Appellate Collector is binding on the Assistant Collector working within his jurisdiction and the order of the Tribunal is binding upon the Assistant Collector and the Appellate Collectors who function under the jurisdiction of the Tribunal. The principles of judicial discipline require that the orders of the higher appellate authorities should be followed unreservedly by the subordinate authorities. The mere fact that the order of the appellate authority is not “acceptable” to the department – in itself an objectionable phrase – and is the subject-matter of an appeal can furnish no ground for not following it unless its operations has been suspended by a competent court. If this healthy rule is not followed, the result will only be undue harassment to assessees and chaos in administration of tax laws.”

Further, in the case of Baradakanta Mishra -vs.- Bhimsen Dixit AIR 1972 SC 2466 the Hon’ble Apex Court held that:

“It would be anomalous to suggest that a Tribunal over which the High Court has superintendence can ignore the law declared by that court and start proceedings in direct violations of it. If a Tribunal can do so, all the subordinate courts can equally do so, for there is no specific provision, just like in the case of Supreme Court, making the law declared by the High Court binding on subordinate courts. It is implicit in the power of supervision conferred on a superior Tribunal that all the Tribunals subject to its supervision should conform to the law laid down by it. Such obedience would also be conducive to their smooth working; otherwise there would be confusion in the administration of law and respect for law would irretrievably suffer.”

In the case of CIT -vs.- Ralson Industries Ltd. (2007) 288 ITR 322 (SC) the Hon’ble Apex Court held that when an order is passed by a higher authority, the lower authority is bound thereby keeping in view the principles of judicial discipline.

Further, in the case of Russell Properties (P.) Ltd. -vs.- Addl. CIT (1977) 109 ITR 229 (Cal.) the Hon’ble High Court, relying on the decision of the Hon’ble Supreme Court in the case of East India Commercial Co. Ltd. -vs.- Collector of Customs AIR 1962 SC 1893, held that whenever there is a decision of the higher appellate authority, the subordinate authorities are bound to follow the said decision to maintain judicial discipline.

In view of the above, it can be safely concluded that the decision of the Hon’ble Jurisdictional High Court are binding on the lower authorities like the AO, Ld. CIT/Pr. CIT and the Ld. CIT(Appeals) and the Hon’ble ITAT working in the jurisdiction of the Hon’ble High Court.

On the perusal of the above principles laid down by the Apex Court, it is clear that the decisions of the Hon’ble Jurisdictional High Court are binding on the appellate and assessing authorities working under the jurisdiction of the said High Court.

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7 Comments

  1. SathikondaA says:

    The High Court of Andhra Pradesh also reiterated the same principle in the case of Sate of Andhra Pradesh Vs. Commercial Tax Officer & Anr [1988] 169 ITR 564

    1. Nitesh Agarwal says:

      Rightly said sir. There are various HCs and SC judgements on this point.
      Yours action of citing a well celebrated judgement by the Hon’ble A.P. HC is highly applauded.

      The crux of this well settled legal position may be stated as:
      The lower authorities are bound by a decision of the Supreme Court as also by a decision of the High Court of the State within whose jurisdiction they are functioning. They would be equally bound by the decision of another High Court on the point.

      However, in cases, where there is a conflict between the decision of the jurisdictional High Court and a non-jurisdictional High Court, they must follow the decision of the High Court within whose jurisdiction they are functioning.

      But if the conflict is between decisions of different non-jurisdictional High Courts, they must take the view which is in favour of the assessee and not against the assessee as the benefit of doubt always flows to the assessee in the taxing statutes.

  2. Naresh says:

    What is the Assessing Officer / CIT(A) bound to do, when an issue is squarely covered by the judgment of non-jurisdictional High Court in favour of assesse and there is no judgment of jurisdictional High Court on the matter. Is the AO / CIT(A) bound to follow the judgment?

    1. Nitesh Agarwal says:

      When a High Court decides a issue on a matter and there is no contrary decision of any other High Court, then the Ruling of the High Court (even if non-jurisdictional) becomes the law of the Land till a contrary view is taken by some other High Court.

      Further, following the principle of Judicial Discipline, the lower authorities i.e. ITAT, CIT(A), CIT/PCIT AO etc. are bound to follow the decision of a Higher authority – High Court.
      The department cannot defy the ruling of a High Court only on the basis that it is a non-jurisdictional High Court.

      1. SathikondaA says:

        In the case of State of Andhra Pradesh Vs. Commercial Tax Officer & Anr [1988] 269 ITR 564, the High Court observed thus –
        “It is clear from the Judicial pronouncements above referred to that the authorities and the tribunals functioning within the jurisdiction of this court in respect of whom this court has the power of superintendence under article 227 are bound to follow the decisions of this court unless, on an appeal, the operation of the judgment is suspended. It is not permissible for the authorities and the Tribunals to ignore the decisions of this court or to refuse to follow the decisions of this court on the pretext that an appeal is filed in the Supreme Court which is pending or that steps are being taken to file an appeal. If any authority or the tribunal refuses to follow any decision of this court on the above grounds, it would be clearly guilty of committing contempt of this court and is liable to be proceeded against.”

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