Is the President of ITAT immune from transferring live appeals from one bench of the ITAT to the other bench outside the headquarters?
The Hon’ble Bombay High Court in a very recent judgement has decided the bar on the transfer of live appeals from one bench of the tribunal to the other which exceeded the headquarters jurisdiction.
The question that was decided in MSPL Ltd Vs PCIT (2021) 127 Taxmann.com 379 (Bombay)
When an appeal or a bunch of appeals are being heard by a Bench of the Tribunal in one State, can an order on the administrative side be passed by the President transferring a live appeal from one Bench to another Bench that too in a different State outside the headquarters?
ITAT’s interpretation of Sec.255 of the IT Act & Rule 4 of the ITAT Rules, 1963:
Arguments of the Revenue before the HC:
Findings of the High court:
The HC discussed various provisions of the Income Tax law as well as drawing analogy from various branches of law to answer the question raised by the Assessee.
Chapter XX deals with Appeals and Revision. Part B specifically deals with appeals to the Appellate Tribunal comprising of Sec.252 to 255.
|252||constitution of Bench – One JM, One AM|
|252A||Qualifications, terms and conditions of service|
|253||Filing of Appeals to Appellate Tribunal|
|254||Deals with orders of Appellate Tribunal|
|255||Procedure of Appellate Tribunal|
It is pertinent to extract sub-sec(5) & (6) of Sec.255;
(5) Subject to the provisions of this Act, the Appellate Tribunal shall have power to regulate its own procedure and the procedure of Benches thereof in all matters arising out of the exercise of its powers or of the discharge of its functions, including the places at which the Benches shall hold their sittings.
What Sec.255(5) stipulates is that the Tribunal has powers to regulate its own procedures while discharging its functions. This includes notifying the places at which the Benches shall hold their sittings e.g., a particular Bench at Mumbai may hold its sittings at, say, Thane for a particular period for administrative reasons. This provision cannot be interpreted in such a broad manner to clothe the President of the Tribunal the jurisdiction to transfer a pending appeal from one Bench to another Bench outside the headquarters in another State.
Sub-Sec(6) of Sec.255:
(6) The Appellate Tribunal shall, for the purpose of discharging its functions, have all the powers which are vested in the income-tax authorities referred to in section 131, and any proceeding before the Appellate Tribunal shall be deemed to be a judicial proceeding within the meaning of sections 193 and 228 and for the purpose of section 196 of the Indian Penal Code (45 of 1860), and the Appellate Tribunal shall be deemed to be a civil court for all the purposes of section 195 and Chapter XXXV of the Code of Criminal Procedure, 1898 (5 of 1898).”
This sub-section clearly states that the proceedings of the Tribunal are deemed to be JUDICIAL PROCEEDINGS within the meaning of sections. 193, 196, 228 of the Indian Penal code. More importantly, it is deemed to be a CIVIL COURT for the purpose of Sec.195 and Chapter XXXV of the Code of Criminal Procedure, 1898.
Therefore, it is clear that there is no such power of transfer is discernible u/s.255 of the IT Act. Such power would amount to interference in a judicial proceeding of the tribunal.
Rule 4 of ITAT Rules, 1963:
“Power of Bench.
4. (1) A Bench shall hear and determine such appeals and applications made under the Act as the President may by general or special order direct.
(2) Where there are two or more Benches of the Tribunal working at any headquarters, the President or, in his absence, the Senior Vice-President/Vice-President of the concerned zone or, in his absence, the seniormost member of the station present at the headquarters may transfer an appeal or an application from any one of such Benches to any other.”
Sub rule (1) empowers the President to direct hearing of appeals by a Bench by a general or special order, sub rule (2) is more specific which merely prescribes rules on transfer of cases within the same headquarters.
The High court also took note of Rules 13 – who may be joined as Respondent and Rule 28 – Power to remand an appeal. Also drawing analogy from Sec.20 of the Civil Procedure Code, 1908 which ultimately states that the place of institution of the suit would be where the defendants reside or works for gain and in case of appeal under the Tribunal Rules where the Assessing Officer is located
It is pertinent to take note of the parties to the WP. The Respondents PCIT-1, Mumbai and ITAT Mumbai.
Adverting to the question of maintainability of WP itself and that too before in a different jurisdiction, the Bombay HC laid emphasis on Article 226(2) of the constitution of India and held;
“Clause (2) of Article 226 makes it clear that the power to issue directions, orders or writs by any High Court within its territorial jurisdiction would also extend to a cause of action or even a part thereof which arises within the territorial limits of the High Court notwithstanding the fact that the seat of the authority is not within the territorial limits of the High Court. Therefore, in the light of the above and having regard to the mandate of clause (2) of Article 226 of the Constitution of India, this Court certainly has the jurisdiction to entertain the writ petition”.
Also, the counsel for the respondents placed emphasis on the words “every order” as contemplated in Sec.260A and submitted that the Assessee ought to have filed an appeal against the order of the ITAT and not a Writ petition. The Court held that the word “every order passed by the tribunal” means an order passed in appeal and has to deal with merits whereas the impugned orders are on transfer of appeals without adjudication on merits of the appeals.
The President of the Income Tax Appellate Tribunal doesn’t have powers to transfer live appeals from one bench to another bench in a different headquarters. The Rules ascribe for such transfer within the same headquarters and not different headquarters. This act of transfer of live appeals from one Bench to the other in a different headquarters cannot be termed as an administrative decision and it would amount to interference in a judicial proceeding of the tribunal.
Chronology of events:
|31.12.2009||Separate order of assessment u/s.153A and 143(3)|
|03.02.2011||Order of CIT(A)|
|06.04.2011||Appeals filed before ITAT Bangalore|
|02.06.011||Appeal marked as part heard by ITAT|
|08.06.2011||Written submissions filed by reveue|
|08.09.2011||Transfer of Accountant member which resulted in releasing of appeal and fixed for hearing on regular course|
|30.08.2012||Search appeals decentralized which resulted in change of jurisdiction of AO from Bangalore to Mumbai|
|21.11.2012||ITAT hearing. Assessee submits that there is no satisfaction note recorded during search which makes the search invalid. Relied on the Jurisdictional HC decision in CIT Vs Ramaiah Reddy 339 ITR 210 (Karnataka)|
|11.02.2013||ITAT directed DR to file satisfaction note|
|29.07.2013||Transfer of appeals application filed before ITAT Bangalore by the Revenue|
|12.08.013||CIT-1, Mumbai communication to VP, Bangalore ITAT for transfer of appeals to Mumbai which holds the jurisdiction post decentralisation|
|07.10.2013||DR submitted the SLP has been admitted by SC and therefore pleaded for deferring of hearing until the SLP is decided. ITAT accedes and adjourns the appeal sine-die. Stay of collection granted until the disposal of appeals|
|13.12.2018||ITAT took note of the order sheet and called for the satisfaction note from the DR.|
|07.02.2019||Non-production of satisfaction note|
|19.03.2019||ITAT took note of the fact that there were no subsequent pleading by the revenue for transfer of appeals and finally adjourned to get instructions|
|27.06.2019||Assessee files objection against the transfer application|
|12.12.2019||Written submissions filed by revenue in support of transfer application|
|19.03.2020||ITAT orders transfer of appeals from ITAT Bangalore to ITAT Mumbai (Impugned order 1)|
|20.08.2020||Order of president giving accent to such transfer as per Rule 4 of ITAT Rules, 1963 (Impugned order 2)|