High Court Within Whose Jurisdiction AO Passes Assessment Order Has Jurisdiction To Entertain Appeal U/S 260A Income Tax Act: Delhi HC

The Section makes provision for an appeal to the High Court from an order passed in appeal by the Appellate Tribunal.

In the case at hand, the original assessment order was passed by the AO in Amritsar, making an addition of ₹4,37,046/- to the assessee's income on account of disallowance of expenditure for personal use.

The said order was subject matter of revision under Section 263 of the Act by the Principal Commissioner of Income Tax. PCIT held that the assessment order was prejudicial to the interest of the Revenue and directed the AO to frame an assessment order afresh after conducting proper enquiries.

On the assessee's appeal, ITAT found that the assessment order was framed in the name of a firm that was dissolved. Accordingly, the ITAT allowed the assessee's appeal on the ground that an order framed in the name of a non-existent entity could not be subjected to revision under Section 263 of the Act.

Since the appeal was decided by ITAT Delhi, Revenue approached the Delhi High Court.

The assessee, however, raised a preliminary objection as to the territorial jurisdiction. It submitted that since the original assessment order was passed by the AO in Amritsar, therefore, Delhi High Court would not have territorial jurisdiction to entertain the present appeal.

The division bench of Justices Vibhu Bakhru and Tushar Rao Gedela agreed with the assessee, stating that since the appeal before it emanates from an assessment order issued by the AO in Amritsar, it does not have territorial jurisdiction.

Reliance was placed on Seth Banarsi Dass Gupta v. Commissioner of Income Tax (1978) where the Supreme Court held that the High Court, within whose jurisdiction the AO has passed the assessment order, would have the jurisdiction to entertain the appeal under Section 260A of the Act.

Reference was also made to Pr. Commissioner of Income Tax-I, Chandigarh v. M/s ABC Papers Ltd. (2022) where the Supreme Court considered the question as to the jurisdiction of the court in cases in which the jurisdiction of the AO had been transferred during the pendency of the proceedings.

The Top Court had ruled that even if the case of an assessee is transferred, the High Court within whose jurisdiction the assessing officer passed the order shall continue to exercise the jurisdiction of the appeal.

At this juncture, the Revenue contended that since the assessee itself had approached ITAT Delhi, it could not now raise the issue of jurisdiction.

However, the High Court said once it is satisfied that it does not have the jurisdiction to entertain the appeal, it would not examine any other question, including whether ITAT Delhi had jurisdiction.

Appearance: For the Petitioners: Mr Vipul Agrawal, Advocate. For the Respondents: Mr Rohit Jain, Mr Aniket D Agrawal and Mr Abhishek Singhvi, Advocates.

Case title: Principal Commissioner Of Income Tax - 1 v. M/S Chemester Food Industries Pvt. Ltd

Citation: 2025 LiveLaw (Del) 181

Case no.: ITA 113/2024

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