Court holds that administrative transfer of appeals must be respected; directs Delhi Bench to hear over 100 connected Sahara group cases on merits, clarifying Supreme Court ruling in ABC Papers Limited not applicable for Tribunal transfers
In a significant judgment dated September 30, 2026, the Delhi High Court (Division Bench) set aside orders of the Income Tax Appellate Tribunal (ITAT) dismissing appeals filed by Sahara India and others on the ground of territorial jurisdiction. The ITAT had ruled that the appeals were not maintainable before the Delhi Bench and directed Sahara India and the Revenue to file fresh appeals before the Lucknow Bench, which technically had territorial nexus since the assessee's place of business and Assessing Officer were in Lucknow.
The Delhi High Court, however, took a holistic and pragmatic view, emphasizing that these appeals had earlier been transferred administratively from Lucknow to Delhi by the President of the Tribunal in 2006, and both parties had requested that the Delhi Bench hear the matters. The Court observed that the ITAT erred in outrightly dismissing the appeals instead of seeking appropriate transfer orders from the President of the Tribunal. It held that a Tribunal Bench cannot nullify an administrative order of transfer and that the proper course, if territorial jurisdiction was in doubt, was to refer the matter for administrative transfer rather than reject the appeals.
Rejecting the reliance placed by the ITAT on the Supreme Court's judgment in Principal Commissioner of Income Tax 1 v. M/s ABC Papers Limited (2022) 447 ITR 1 (SC), the High Court clarified that the apex court's ruling pertained to appellate jurisdiction of High Courts under Section 260A of the Income Tax Act after transfer under Section 127 and did not govern administrative transfers within the Tribunal. Therefore, the ITAT's refusal to hear the appeals on this basis was misplaced.
The Court restored the appeals to the Delhi Bench of the ITAT for hearing on merits and directed that any appeals filed before the Lucknow Bench in the same matters shall remain deferred and be closed upon production of the Delhi Bench's decisions. The Court underscored that this order was passed in the peculiar facts of the case, where over 100 related appeals of the Sahara group were pending before the Delhi Bench, and thus should not be treated as a precedent.
The judgment vindicates Sahara India's contention that since the impugned orders before the Tribunal were passed by the Commissioner of Income Tax (Appeal) in Delhi, the appeals were maintainable before the Delhi Bench, especially given the joint request of both assessee and Revenue for hearing in Delhi.
This ruling reinforces the administrative authority of the President of the ITAT in transferring cases and cautions against arbitrary rejection of appeals on the ground of territorial jurisdiction when administrative transfers are in place. It also clarifies the limited scope of the Supreme Court's ABC Papers judgment, which does not extend to Tribunal administrative transfers.
Bottom Line:
Income Tax - Appeals before ITAT - Though technically Lucknow Bench had territorial nexus as assessee's place of business and Assessing Officer were situated at Lucknow, where appeals had earlier stood transferred to Delhi and both assessee and Revenue desired hearing at Delhi, Tribunal erred in rejecting appeals as not maintainable and directing fresh filing before Lucknow - Delhi Bench alone directed to hear and decide restored appeals on merits - Order passed in peculiar facts and not to be treated as precedent.
Statutory provision(s):
Income Tax Act, 1961 Sections 120, 127, 260A; Income-tax (Appellate Tribunal) Rules, 1963 Rule 4; Standing Order F. No.63 AD (AT)/97 dated 16.09.1997
Sahara India v. Income Tax Appellate Tribunal Delhi Bench, (Delhi)(DB) : Law Finder Doc Id # 2990690
