Delhi High Court Rules Judicial Benches Cannot Nullify ITAT President’s Administrative Transfer Orders: Reinstates Sahara Group Appeals

In a landmark judgment reinforcing administrative discipline within tax tribunals, the Hon’ble Delhi High Court has set aside a controversial order passed by the Delhi Bench of the Income Tax Appellate Tribunal (ITAT). The Court ruled that a judicial bench of the Tribunal lacks the authority to dismiss appeals on the grounds of territorial jurisdiction when such appeals have been specifically assigned to it via an administrative transfer order issued by the President of the ITAT.

The case, titled Sahara India Ltd. Vs ITAT Delhi Bench & Ors. (W.P.(C) 6024/2025), addresses critical questions regarding the hierarchy of administrative powers within the Tribunal, the applicability of the Supreme Court’s ruling in PCIT v. M/s ABC Papers Ltd., and the rights of an assessee to a hearing on merits after long-standing procedural delays.

Factual Matrix and Procedural History

To understand the gravity of the High Court’s intervention, it is essential to trace the chronological trajectory of the litigation, which spans nearly two decades.

Origin of the Dispute

The genesis of the matter lies in an assessment order where the Assessing Officer (AO), dissatisfied with the relief granted to the assessee by the Commissioner of Income Tax (Appeals) [CIT(A)] in Lucknow vide an order dated 09.09.2005, filed an appeal before the ITAT Lucknow Bench. This appeal was docketed as ITA No. 823/Lkw/2005. Concurrently, the assessee, Sahara India Ltd., filed a cross-objection registered as CO No. 29/Lkw/2006.

Administrative Centralization of Cases

Given the magnitude and complexity of the Sahara Group's operations, the tax authorities invoked Section 127(2) of the Income Tax Act 1961. This provision empowers the department to transfer cases between jurisdictions for administrative convenience and coordinated investigation. Consequently, cases pending in various locations, including Lucknow and Kolkata, were centralized to Delhi vide an order dated 29.07.2005.

Although the assessee initially challenged this centralization before the Allahabad High Court (Lucknow Bench), that challenge was dismissed on 08.02.2006, thereby solidifying the jurisdiction in Delhi.

The ITAT President’s Transfer Order

Following the centralization of the assessment proceedings, the appellate proceedings also required consolidation. On 17.08.2006, the President of the ITAT, exercising powers conferred under Rule 4 of the Income Tax (Appellate Tribunal) Rules, 1963, issued an administrative order. This order transferred a batch of 218 appeals related to the Sahara Group—originally pending before the Lucknow Bench—to the Delhi Bench of the Tribunal.

For nearly two decades, these appeals remained pending on the docket of the Delhi Bench.

The Impugned Order by ITAT Delhi

The controversy erupted on 20.11.2024, when the Delhi Bench of the ITAT took up the matters for hearing. Instead of adjudicating the appeals on their merits, the Tribunal dismissed ITA No. 823/Lkw/2005 and the corresponding cross-objection CO No. 29/Lkw/2006.