The Delhi High Court has restored a batch of income tax appeals involving Sahara group entities to the Delhi Bench of the Income Tax Appellate Tribunal (ITAT), granting relief in view of the connected litigation already being heard in Delhi and the joint preference of the assessees and the Revenue.
The Bench of Justice Dinesh Mehta and Justice Aditi Choudhary set aside the Tribunal’s orders declining to entertain the matters on territorial jurisdiction grounds. However, the Court expressly clarified that its decision arose from the peculiar facts of the case and must not be treated as a precedent.
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The petitions challenged ITAT orders holding that the appeals were not maintainable before its Delhi Bench. The Tribunal had relied on the Supreme Court’s decision in Principal Commissioner of Income Tax 1 v. M/s ABC Papers Limited, reported in (2022) 447 ITR 1 (SC).
The petitioners argued that they had approached the Delhi Bench because the underlying appellate orders had been passed by the Commissioner of Income Tax (Appeals), Delhi. According to them, appeals against those orders could therefore be heard in Delhi.
Their counsel further submitted that the Supreme Court’s ruling in ABC Papers Limited concerned the jurisdiction of High Courts in income tax appeals. They also pointed out that both the assessees and the Revenue wanted the proceedings to continue before the Delhi Bench.
The High Court acknowledged that, technically, the Tribunal’s view could not be described as erroneous under Rule 4 of the Income-tax (Appellate Tribunal) Rules, 1963, read with the standing order dated September 16, 1997.
The Court noted that the petitioners’ place of business and the office of the Assessing Officer who had assessed them were situated in Lucknow.
It explained that the first appeals had been decided by the CIT(A), Delhi because, during their pendency, the Chief Commissioner of Income Tax, Kanpur had passed an order dated April 4, 2006 under Section 120 of the Income-tax Act, 1961, conferring jurisdiction on CIT(A)-I, New Delhi.
The Court nevertheless considered a broader and pragmatic approach appropriate in light of its earlier decision concerning the same group companies.
The Bench referred extensively to its January 22, 2026 order, in which it had restored related appeals to the Delhi Bench after the Tribunal dismissed them despite their transfer from Lucknow under administrative orders of the ITAT President.
In that earlier ruling, the High Court held that a Tribunal Bench could not undo the President’s administrative transfer order through a judicial order declining territorial jurisdiction. The legality of such a transfer could be examined by a competent court, but the receiving Tribunal Bench could not simply nullify it.
The earlier decision also distinguished the Supreme Court’s ruling in ABC Papers Limited. That case concerned which High Court could entertain an appeal under Section 260A following a transfer of the assessee’s case under Section 127. It did not concern an administrative transfer of appeals between ITAT Benches.
The High Court had explained that an eventual Section 260A appeal against the Tribunal’s decision on merits might lie before the Allahabad High Court, while the transferred proceedings before the Tribunal could still be heard in Delhi.
It had also criticised the practice of dismissing appeals and requiring fresh proceedings in Lucknow, observing that, even if the Delhi Bench considered itself without territorial jurisdiction, it should have placed the matters before the ITAT President for appropriate transfer orders.
In the present proceedings, the High Court noted that more than 100 appeals involving the assessees’ group companies were already being heard by the Tribunal in Delhi.
Both the assessees and the Revenue had jointly submitted that they preferred the present appeals to be heard there as well.
Taking these circumstances into account, the Court allowed the writ petitions “as a special case” and restored the appeals for adjudication by the Delhi Bench.
The orders set aside were dated May 30, 2025 and June 26, 2025. The proceedings covered appeals and cross-objections involving Sahara India and Sahara India Financial Corporation Ltd.
The Court directed that hearings of corresponding appeals, if filed before the Lucknow Bench, would remain deferred following restoration of the Delhi proceedings.
The Delhi Bench alone will decide the restored matters on merits. Once those appeals are finally disposed of, the Lucknow Bench must close the corresponding proceedings upon production of the Delhi Bench’s disposal orders.
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