Calcutta H.C : The petitioner No. 1 is a company having its registered office at 71, Park Street, Kolkata. The petitioner-company is all along assessed by the respondent No. 2 at Kolkata.

High Court Of Calcutta

Ispat Industries Ltd. vs. DCIT & Ors.

Sections 148, 163, Art. 226

Asst. Year 1998-99

Pinaki Chandra Ghose, J.

Writ Petn. Nos. 4840 & 4846 of 2001

10th September, 2001

Counsel Appeared

R.N. Bajoria, Goutam Mitra, J.P. Khaitan, Ms. Anua Malhotra & Makhan Roy, for the Petitioner : Rupen Mitra & Md. Nizamuddin, for the Respondent

JUDGMENT

PINAKI CHANDRA GHOSE, J. :

This is an application filed by the petitioner inter alia challenging the impugned notice dt. 1st March, 2001, issued by the respondent-authorities under s. 163 of the IT Act, 1961 (hereinafter referred to as the Said Act), an order passed thereon and further the impugned notice dt. 8th March, 2001 issued by the respondent-authorities under s. 148 of the Said Act.

2. Facts of the case briefly are as follows : The petitioner No. 1 is a company having its registered office at 71, Park Street, Kolkata. The petitioner-company is all along assessed by the respondent No. 2 at Kolkata. The petitioner has branch office at Mumbai, M/s Linklaters & Paines of London (hereinafter referred to as the foreign bank) is a solicitor firm engaged by the petitioner by and agreement dt. 17th May, 1996, for rendering their services to the petitioner. The petitioner-company obtained no objection certificate from the concerned officer of the IT Department for remittance of professional fees payable to the said firm under s. 195 of the Said Act. The said no objection certificate was obtained by the petitioner for making remittance of the professional fees of the said foreign firm in London in terms of the provisions of the Double Taxation Avoidance Agreement between the Government of India and United Kingdom. On or about 18th Nov., 1997, a circular bearing No. 759 was issued by the Ministry of Finance, Department of Revenue, CBDT, whereby the provisions for making application to obtain no objection certificate from the IT Department was withdrawn. Subsequent thereto the petitioner made two remittances to the said foreign firm. The petitioner-company received a notice dt. 1st March, 2001, from the respondent No. 1 addressed to the principal officer of the petitioner at Mumbai. The said notice has been issued under s. 163 of the Said Act asking the petitioner-company to show-cause as to why it should not be treated as an agent of the said foreign firm for the asst. yr. 1998-99. The petitioner-company was directed to show cause by 5th March, 2001. Thereafter, according to the petitioner the said notice was forwarded to the registered office of the petitioner-company at Kolkata by a letter dt. 5th March, 2001. By a letter, dt. 5th March, 2001 the petitioner duly replied the said notice and clarified its position. Thereafter, on 8th March, 2001, the respondent No. 1 passed an order under s. 163 of the Said Act treating the petitioner-company as an agent of the said foreign firm in terms of s. 163(b) and (c). Respondent-authorities along with the said order dt. 8th March, 2001, also served a notice under s.148 of the Said Act being dt. 8th March, 2001. According to the petitioner, the respondent No. 1 has not recorded any reason to issue such notice under s. 148 of the Said Act.

3. The grievance of the petitioner is that the petitioner-company cannot be treated as an agent of the said Linklaters & Paines, London, and further the respondent No. 1 is not authorised to pass such order under s. 163 and, therefore, the respondent No. 1 has no authority or jurisdiction to issue such notice as the petitioner is regularly assessed by a different officer being the respondent No. 2 herein. Hence, the petitioner has challenged the said notice issued under s. 163 as well as the notice issued under s. 148 of the Said Act. The further contention of the petitioner in the writ petition that the purported order dt. 8th March, 2001, holding the petitioner as an agent of the said foreign firm and further the notice under s. 148 of the Said Act issued by the respondent No. 1 directing the petitioner-company to file return within 16th March, 2001, was too short time to file such return. The petitioner has also challenged the said notice under s. 148 of the Said Act issued by the respondent No. 1 for the asst. yr. 1998-99 as bad, illegal and void and further the officer at Mumbai had no jurisdiction to issue such notice to the petitioner. It further appears that the petitioner by a letter dt. 14th March, 2001, prayed time from the respondent No. 1 to file such return as the petitioner-company has to collect information and datas for filing such return. The petitioner duly received intimation from the respondent No. 1 by a faxed letter (message) that the time was extended upto 19th March, 2001. Hence, the petitioner has challenged the said notice under s. 163 of the Said Act as well as the order passed pursuant thereto and the notice under s. 148 of the Said Act inter alia on the ground that the same are illegal, mala fide, without jurisdiction, unreasonable and void.

Affidavits have been filed by the respondent Nos. 1 and 3. According to the respondents, writ application is not maintainable since the order under s. 163 of the Said Act and subsequent proceedings which is the subject-matter of challenge in the present writ proceedings is an order under s. 163 of the IT Act, 1961. Further, the subject-matter of the writ petition are limited to and in connection with M/s Linklaters & Paines, London and the writ petitioner No. 1 is the agent of the said foreign firm and the said foreign firm is an assessee within the jurisdiction of the AO at Mumbai and assessed at Mumbai. Furthermore an alternative remedy is available to the writ petitioner by way of an appeal against the order passed under s. 163 of the Said Act. The said firm has filed its return of income for the asst. yr. 1998-99 at Mumbai on 27th Oct., 1998. It is further stated by the respondents in their affidavit that during the said assessment year on the basis of the materials available to the respondent No. 1 it appears that petitioner- company had engaged the professional consultancy services of the said Linklaters & Paines, U.K. against the payment of specified fees. It is also stated in the affidavit that no objection certificate issued under s. 195 of the Said Act are only tentative and provisional and subject to modification in the final assessment made under s. 143 of the Said Act. It is further stated that this High Court has no jurisdiction to entertain this application inasmuch as the show-cause notice has been served on the petitioner as an agent of the said foreign firm and the notice under s. 148 of the Said Act has been served treating the Ispat Industries Ltd. as a representative-assessee of the said M/s Linklaters & Paines, London whereby the said company as a representative-assessee has to file return for the asst. yr. 1998-99 and further stated that the said order and the notice under s. 163 of the Said Act and s. 148 of the Said Act have been issued without violating any norms of law. Mr. Bajoria appearing on behalf of the petitioner contended that issues involving in this application are that whether this Hon’ble Court has jurisdiction in respect of the proceedings initiated under s. 148 of the Said Act since the respondent No. 1 is at Mumbai and the proceedings are sought to be conducted there.

He first urged on the point of jurisdiction and contended before me that under Art. 226 of the Constitution of India this Hon’ble Court has jurisdiction in case any part of the cause of action arises within the jurisdiction of this Hon’ble Court. Sec. 148 of the Said Act provides that before making any assessment, re-assessment or recomputation under s. 147, the AO shall serve on the assessee a notice requiring him to furnish the return. Therefore, the assessment proceedings can only be commenced after a valid notice under s. 148 of the Said Act is served on the assessee. The service of a valid notice is the condition precedent for initiating and continuing the proceedings under s. 147 of the Act. He further contended that it is well settled that the notice under s. 148 of the Said Act is not a mere show-cause notice with reference to the principles of natural justice but is a jurisdictional notice. Accordingly, service of the notice is a substantial part of the cause of action. Since such service has been made at Calcutta, a part of the cause of action arises within the jurisdiction of this Hon’ble Court. In support of his contention he relied upon judgments in Anandilal Goenka vs. TRO & Ors. (1994) 120 CTR (Cal) 346 : (1994) 208 ITR 46 (Cal) : TC 51R.479, Krishan Prasad Singhi & Ors. vs. TRO & Ors. (1997) 137 CTR (Cal) 154 : (1996) 221 ITR 720 (Cal) : TC 52R.480, Everest Coal Co. (P) Ltd. vs. Coal Controller (1986) 90 CWN 438, Dowsyl Polymers (P) Ltd. vs. M.G. Abrol, Special Secretary, Ministry of Finance & Ors. (1987) 31 ELT 895 and Modi Charitable Fund Society & Anr. vs. ITO & Ors. (1983) 36 CTR (All) 81 : (1983) 142 ITR 818 (All) : TC 51R.1202 in support of such submissions.

He further contended that there is no alternative remedy available at the stage of the issue of the notice. Accordingly, a writ petition is maintainable challenging such notice. According to him, when the jurisdiction to initiate the proceedings is challenged on the ground that the conditions precedent for assumption of such jurisdiction do not exist or have not been complied with the writ Court would interfere. In support of such contention be relied upon judgments in Mohindra Mohan Sirkar vs. ITO & Anr. (1978) 112 ITR 47 (All) : TC 51R.466, Shova Sarkar & Ors. vs. ITO 1977 CTR (Cal) 329 : (1983) 139 ITR 386 (Cal) : TC 51R.468, Jayshree Tea & Industries Ltd. vs. Dy. CIT (2001) 165 CTR (Cal) 193 : (1999) 106 Taxman 508 (Cal) and Raza Textiles Ltd. vs. ITO 1973 CTR (SC) 238 : (1973) 87 ITR 539 (SC) : TC 56R.1073. He further submitted that there are two conditions precedent for assumption of jurisdiction under s. 147 of the Act. The first condition is that there must be a failure to file the return or to disclose truly and fully the material facts necessary for the assessment and the second condition is that by reason thereof income should have escaped assessment. Both these conditions are conditions precedent and are cumulative and absence of either of them would make the proceedings without jurisdiction. In support of such submission he relied upon judgments in ITO & Ors. vs. Lakhmani Mewal Das 1976 CTR (SC) 220 : (1976) 103 ITR 437 (SC) : TC 51R.589, Ganga Saran & Sons (P) Ltd. vs. ITO & Ors. (1981) 22 CTR (SC) 112 : (1981) 130 ITR (SC) : TC 51R.639, Phool Chand Bajrang Lal & Anr. vs. ITO & Anr. (1993) 113 CTR (SC) 436 : (1993) 203 ITR 456 (SC) : TC 51R.825. He also contended that it is well settled that the same income cannot be assessed in the hands of the same assessee or another person twice over. In the instant case proceedings have been initiated against the writ petitioner for assessing the said foreign firm through the writ petitioner as its agent. As would appear from the facts enumerated hereinabove and from the order of assessment passed by the respondent No. 1 against the said foreign firm, on 30th March, 2001, copy of which has been filed with supplementary affidavit, that the said foreign firm had duly filed its return which was duly processed under s. 143(1) of the Said Act and proceedings were initiated under s. 143(2) against the said foreign firm and assessment has also been made against the said foreign firm pursuant thereto under s. 143(3) of the Act. In such assessment the amount received by the said foreign firm from all the parties including the writ petitioner has been duly assessed. In the proceedings impugned in this writ petition the same income received from the writ petitioner which has already been assessed is sought to be assessed once again. In support of such contention he relied upon judgments in Prem Nath Diesels Grainvaying Division vs. CIT (1985) 48 CTR (Del) 171 : (1986) 159 ITR 575 (Del) : TC 47R.219 and CIT vs. Alfred Herbert (India) (P) Ltd. (1986) 52 CTR (Cal) 321 : (1986) 159 ITR 583 (Cal) : TC 51R.392.

He further submitted that it is well settled that there cannot be any question of any escapement of any income when a return duly filed is pending for such assessment. The question of any income escaping the assessment can only arise after the assessment is made and not during the pendency of the assessment proceedings. In the instant case the notice under s. 148 of the Act has been issued on 8th March, 2001 when the assessment proceedings were pending against the said firm. In support of such submission he relied upon judgments in Trustees of H.E.H. the Nizam’s Supplemental Family Trust vs. CIT (2000) 159 CTR (SC) 114 : (2000) 242 ITR 381 (SC) and CIT vs. M.K.K.R. Muthukaruppan Chettiar (1970) 98 ITR 69 (SC) : TC 17R.1038. He further submitted that the proceeding against an agent are not in addition to and/or twice over in respect of the assessment to be made on the principal. The agent is brought in when for any reason like the principal being outside the country or for any other cause it is not possible to assess the principal. However, when the principal itself is available and has filed the return and on such return assessment proceedings are being conducted then there cannot be another parallel simultaneous proceedings for the self-same income to be assessed on the same principal through as agent. He also contended that the instant case is not of challenging the proceedings on the ground of adequacy or sufficiency of the reason therefor. It is a case of inherent lack of jurisdiction. It is a case of where there exists no grounds or reasons at all. He further contended that the respondents are proceeding on the wrongful assumption that for making an assessment on the principal a prior assessment is necessary in respect of each item of income on all the persons who gave such income to the non-resident and who can be treated as an agent. There is no authority for any such proposition. No doubt the liability of the agent to be assessed is co-extensive with that of the principal but that does not mean that there would be two simultaneous assessments of the same income on the principal one directly and other through his agent.

9. Mr. Mitra appearing on behalf of the respondents contended that the show-cause notice under s. 163 of the Said Act was issued to the petitioner-company on 1st March, 2001 as to why the petitioner should not be treated as an agent of M/s Linklaters & Paines London within the meaning of s. 163(1)(b) and 163(1)(c) of the Said Act. After giving further opportunity to the petitioner and upon the consideration of the reply of the writ petitioner an order dt. 8th March, 2001, was passed treating the writ petitioner-company as an agent of the said foreign firm. He further drew my attention to the reply filed by the petitioner-company wherefrom it appears that the petitioner- company submitted that the petitioner-company cannot be treated as an agent of the said foreign firm since the respondent No. 2 has no jurisdiction over Ispat Industries Ltd. which is regularly assessed at Calcutta. Payments were made only after obtaining no objection certificate from the Department and Ispat Industries Ltd. did not have any business connected with the said foreign firm excepting for payment of consultancy charges. He further submitted that all these points were duly considered by the Department. The petitioner-company did not deny the payments to the said foreign firm for the said asst. yr. 1998-99 and he further drew my attention to ss. 163(1)(b) and 163(1)(c) of the Said Act and contended that for the purposes of this Act, ‘agent’ in relating to a non-resident includes any person in India who has any business connection with the non-resident or from or through whom the non-resident is in receipt of income, whether directly or indirectly can be treated as an agent of the said foreign firm.

He further relied upon a judgment in Transmission Corporation of India vs. CIT (1999) 155 CTR (SC) 489 : (1999)239 ITR 587 (SC) where the Hon’ble Supreme Court has held that certificate under s. 195 of the Said Act are only tentative and provisional, subject to modification in the final assessment to be made under s. 143 of the IT Act. He further contended that the notice has been served upon the petitioner-company not in its own right but in its capacity as an agent of the said foreign firm within the ambit of s. 163(1) of the IT Act. He also submitted that it was against the backdrop that the petitioner-company is treated as agent of M/s Linklaters & Paines, London and an order under s. 163 of the Said Act was passed on 8th March, 2001. He further contended that the said order is a reasoned order contended that the said order is a reasoned order and wholly dealt with the contention made by Ispat Industries Ltd. before the said authorities. He further submitted that on these facts Ispat Industries Ltd. was treated as a representative-assessee of the said foreign firm and a notice under s. 148 of the IT Act was issued requiring the said petitioner-company to file its return of income as representative-assessee of the said foreign firm for the asst. yr. 1998-99 by 16th March, 2001. Notice has been served under s. 148 of the Said Act treating the petitioner only as an agent of the said foreign firm. He further submitted that the said petitioner-company duly asked for time before the said authorities. Time was granted upto 19th March, 2001, and on 19h March, 2001 this writ petition has been filed before His Lordship Kalyan Jyoti Sengupta, J. and His Lordship extended the time to file return under s. 148 of the Said Act by three weeks commencing from 16th March, 2001. He further contended that short time allowed to the Ispat Industries Ltd. to file its return as an agent of the principal under s. 148 of the Said Act as it is not now mandatory on the part of the AO to afford thirty days’ time for filing a return of income pursuant to notice under s. 148 of the Said Act.

He further relied upon a decision in CIT vs. Smt. Ushaben Trust (1991) 190 ITR 485 (Bom) : TC 67R.455 and the judgment of the Hon’ble Andhra Pradesh High Court in CWT vs. Trustee of H.E.H. the Nizam-II Supplemental Family Trust (1987) 64 CTR (AP) 152 : (1987) 167 ITR 688 (AP) : TC 67R.456 whereby it has been held that the assessment of the agent would necessarily have to be completed before completion of assessment of the principal. That is the reason, according to him, such short time was granted. He further contended that the assessment of the said foreign firm for the asst. yr. 1998-99 was getting barred by limitation on 31st March, 2001 which in effect means that the assessment of M/s Ispat Industries Ltd. as representative-assessee of the said foreign firm have to be completed prior to 31st March, 2001. He also submitted that the AO in Mumbai does not have jurisdiction over M/s Ispat Industries Ltd. is untenable inasmuch as the proposal contained in the show-cause notice was to assess M/s Ispat Industries Ltd., not in its own right but in its capacity as agent of the said foreign firm within the ambit of s. 163(1) of the Said Act. He further drew my attention to s. 161(1) of the Said Act in respect of the liability of representative-assessee. He further contended that from the said section it appears that the assessment of the principal may be done through the representative-assessee. Therefore, the AO, Mumbai has jurisdiction to assess the petitioner-company as a representative-assessee of the said foreign firm. He further contended that the show- cause notice under s. 163 of the Said Act was issued on 1st March, 2001 requiring a reply by 5th March, 2001. Pursuant to receipt of reply from Ispat Industries Ltd. on 5th March, 2001, and order under s. 163 of the Said Act was passed on 8th March, 2001. He further contended that on the same date notice under s. 148 of the Said Act was also issued giving the petitioner seven days’ time to file the requisite return. The petitioner sought for extension of time and extension was granted. He further submitted that the reasons for issuance of such notice under s. 148 of the Said Act have been recorded and in fact he produced such reasons recorded before issuing notice under s. 148 of the Said Act which may be reproduced hereunder : “It is a matter of record that certain payments have been made by Ispat Industries Ltd. to M/s Linklaters & Paines, UK in lieu of consultancy services during the previous year relevant to the asst. yr. 1998-99. Considering that such payments constitute income in the hands of Ms. Linklaters & Paines, UK, Ispat Industries Ltd. qualifies itself for treatment as an ‘agent’ of the non- resident principal within the meaning of s. 163(1)(c) of the IT Act, 1961 for the asst. yr. 1998-99. Since no return has been filed by M/s Ispat Industries Ltd. in the capacity of ‘agent’ of M/s Linklaters & Paines, UK for the said assessment year, notice under s. 148 is to be issued to Ispat Industries Ltd. calling for furnishing of return in the capacity of representative-assessee of M/s Linklaters & Paines, UK within the date specified.”

He further drew my attention to s. 147 of the Said Act and Expln. 2 of the said s. 147 of the Act and contended that where the persons concerned have failed to disclose fully and truly all material necessary for their assessment, notice under s. 148 of the Said Act can be issued and in fact in the instant case, notice under s. 148 has been issued on the petitioner-company as an agent of the said foreign firm and not in their personal capacity. He further relied upon judgments State of Rajasthan & Ors. vs. Swaika Properties & Anr. AIR 1985 SC 1289, Oil & Natural Gas Commission vs. Utpal Kumar Basu & Ors. 1994 (4) SCC 711 and State of U.P. & Anr. vs. Jana Seva Karjyalaya Ltd. & Anr. AIR 1994 Cal 65, and contended that this Hon’ble Court has no jurisdiction to entertain this application as no part of the cause of action arose within the jurisdiction of this Hon’ble Court. He further contended that the order passed under s. 163 of the Said Act is an appealable order under s. 246A(1)(d) of the Said Act. Since there is an alternative remedy, this application should not be entertained. In support of such submission he relied upon judgments in ANZ Grindlays Bank & Anr. vs. President District Consumer Disputes Redressal Forum & Ors. AIR 1995 Cal 104, Titagarh Paper Mills Co. Ltd. & Anr. vs. State of Orissa & Anr. AIR 1983 SC 603 and Shyam Kishore & Ors. vs. Municipal Corpn. of Delhi & Anr. AIR 1992 SC 2279. He further submitted that if any notice is being issued under s. 148 of the Act, the Hon’ble Court will only find out whether there was prima facie some material on the basis of which the Department could reopen the case. Sufficiency or correctness of the material is not a thing to be gone into by the Court. In support of such contention he relied upon judgments in Raymond Woollen Mills Ltd. vs. ITO & Ors. (1999) 152 CTR (SC) 418 : (1999) 236 ITR 34 (SC) and Phool Chand Bajrang Lal & Anr. vs. ITO & Anr. (supra).

After considering the facts and circumstances of this case it appears that the points to be decided that (i) whether this Hon’ble Court has jurisdiction to entertain this application? and (ii) whether this application is maintainable since there is an alternative remedy ? It is an admitted fact that the respondent No. 2 issued the notices and passed the order under ss. 163 and 148 of the Said Act from Mumbai. But it further appears that the said notice and orders were served upon the petitioner at its registered office at Calcutta. It further appears that such notice has been served only on the basis that treating the petitioner as an agent of the principal of a foreign firm it is also to be taken into account for the purpose of the jurisdiction that the said foreign firm is being assessed at Mumbai. From the pleadings and the submissions made before me there is no dispute that excepting the service of the notice at Calcutta no steps have been taken by the respondent-authorities at Calcutta within the jurisdiction of this Hon’ble High Court. The submissions made before me by Mr. Bajoria appearing on behalf of the petitioner that the service of the valid notice is a condition precedent for assumption of jurisdiction under s. 147 of the Said Act. He further contended that service of the notice is the substantial part of the cause of action. Reliance was also placed by him on the following decisions in (1994) 120 CTR (Cal) 346 : (1994) 208 ITR 46 (Cal) : TC 51R.479 (supra), (1997) 137 CTR (Cal) 159 : 221 ITR 720 (Cal) (supra), (1986) 90 CWN 438 (supra) 31 ELT 895 (supra) and (1983) 36 CTR (All) 81 : (1983) 142 ITR 818 (All) : TC 51R.1202 (supra). Respondents appeared before me and contended that in respect of jurisdiction this Hon’ble Court has no jurisdiction in view of the fact that no cause of action arose within the jurisdiction of this Hon’ble Court. In support of such contention reliance was also placed before me reported in AIR 1985 SC 1289 (supra), (1994) 4 SCC 711 (supra) and AIR 1995 Cal 65 (supra). Now I deal with the judgments cited before me and shall try to come to the conclusion in the light of the facts and the judgments as placed before me. In the case reported as Anandilal Goenka vs. TRO & Ors. (supra) the Hon’ble High Court came to the conclusion that this Court has jurisdiction since part of the cause of action arises within the jurisdiction of this Hon’ble Court. Such cause of action includes the attachment of shares which were lying with the petitioners at Calcutta and the order of attachment was given effect to at Calcutta and further under r. 26 of Sch. II of the Act, service of such attachment order is a statutory requirement. Accordingly the Court held that the service of such attachment order gives the cause of action to the writ petition to file such application in this Hon’ble Court. In coming to the conclusion the Hon’ble Court also held that an order becomes effective only when it is communicated or served, the service of the order or receipt of a notice thereof would form part of the cause of action for filing of a writ petition by the person aggrieved thereby. The other judgment which is reported as Krishan Prasad Singhi & Ors. vs. TRO & Ors. (supra) is also a judgment of the Calcutta High Court where also the attachment of shares was made by the TRO and has been held that the Hon’ble High Court has jurisdiction on the facts pleaded in the said case that the attachment in question were and are still lying at Calcutta and the order of attachments was served at Calcutta and furthermore, such order of attachment cannot be effective unless served and therefore, the Hon’ble Court came to the conclusion that part of the cause of action arose within the jurisdiction.

The next judgment cited by Mr. Bajoria reported as Dowsyl Polymers (P) Ltd. & Anr. vs. M.G. Abrol, Special Secretary, Ministry of Finance & Ors. (supra) where the Hon’ble Court came to the conclusion that no order confiscating any goods or imposing any penalty on any person shall be made unless a notice as contemplated under s. 124 of the Customs Act is served on the owner of the goods or such person who is made liable for the same. Therefore, if a notice under s. 124(1) of the Customs Act is served on the petitioners in Bombay, such service of the notice can be said to be part of the cause of action. In Modi Charitable Fund Society & Anr. vs. ITO & Anr. (supra) where the Hon’ble Allahabad High Court came to the conclusion on the fact that during the pendency of the assessment proceedings of the writ petitioner for the asst. yr. 1974-75, the ITO, Delhi, issued notice under s. 148 of the Act to the petitioner for reopening the assessment for 1960-61. The petitioner filed a return under protest declaring its income at “nil”. The point was taken in the said matter that the cause of action arose within the jurisdiction of Delhi High Court and the Allahabad High Court has no jurisdiction to entertain the same. The Allahabad High Court also came to the conclusion that the part of the cause of action arose within the jurisdiction on the fact that the petitioner society is situated within the territorial jurisdiction of the Court and the notice was served on the petitioner society at the same place and it has been called upon to produce books and documents in support of its return. Thus, it cannot be said that no part of the cause of action has arisen within the territorial jurisdiction of the Hon’ble Court and the Allahabad High Court when deciding the said matter the duly considered a case reported in Purtaboore Co. Ltd. vs. Cane Commissioner, Bihar AIR 1969 All 105 wherein the said case, the Cane Commissioner, Bihar at Patna passed two orders on 14th Nov., 1967. By his first order he superseded his earlier order dt. 30th Dec., 1966, passed under cl. 6(1)(a) of the Sugarcane (Control) Order, 1966, in favour of the petitioner’s sugar factory situated in U.P. and also reduced the number of villages (all situate in Bihar) constituting the reserved area of the factory for the purpose of sugarcane. This order was communicated to the petitioner’s factory in U.P. By his order of the same date, which was not communicated to the petitioner, he directed that the villages excluded from the petitioner’s reserved area should be allotted to R, another sugar factory in Bihar. The petitioner filed a writ petition in the Allahabad High Court for quashing these two orders dt. 14th Nov., 1967. It was held that as no part of the cause of action for the reliefs claimed arose within the territories of U.P., the High Court could not entertain the petition. One of the main reasons which influenced the Hon’ble Court to take that view was that even assuming that the communication of the order to the petitioner in U.P. gave rise to a part of the cause of action for setting aside that order no cause of action in relation to the order passed in favour of R could arise in U.P. Even if the order superseding the earlier one is set aside the other order in favour of R would remain operative. By itself that would constitute modification of the earlier order passed on 30th Dec., 1966. Without setting aside the order passed in favour of R, no effective relief could be granted to the petitioner. Now I deal with the cases cited by the respondents contending that this Hon’ble High Court has no jurisdiction.

In a decision reported as State of Rajasthan & Ors. vs. Swaika Properties & Anr. (supra) the Hon’ble Supreme Court held that mere service in the State of West Bengal or notice under s. 52(2) of the Rajasthan Urban Improvement Act (35 of 1959) on the owner of a land situated in the State of Rajasthan intimating of the State Government’s proposal to acquire that land for public purpose does not constitute an integral part of the cause of action sufficient to invest the Calcutta High Court with jurisdiction to entertain a petition under Art. 226 of the Constitution challenging the validity of the notification acquiring the land. It has been specifically held by the Hon’ble Supreme Court that the cause of action is a bundle of facts which taken with the law applicable to them gives the plaintiff a right to relief against the defendant. The notification issued by the State Government under s. 52(2) of the Act became effective the moment it was published in the Official Gazette as thereupon the noticed

land became vested in the State Government free from all encumbrances. It was not necessary for the owner to plead the service of notice on him under s. 52(2) of the Act for the grant of an appropriate writ, direction or order under Art. 226 of the Constitution for quashing the notification issued by the State Government under the said Act. In another judgment The State of Uttar Pradesh & Anr. vs. Jana Seva Karjyalaya Ltd. & Anr. AIR 1994 Cal 65 the Hon’ble Division Bench held that this High Court while exercising power under Art. 226 must exercise jurisdiction when the Hon’ble High Court is satisfied prima facie as the Hon’ble Court had territorial jurisdiction. In the said case on the basis of the facts pleaded before the Division Bench, the Hon’ble Division Bench held that this Court had no territorial jurisdiction to entertain the petition. Mere having the head office without anything more is wholly irrelevant for the purpose of exercising jurisdiction. In Oil & Natural Gas Commission vs. Utpal Kumar Basu & Ors. (supra) the Hon’ble Supreme Court has also come to the conclusion that for the purpose of determining whether a part of the cause of action has arisen within the jurisdiction of the Court or not, the facts pleaded in the writ petition alone are to be taken into consideration. The Hon’ble Supreme Court examined the facts of that case and came to the conclusion that none of the facts pleaded constitute any part of the cause of action. It was further held in the said decision that the receipt of the fax message at Calcutta would not constitute an integral part of the cause of action as the fax message could not be construed as rejection of the offer. It also appears in that case that the tender should be submitted at New Delhi, that those would be scrutinised at New Delhi and that a final decision whether or not to award the contract to the tenderer would be taken at New Delhi and further the Hon’ble Supreme Court came to the conclusion that even the rejection of the tender was not communicated at Calcutta. On the said facts, the Hon’ble Supreme Court held that the Hon’ble Calcutta High Court has no jurisdiction to entertain the said application. Sec. 148 of the IT Act, 1961 specifically states that before making the assessment, reassessment or recomputation under s. 147, the AO shall serve on the assessee a notice requiring him to furnish within such period, as may be specified in the notice, a return of his income or the income of any other person in respect of which he is assessable under this Act during the previous year corresponding to the relevant assessment year, in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed; and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under s. 139.

In the instant case, first, notice was served upon the petitioner at Mumbai under s. 163 of the Said Act whereby the petitioner has been held as an agent of the foreign firm and furthermore, the respondent-authorities came to the conclusion and passed an order at Mumbai in the matter holding the petitioner as an agent of the foreign firm. It further appears that appeal from the said order also to be filed at Mumbai before the appellate authority and further appeal will also lie before the appellate forum at Mumbai. Therefore, in my opinion no integral part of the cause of action arose within the jurisdiction of this High Court in respect of order passed by the authority under s. 163 of the Said Act. Now so far the challenge of an order under s. 148 of the Act it appears that the notice has been served on the petitioner to file return under s. 148 of the Said Act by the respondent No. 1 who is having his office at Mumbai. The order if any passed by the said authority, appeal will also to be filed at Mumbai and further the return also to be filed by the petitioner as an agent under s. 148 of the Said Act is also at Mumbai. Notice has been served upon the petitioner only treating the petitioners as a representative-assessee and not in its own identity but as an agent of the said foreign firm, who has been assessed at Mumbai, and return to be filed on behalf of the said firm before the respondent No. 2 at Mumbai who has the jurisdiction in the matter. There cannot be any reason to accept the contention that AO of the petitioners shall have the jurisdiction. Therefore, there cannot be said to be that any integral part of the cause of action has arisen within the jurisdiction of this Hon’ble High Court. In my opinion the judgments cited before me by Mr. Bajoria will not extend any help to him on this aspect. Further more, as the Supreme Court has held in State of Rajasthan vs. M/s Swaika Properties & Anr. (supra) that mere service of a notice at Calcutta does not constitute an integral part of the cause of action sufficient to acquire jurisdiction by this High Court and to entertain a petition under Art. 226 of the Constitution. Therefore, I do not have any hesitation to hold in this matter that the service of the notice under s. 148 of the Said Act or under s. 163 of the Said Act or the order communicated at Calcutta cannot give any jurisdiction to the petitioner to file this writ application in this High Court and I hold that service of the notice in the instant application cannot constitute any part of the cause of action to entertain this application. Accordingly, on that ground this application must be dismissed.

26. The other question whether there is an alternative remedy and this Court shall entertain this application? On that ground also in my opinion the petitioner has a remedy under the Said Act. In view of such remedy available to the petitioner in my opinion I do not intend to interfere in the matter and the petitioner shall be at liberty to apply before the appropriate authority and to take necessary steps by way of an appeal before the appropriate forum. In this connection I also do not have any hesitation to hold that there is an alternative remedy and this Hon’ble Court will not interfere in the matter. Although I have dismissed this application holding that this Hon’ble Court has no territorial jurisdiction, as no part of the cause of action arose within the jurisdiction of this High Court, but nevertheless I must express my opinion that the Department has also issued the said notice under s. 148 after recording the reasons, therefore, and further I am of the view that at this stage Court will not probe into the matter. I fully agree with the views of the Hon’ble apex Court as expressed in Raymond Woollen Mills Ltd. vs. ITO & Ors. (supra) and (1999) 152 CTR (SC) 34 : (1993) 203 ITR 456 (SC) (supra) and hold the Court will only find out whether there was any prima facie material to reopen the case. Sufficiency or correctness cannot be gone into by the Court. Accordingly this application must fail and is hereby dismissed, however, without any costs. W.P. No. 4846(W) of 2001 In view of my judgment delivered in W.P. No.4840(W) of 2001 I do not have any hesitation to dismiss the application on the similar ground as this Hon’ble High Court has no jurisdiction to entertain this application. The reasons stated in the said judgment are totally applicable in view of the facts are identical in this application also. Accordingly, this application being W.P. No. 4846(W) of 2001 is also dismissed.

[Citation : 253 ITR 474]

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