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High Court Of Calcutta
D. K. SETH, RAJENDRA NATH SINHA
C.E.S.C.LTD. - Appellant
Versus
DEPUTY COMMISSIONER OF INCOME TAX - Respondent
Writ Petn. 598 Of 2001
Decided On : 06/19/2003
INCOME TAX ACT, 1961 - SECTION 163 - SECTION 148 - JURISDICTION - WRIT PETITION - ALTERNATIVE REMEDY: - The jurisdiction of the Court within the territorial limit of which service is effected, is attracted. - The absence of jurisdiction to issue notices on the CESC makes those notices liable to be quashed as being without jurisdiction. - The conditions precedent for assuming jurisdiction under Section 163 and Section 147, respectively, have not been fulfilled. - Therefore, there was no ground for the Dy. CIT, Mumbai, to assume jurisdiction and issue the respective notices.
Fact of the Case:
The petitioners/appellants have challenged the two notices. One dt 8th March, 2001 passed by the Deputy Commissioner of Income-tax. Circle-2 (6), (Dy. CIT) Mumbai, treating CESC Ltd. as 'representative assessee'/'agent' of the non-resident assessee Linklaters and Paines, U. K. (Landp) under Section 163 of the IT Act, 1961. The other notice is dt. 20th of March, 2001, passed by the same officer under Section 148 seeking to reopen the assessment of the non-resident for the asst. yr. 1998-99 at the hands of the CESC requiring to submit return as 'representative assessee' of Landp.
Finding of the Court:
The service of notice upon the agent is an integral part of the cause of action as against the agent. Therefore, the said notice is amenable to the jurisdiction of this Court on account of its service upon the agent within the territorial limits of this Court.
Issues: 1. Whether the absence of jurisdiction to issue notices on the CESC makes those notices liable to be quashed as being without jurisdiction? 2. Whether the conditions precedent for assuming jurisdiction under Section 163 and Section 147, respectively, have not been fulfilled? 3. Whether there was no ground for the Dy. CIT, Mumbai, to assume jurisdiction and issue the respective notices?
Ratio Decidendi: 1. The communication of such order to such person is an integral part of the cause of action, which arises at such place where it is communicated. Therefore, the jurisdiction of the Court, within the territorial limit of which service is effect, is attracted. 2. The conditions precedent for assuming jurisdiction under Section 163 r/w Sections 160 and 161 are not fulfilled. In the present case, the order under Section 163 (2) was passed on 8th of March, 2001, in course of the assessment proceeding against the non-resident. The said assessment was concluded on 30th of March, 2001. The income of the non-resident was being assessed at the hands of the non-resident and in course of such assessment, the same is again sought to be assessed at the hands of the 'representative assessee'. Thus, the same income is being assessed at the hands of two persons twice, attracting the mischief of double assessment. 3. The service of notice under Section 148 is a condition precedent for assuming jurisdiction under Section 147. Therefore, the notice under Section 148 is an integral part of the cause of action arising out of initiation of a proceeding under Section 147 with the service of the notice under Section 148.
Final Decision: The appeal succeeds in part only with regard to the notice under Section 148 relating to reopening of the assessment under Section 147 on the ground that this notice was issued on 20th of March, 2001, when the return submitted by the principal Was pending and the assessment whereof was not completed till 30th March, 2001 The notice, dt. 20th March, 2001, issued under Section 148 impugned in the writ petition is, therefore, hereby quashed and the writ petition succeeds to that extent and is accordingly made absolute only with regard thereto. However, this will not prevent the authorities to issue a fresh notice if circumstances so warrant and it is otherwise permissible in law. The writ petition so far as it relates to the notice under Section 163 stands dismissed.
( 1 ) THIS appeal is directed against the judgment and order dt. 10th Sept. , 2001, passed by the learned Single Judge in WP No. 598 of 2001, dismissing the writ petition on the ground of alternative remedy.
( 2 ) IN the writ petition the petitioners have challenged two notices. One dt 8th March, 2001 passed by the Deputy Commissioner of Income-tax. Circle-2 (6), (Dy. CIT) Mumbai, treating CESC Ltd. as 'representative assessee'/'agent' of the non-resident assessee Linklaters and Paines, U. K. (Landp) under Section 163 of the IT Act, 1961. The other notice is dt. 20th of March, 2001, passed by the same officer under Section 148 seeking to reopen the assessment of the non-resident for the asst. yr. 1998-99 at the hands of the CESC requiring to submit return as 'representative assessee' of Landp. The challenge
( 3 ) THE petitioners/appellants have challenged the said two notices on the ground that each of these two notices are integral part of the cause of action against which relief is being sought for in the writ petition. The issuing of these notices are preconditions for assuming jurisdiction under the respective provisions of law under which the liability of the non-resident assessee was sought to be foisted upon the CESC. These notices having been served on the CESC at Calcutta where it carries on business and has its principal office. The service of the notice at Calcutta gives rise to the cause of action to the CESC within the jurisdiction of this Court. Therefore, the writ petition could be maintained in this High Court. The view contrary thereto taken by the learned Single Judge, therefore, is unsustainable. The second ground urged is that the absence of jurisdiction to issue these notices on the CESC makes those notices liable to be quashed as being without jurisdiction. The conditions precedent for assuming jurisdiction under Section 163 and Section 147, respectively, have not been fulfilled. Therefore, there was no ground for the Dy. CIT, Mumbai, to assume jurisdiction and issue the respective notices. As such those are liable to be quashed.
( 4 ) DR. D. Pal appearing on behalf of the appellant/cesc contained that the order passed under Section 163 (2) becomes effective, in view of the scheme of the statute, only on communication of the order upon such person. Therefore, the communication of such order to such person is an integral part of the cause of action, which arises at such place where it is communicated. Therefore, the jurisdiction of the Court, within the territorial limit of which service is effect, is attracted. He then contended that Dy. CIT could not treat CESC as a 'representative assessee' under Section 163 unless the condition precedent provided in Section 163 r/w Sections 160 and 161 are fulfilled. In the present case, according to him, the order under Section 163 (2) was passed on 8th of March, 2001, in course of the assessment proceeding against the non-resident. The said assessment was concluded on 30th of March, 2001. The income of the non-resident was being assessed at the hands of the non-resident and in course of such assessment, the same is again sought to be assessed at the hands of the 'representative assessee'. Thus, the same income is being assessed at the hands of two persons twice, attracting the mischief of double assessment. He contended further that when the income at the hands of the non-resident is being assessed, it cannot be said that the non-resident is not available. When the non-resident is available, Section 163 has no manner of application. Until the assessment is over at the hands of the non-resident and until there is a finding that the non-resident is not available, Section 163 cannot be resorted to. Therefore, the Dy. CIT could not have assumed jurisdiction under Section 163 to treat the CESC as 'representative assessee'. Thus, the order passed under Section 163 (2) sought to be communicated by the notice dt. 8th of March, 2001, is wholly without jurisd
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