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High Court Of Calcutta
Kalyan Jyoti Sengupta
INDIA GLYCOLS LTD. - Appellant
Versus
COMMISSIONER OF INCOME-TAX - Respondent
G. A. 1852 Of 2003
Decided On : 10/07/2004
Jurisdiction - Income-tax Act, 1961 - Section 124 - The court analyzed the meaning of cause of action and jurisdiction. It held that if part of the cause of action arises within the territorial jurisdiction of a court, that court can exercise power. Under Section 124 of the Income-tax Act, an assessee cannot be compelled to file returns with an inappropriate Assessing Officer. The principal place of business is the place where control over business activities is exercised, which may or may not be the registered office.
Fact of the Case:
The petitioner, a company, filed a writ petition challenging the jurisdiction of the Commissioner of Income-tax, Moradabad, to assess their returns. The petitioner argued that their principal place of business was in Calcutta and they should file returns there. The Commissioner held that the principal place of business was in Moradabad. The court had to decide the question of jurisdiction before addressing other issues. The court found that part of the cause of action had arisen within its territorial jurisdiction as the petitioner would suffer loss and prejudice if forced to file returns in Moradabad. The court held that under Section 124 of the Income-tax Act, an assessee cannot be compelled to file returns with an inappropriate Assessing Officer. The impugned orders and notices were set aside, and the writ petition was allowed.
Finding of the Court:
The court analyzed the meaning of cause of action and jurisdiction. It held that if part of the cause of action arises within the territorial jurisdiction of a court, that court can exercise power. The court also considered the meaning of the phrase 'integral part' of the cause of action and concluded that it depends on the individual facts of each case. The court found that the impugned orders and notices had a direct effect on the petitioner's right to file returns in Calcutta, and therefore, part of the cause of action had arisen within its jurisdiction. The court also examined the meaning of 'principal place of business' under Section 124 of the Act and held that it is the place where control over business activities is exercised, which may or may not be the registered office. The court found that the petitioner's principal place of business was in Calcutta and set aside the impugned orders and notices.
Ratio Decidendi: The court held that if part of the cause of action arises within the territorial jurisdiction of a court, that court can exercise power. Under Section 124 of the Income-tax Act, an assessee cannot be compelled to file returns with an inappropriate Assessing Officer. The principal place of business is the place where control over business activities is exercised, which may or may not be the registered office.
Result: The court set aside the impugned orders and notices and allowed the writ petition. The petitioner's principal place of business was held to be in Calcutta, and they were not compelled to file returns in Moradabad. The interim order already passed was confirmed.
( 1 ) IN spite of the direction no affidavit-in-opposition has been filed in this matter. Pursuant to the earlier order supplementary affidavit has been filed.
( 2 ) THIS petition is directed against an order dated April 25,1994, passed by respondent No. 3, namely, the Commissioner, Moradabad, and the Order dated April 30, 1996, passed by the Deputy Commissioner of Income-tax, Moradabad. The petitioners have also challenged various notices dated October 30, 1996 and March 12,1997, issued by the Deputy Commissioner of Income-tax (Assessment), Special Range, Moradabad. The short facts of the case are narrated hereunder :
( 3 ) THE first petitioner is having its principal place of business at Calcutta, as such since day one it has been filing returns in Calcutta and is being assessed by respondent No. 2. Petitioner No. 1 has a factory and registered office at Moradabad. On or about September 13, 1993, respondent No. 4 issued notices to petitioner No. 1 for filing returns in Moradabad as it is having its registered place of business thereat. Despite repeated representation made by petitioner No. 1 for withdrawal of this notice the said respondent went on insisting to file returns there. Challenging the aforesaid action petitioner No. 1 filed a writ petition in the Allahabad High Court at its Lucknow Bench and this court passed an order directing the Commissioner of Lucknow to decide the question of jurisdiction as regards filing of returns. Respondent No. 3 in terms of the order of the High Court passed the aforesaid first mentioned impugned order dated April 25, 1994, and held that the Assessing Officer, Moradabad, had got jurisdiction as petitioner No. 1 is having registered office thereat. So petitioner No. 1 should have filed and in future would file returns with appropriate official, respondent No. 4. In spite of the decision no follow up action was taken by any of the officials at Moradabad, the matter was kept pending for two years. Meanwhile, petitioner No. 1 also prayed for recalling of the aforesaid order on the ground that petitioner No. 1 is having its principal place of business and/or controlling office at Calcutta and further all the time returns were being filed at Calcutta and the same were being assessed. So, under the provisions of Section 124 of the Income-tax Act, 1961, the Assessing Officer concerned at Calcutta had and still has jurisdiction. This application for recalling was not disposed of specifically. On the contrary, by the subsequent notice petitioner No. 1 was asked to file returns at Moradabad on the
strength of the earlier order of the Commissioner dated April 25, 1994, followed by the second impugned Order dated October 30, 1996.
( 4 ) MR. Poddar, learned senior counsel, appearing in support of the writ petition, contends on the question of jurisdiction that this court can entertain this writ petition as part of the cause of action has arisen within the territorial limit of this court though two impugned Orders were passed and further the impugned notices were issued at and from the place situated outside the territorial limit of this court in its writ jurisdiction. He contends while explaining the jurisdiction fact that petitioner No. 1 has got a statutory right to file returns in Calcutta as it is having its principal place of business here. His client cannot be compelled to file returns at a different place in breach of the statutory provisions. By the impugned orders and notices petitioner No. 1 is sought to be compelled to do exactly, and thereby its statutory right has been affected and such affection has been felt at Calcutta as the petitioner subsequently has filed returns in Calcutta. During the relevant period when the impugned orders were passed, and pendency of this writ petition respondent No. 2 has asked petitioner No. 1 to file returns in Calcutta. In support of his submission he has relied on a decision of a Division Bench of this court dated May 13, 19
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