Jurisdictional Limits: High Court dismisses reference application due to lack of territorial jurisdiction

The High Court clarified that the jurisdiction to file a reference application under section 256(2) of the Income-tax Act is limited to the High Court within the jurisdiction of the Appellate Tribunal. In this case, the application filed in the Andhra Pradesh High Court was dismissed for lack of territorial jurisdiction, as the Mumbai D-Bench of the Income-tax Appellate Tribunal was located in Bombay. The court emphasized that the Explanation to section 127 does not allow for such transfers between High Courts, leading to incongruous results. Consequently, the reference application was deemed not maintainable and dismissed.

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Issues Involved: Jurisdiction of High Court to entertain reference application under section 256(2) of the Income-tax Act, 1961.

Jurisdiction of High Court - Mumbai Bench vs. Andhra Pradesh High Court:
The application under section 256(2) was filed by the Commissioner of Income-tax, A. P.-I seeking reference of certain questions of law. The appeals arose out of the assessment made for the year 1983-84 under section 143(3) by the Inspecting Assistant Commissioner, Assessment Range-V(A), Bombay. The Mumbai D-Bench of the Income-tax Appellate Tribunal dismissed the reference application. The court clarified that the application should have been filed in the High Court of Bombay as the High Court of Andhra Pradesh lacked territorial jurisdiction. The court emphasized that the choice of High Court for filing the application under section 256(2) is limited to the High Court within whose jurisdiction the Appellate Tribunal is located. Therefore, the application filed in the Andhra Pradesh High Court was deemed not maintainable due to lack of jurisdiction.

Interpretation of Section 127 and Explanation:
The petitioner justified filing the application in the Andhra Pradesh High Court based on the Explanation to section 127 of the Income-tax Act. Section 127(1) deals with the power to transfer cases between Assessing Officers. However, the court highlighted that this provision does not extend to transferring proceedings from one Appellate Tribunal to another or vesting jurisdiction in a High Court that does not otherwise possess it. The court emphasized that the purpose of section 127 is to transfer proceedings between Assessing Officers and not between Appellate Tribunals or High Courts. The interpretation sought to be placed on the Explanation to section 127 was deemed to lead to incongruous results contrary to the Act's scheme, interfering with the territorial jurisdiction of the concerned High Court. Consequently, the court concluded that the reference application under section 256(2) was not maintainable in the Andhra Pradesh High Court due to lack of jurisdiction and dismissed the application.

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