1997 (9) TMI 94 - HC - Income Tax

Income-tax assessment order location decides territorial jurisdiction for s.256(2) application; later record transfer ignored, petition dismissed.

Territorial jurisdiction to entertain an application under s. 256(2) of the Income-tax Act was determined by applying the doctrine of precedents and ... Maintainability of the petition - Assessing Officer - doctrine of precedents and the rule of binding efficacy of the law - Territorial Jurisdiction - HELD THAT:- In our opinion, the question of territorial jurisdiction of the High Court who would be competent to hear a reference under section 256(1) of the Act or an application under section 256(2) of the Act is no more res integra in view of the law settled by a Division Bench decision of this court in the case of Seth Banarsi Dass Gupta [1978 (3) TMI 100 - DELHI HIGH COURT]. In that case, the assessee, a Hindu undivided family, resided and carried on business in Meerut. The assessment orders were passed by the Income-tax Officer at Meerut and appeals therefrom were heard by the Appellate Assistant Commissioner at Meerut. On account of the doctrine of precedents and the rule of binding efficacy of the law laid down by the High Court within its territorial jurisdiction, the questions of law arising for decision in a reference should be determined by the High Court which exercises territorial jurisdiction over the situs of the Assessing Officer. An assessee affected by an assessment order at Bombay may invoke the jurisdiction of the Delhi High Court to take advantage of the law laid down by it and suited to him and thus get rid of the law laid down to the contrary by the High Court of Bombay not suited to the assessee. This cannot be allowed. We are, therefore, clearly of the opinion that in so far as the present case is concerned, the jurisdiction under sub-sections (1) and (2) of section 256 vests in the High Court of Bombay and certainly not in the High Court of Delhi. It appears that for some assessment years (other than the assessment year 1980-81), the assessment records of the petitioner have been ordered to be transferred from Bombay to Delhi some time in the year 1988 which were pending at Bombay at that time. So far as the assessment for the year, 1980-81 is concerned, it had stood concluded. The said transfer has taken place under section 127(1) of the Act. It is not that the jurisdiction to make assessment in respect of matters arising at Bombay has been conferred or transferred to Delhi by reference to territory or persons or classes of persons or incomes or classes of income or cases or classes of cases as contemplated by section 120 of the Act. Such transfer of assessment cases for a few years other than the year in question has no relevance and no bearing on the territorial jurisdictional competence of the High Court of Delhi to hear the present application under section 256(2) of the Act. Thus, the petition is dismissed though without any order as to the costs. Needless to say the petitioner's right to invoke the jurisdiction of the competent High Court by filing an appropriate application under section 256(2) is not taken away by this dismissal. Issues Involved: Jurisdiction of High Court for hearing reference under section 256(2) of the Income-tax Act, 1961.Summary:Jurisdictional Objection Raised by Revenue:The petition under section 256(2) of the Income-tax Act, 1961, was filed seeking mandamus to the Income-tax Appellate Tribunal, New Delhi, to draw up a statement of case and refer the questions for the opinion of the High Court. The Revenue raised a preliminary objection to the maintainability of the application, arguing that it should have been filed before the High Court of Bombay, the jurisdiction over the assessing authority at the relevant time.Applicability of Delhi High Court's Jurisdiction:The petitioner contended that since the appellate order was passed by the Tribunal at Delhi, the reference application filed in New Delhi was competent. Additionally, the jurisdiction of the High Court of Delhi was supported by an order transferring powers of the Assessing Officer to Delhi. However, the court referred to precedent cases and highlighted that the High Court having jurisdiction over the situs of the Assessing Officer should hear the reference.Precedents and Binding Efficacy of High Court's Decisions:Citing previous cases, the court emphasized that decisions of a High Court are binding only within its territorial jurisdiction. It noted that allowing an assessee to choose a High Court based on favorable laws would create anomalies. The court reiterated that the High Court with jurisdiction over the Assessing Officer's location should handle the reference.Decision and Dismissal of the Petition:The court dismissed the petition, stating that the High Court of Bombay, not Delhi, had jurisdiction over the matter. The transfer of assessment records from Bombay to Delhi for other years did not impact the jurisdictional competence of the High Court of Delhi for the present application under section 256(2) of the Act. The petitioner's right to approach the competent High Court for filing an appropriate application under section 256(2) was preserved.This judgment clarifies the importance of territorial jurisdiction in determining the appropriate High Court for hearing references under the Income-tax Act, emphasizing the binding nature of decisions within a High Court's territorial limits.