2016 (10) TMI 773 - HC - Income Tax

Madras High Court Dismisses Writ Appeal Over Jurisdiction

Tecpro Systems Limited Rep. by its Authorised Signatory/ Principal Officer Mr. Venugopalan Versus The Union of India Rep. by the Office of the Asst. Commn. Of Income Tax New Delhi

The Madras High Court dismissed the writ appeal due to lack of territorial jurisdiction, as the cause of action primarily arose in New Delhi where the ... Seeking stay of recovery proceedings - sick industrial unit - seeking protection - failure to discharge TDS liability - petitioner/appellant had deducted at source with respect to certain payments and not paid - Held that:- No material has been placed before this Court, as to whether, the appellant has given a cheque for ₹ 25,00,000/-, as stated in E-Mail, dated 20.01.2016 and thereafter, sent the amount, by RTGS. There are no materials, to indicate, as to whether, the respondent has taken any further proceedings, after 20.01.2016, notwithstanding the pendency of the proceedings, under the SICA Act, which is stated to have been communicated on 21.09.2015, which according to the appellant, is an infringement of right, available under the provisions of the SICA Act and that no tax could be coercively collected. For the abovesaid reasons, the actual injury or alleged threat to the infringement of right also, is not substantiated. - Petition dismissed - Decided against the assessee. Issues Involved:1. Territorial Jurisdiction of the High Court.2. Infringement of Rights under the Sick Industrial Companies Act, 1985 (SICA).3. Validity of the order dated 20.01.2016 by the Assistant Commissioner of Income Tax, New Delhi.4. Maintainability of the Writ Petition.Detailed Analysis:1. Territorial Jurisdiction of the High Court:The primary issue was whether the Madras High Court had the territorial jurisdiction to entertain the writ petition. The petitioner argued that part of the cause of action arose in Chennai because TDS was deducted there, and the company maintained an office in Chennai. However, the court noted that the petitioner was an assessee in New Delhi, where the order dated 20.01.2016 was issued. The court referred to Article 226(2) of the Constitution and Section 20 of the Civil Procedure Code, emphasizing that the cause of action must arise within the jurisdiction of the court. The court found that no part of the cause of action arose in Chennai as the principal place of business and the relevant records were in New Delhi. Thus, the court concluded that it lacked territorial jurisdiction.2. Infringement of Rights under the Sick Industrial Companies Act, 1985 (SICA):The petitioner contended that coercive action by the Income Tax Department would infringe upon its rights under SICA, as the company was under the Board for Industrial and Financial Reconstruction (BIFR). The court acknowledged the petitioner's right to claim protection under SICA but clarified that the issue at hand was the jurisdiction to entertain the writ petition. The court did not delve into the merits of the case regarding the infringement of rights under SICA, as it was determined that the matter should be addressed by the competent authorities in New Delhi.3. Validity of the Order Dated 20.01.2016 by the Assistant Commissioner of Income Tax, New Delhi:The court reviewed the proceedings dated 20.01.2016, which held the petitioner as an assessee in default for not depositing TDS amounting to Rs. 17,43,74,191/- for the financial years 2013-14, 2014-15, and 2015-16. The petitioner admitted financial difficulties and requested time to remit the amount. The court emphasized that any challenge to the order should be made within the jurisdiction where the order was issued, i.e., New Delhi. The court did not make any findings on the validity of the order itself, focusing solely on the jurisdictional issue.4. Maintainability of the Writ Petition:The court examined whether the writ petition was maintainable in light of the territorial jurisdiction. The petitioner argued that even a fraction of the cause of action arising in Chennai would confer jurisdiction to the Madras High Court. However, the court cited precedents, including Union of India vs. Adani Exports and Kusum Ingots & Alloys Ltd. vs. Union of India, to assert that the mere existence of an office in Chennai did not suffice to establish jurisdiction. The court concluded that the writ petition was not maintainable in the Madras High Court due to the lack of territorial jurisdiction.Conclusion:The Madras High Court dismissed the writ appeal on the grounds of territorial jurisdiction, stating that the cause of action arose entirely in New Delhi where the order was issued and the principal place of business was located. The court did not address the merits of the case regarding the infringement of rights under SICA or the validity of the order dated 20.01.2016, as these matters were beyond its jurisdiction. The writ petition was deemed not maintainable in the Madras High Court.