Good faith under tax-law bar cannot be decided without evidence when mala fides are genuinely disputed.

Section 293 of the Income-tax Act was treated as creating distinct bars, but the suit could not be rejected at the preliminary stage because the applicability of the bar depended on whether the impugned acts were done in good faith. Since mala fides were genuinely disputed and evidence was required, the question could not be decided without trial. Territorial jurisdiction was also upheld because part of the cause of action arose where search and seizure were carried out in Delhi, making the forum competent despite the place of issue of the warrant or other assessment links.

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Issues: (i) Whether the suit was barred by Section 293 of the Income-tax Act, 1961. (ii) Whether the court had territorial jurisdiction to entertain the suit.

Issue (i): Whether the suit was barred by Section 293 of the Income-tax Act, 1961.

Analysis: Section 293 creates two distinct bars: one against suits that seek to set aside or modify proceedings or orders under the Act, and another against proceedings against the Government or its officers for acts done in good faith under the Act. The present suit fell within the second category, so the decisive question was whether the impugned acts were done in good faith. The pleadings raised a disputed factual question on mala fides, and the material relied upon by the parties required evidence. Since good faith is a matter of proof and cannot be conclusively decided at the threshold on the existing record, the statutory bar could not be applied as a preliminary issue.

Conclusion: The suit was not held to be barred at the preliminary stage and the issue was decided in favour of the assessee.

Issue (ii): Whether the court had territorial jurisdiction to entertain the suit.

Analysis: Territorial jurisdiction depended on whether any part of the cause of action arose within the court's jurisdiction. The suit was founded on search and seizure proceedings, and the search included premises in Delhi with seizure also partly effected there. Those facts were sufficient to constitute a part of the cause of action within Delhi, regardless of where the warrant was issued or where assessment jurisdiction otherwise lay.

Conclusion: The court had territorial jurisdiction and the issue was decided in favour of the assessee.

Final Conclusion: The territorial objection failed, and the statutory bar under Section 293 could not be finally applied at the preliminary stage because the plea of good faith required evidence.

Ratio Decidendi: Where a statutory bar depends on whether the impugned act was done in good faith, and the pleadings disclose a genuine factual dispute on mala fides, the question cannot be decided as a preliminary issue without evidence; territorial jurisdiction is made out if a part of the cause of action arose within the forum's limits.

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