Writ petition dismissed for lack of territorial jurisdiction under Section 148 Income Tax Act notice

The Gujarat HC dismissed a writ petition challenging the validity of a notice issued under Section 148 of the Income Tax Act for lack of territorial jurisdiction. The court held that territorial jurisdiction must be determined based on facts pleaded in the petition, and the entire cause of action must be considered. Although a notice under Section 143(2) was served at the petitioner's Ahmedabad residence, the court applied the principle of forum conveniens, noting that the petitioner was consistently assessed at Cuttack, held a PAN card there, filed returns there, and the impugned Section 148 notice was issued from Cuttack. The court directed the petitioner to approach the Orissa HC.

---

---

Issues Involved:
1. Territorial Jurisdiction of the High Court
2. Legality and Validity of the Notice Issued under Section 148 of the Income Tax Act, 1961
3. Reopening of Assessment under Section 147 of the Income Tax Act, 1961

Analysis:

1. Territorial Jurisdiction of the High Court:
The primary issue addressed was whether the Gujarat High Court had the territorial jurisdiction to entertain the writ application. The respondent argued that the writ application was not maintainable in the Gujarat High Court because the impugned notice and the assessment order were issued in Cuttack, Orissa, and the writ applicant was also assessed in Cuttack. The Court examined Article 226 of the Constitution, which allows High Courts to issue writs if the cause of action arises wholly or partly within their jurisdiction. The Court referred to several Supreme Court judgments, including *Election Commission, India v. Saka Venkata Rao*, *K. S. Rashid and Son v. Income-tax Investigation Commission*, and *Lt. Col. Khajoor Singh v. Union of India*, which emphasized that the High Court's jurisdiction is limited to its territorial boundaries unless a part of the cause of action arises within its jurisdiction.

The Court further discussed the amended Article 226(2), which permits High Courts to issue writs if the cause of action arises wholly or partly within their jurisdiction. The term "cause of action" was analyzed with references to various cases like *State of Rajasthan v. M/s. Swaika Properties*, *Oil and Natural Gas Commission v. Utpal Kumar Basu*, *Kusum Ingots and Alloys Ltd. v. Union of India*, and *Union of India v. Adani Exports Ltd.*. The Court concluded that the mere issuance of a notice under Section 143(2) of the Act to the writ applicant in Ahmedabad did not constitute a significant part of the cause of action to confer jurisdiction to the Gujarat High Court. The Court emphasized the doctrine of forum conveniens, suggesting that the appropriate forum for the writ application would be the High Court of Orissa at Cuttack.

2. Legality and Validity of the Notice Issued under Section 148 of the Income Tax Act, 1961:
The writ applicant challenged the legality and validity of the notice dated 31-03-2021 issued under Section 148 of the Income Tax Act, 1961, seeking to reopen the assessment for the assessment year 2015-16. The Court did not delve deeply into the merits of this issue due to the decision on the territorial jurisdiction. However, it acknowledged the writ applicant's contention that the notice was issued without proper jurisdiction and sought its quashing.

3. Reopening of Assessment under Section 147 of the Income Tax Act, 1961:
The writ applicant also challenged the reopening of the assessment under Section 147 of the Income Tax Act, 1961, for the assessment year 2015-16. The Court noted that the final assessment order for the said year was passed at Cuttack, and the return of income was also filed there. Similar to the previous issue, the Court refrained from making any observations on the merits due to the lack of territorial jurisdiction.

Conclusion:
The Gujarat High Court concluded that it did not have the territorial jurisdiction to entertain the writ application. The Court directed the writ applicant to file an appropriate writ application before the High Court of Orissa at Cuttack. The interim relief granted earlier was extended for two weeks to enable the writ applicant to seek appropriate legal remedies. The writ application was rejected without any opinion on the merits of the case.

---