Article 226(2) allows relief where registered office shifted and substantial cause arose; Section 148 notice and proceedings set aside

The HC held it has territorial jurisdiction as the petitioner's registered office was shifted to Mumbai and a substantial part of the cause of action arose within its territory, so Article 226(2) permits relief despite the Assessing Officer being based elsewhere. The court rejected forum conveniens objections and, following controlling precedent, set aside the notice issued under Section 148 and all proceedings emanating therefrom.

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ISSUES PRESENTED AND CONSIDERED

1. Whether the High Court has territorial jurisdiction under Article 226(2) to entertain a writ challenging a notice issued under Section 148 of the Income Tax Act where the Assessing Officer is situated outside the State but a substantial part of the cause of action arose within the State.

2. Whether the doctrine of forum conveniens requires dismissal (or transfer) of the petition to the High Court of the State where the Assessing Officer is located when the notice under Section 148 was issued from that other State.

3. Whether a notice under Section 148 issued by the Jurisdictional Assessing Officer (as opposed to a Faceless Assessing Officer) is invalid - specifically whether the decision holding it invalid is binding on the Court hearing the present petition.

4. Consequences and appropriate relief where a binding Division Bench precedential decision is directly dispositive of the challenge to the Section 148 notice, and whether the Revenue should have liberty to revive proceedings if that precedent is overturned.

ISSUE-WISE DETAILED ANALYSIS

Issue 1 - Territorial Jurisdiction under Article 226(2)

Legal framework: Article 226(2) permits any High Court to issue writs where the cause of action, wholly or in part, arises within its territorial jurisdiction, irrespective of the seat of the authority or residence of the person.

Precedent treatment: The Court relied on the settled principle embodied in Article 226(2) (no specific prior cases recited for this point in the judgment) and applied it to the facts.

Interpretation and reasoning: The Court examined documentary evidence showing that (a) the petitioner's registered office was altered to the State within the Court's territorial jurisdiction by special resolution confirmed by the Regional Director in 2017; (b) tax returns for the assessment year showed the address within this territorial jurisdiction; (c) the transaction sought to be reopened involved an entity incorporated in the same State; and (d) case-related information reflected the address in the State. The only connection outside the territorial jurisdiction was that the Assessing Officer (whose records had not been updated by the taxpayer) was located in the other State. The Court held that a substantial part of the cause of action arose within its territory because the subject transaction, the registered office and return details pointed to that territory.

Ratio vs. Obiter: Ratio - the Court's conclusion that Article 226(2) confers jurisdiction where a substantial part of the cause of action arises within the High Court's territory, notwithstanding the seat of the Assessing Officer.

Conclusion: The High Court has territorial jurisdiction to entertain the writ petition because a substantial part of the cause of action arose within its territorial limits.

Issue 2 - Forum Conveniens

Legal framework: The doctrine of forum conveniens governs appropriateness/convenience of forum but does not oust jurisdiction where substantial cause of action lies within the forum's territory.

Precedent treatment: Applied conventional principles concerning convenience and locus of events rather than invoking a particular authority to compel dismissal.

Interpretation and reasoning: The Court found the doctrine inapplicable merely because the Assessing Officer sits elsewhere. Given that the transaction and other operative facts were within the Court's territory, forcing the petitioner to approach the other High Court would cause greater inconvenience. The Court also reiterated that once it has jurisdiction under Article 226(2), forum conveniens does not mandate dismissal in favour of the other Court on the facts shown.

Ratio vs. Obiter: Ratio - forum conveniens does not defeat jurisdiction where a substantial portion of the cause of action lies within the forum and it would be more inconvenient to require transfer.

Conclusion: The objection based on forum conveniens is rejected; the petition remains properly before the Court.

Issue 3 - Validity of Section 148 Notice Issued by Jurisdictional Assessing Officer; Binding Precedent

Legal framework: Challenge to the validity of a Section 148 notice on the ground that the statute/procedure mandates issuance by a Faceless Assessing Officer and not the Jurisdictional Assessing Officer.

Precedent treatment: The Court recognized a Division Bench decision of the same High Court squarely holding that notices issued by Jurisdictional Assessing Officers (instead of Faceless Assessing Officers) are invalid. That decision has been challenged before the Supreme Court but there is no stay.

Interpretation and reasoning: Where a binding Division Bench decision directly covers the legal issue and is not stayed, the Court is obliged to follow it. The Court observed that the present petition's challenge on this ground is "squarely covered" by that binding decision; consequently, continuation of proceedings would be impermissible in the face of binding precedent. The Court did not re-decide the legal correctness of that precedent on merits but applied it as binding law.

Ratio vs. Obiter: Ratio - where a binding Division Bench decision concludes that a Section 148 notice issued by a Jurisdictional Assessing Officer (instead of a Faceless Assessing Officer) is invalid and that decision is not stayed, the Court must follow it and set aside such notice and consequential proceedings.

Conclusion: The impugned Section 148 notice and all proceedings/orders emanating therefrom are set aside in light of the binding Division Bench precedent; the Court declined to keep the matter pending given the absence of a stay.

Issue 4 - Relief Structure and Revival if Precedent Overturned

Legal framework: The Court's equitable authority to grant relief subject to conditions and to provide directions concerning revival where higher court determinations alter the law.

Precedent treatment: The Court fashioned conditional liberty recognizing the possibility of reversal by the Supreme Court - a practice consistent with preserving parties' rights where controlling precedent may be overruled.

Interpretation and reasoning: The Court set aside the notice and reassessment order but expressly granted the Revenue liberty to revive the writ petition if the controlling Division Bench decision is set aside by the Supreme Court on the specific issue. To avoid procedural multiplicity, the Court allowed revival by simple praecipe without a formal interim application and ordered that revival would automatically operate with a stay on the notice's implementation until further orders. The Court also accepted the petitioner's concession that, if revived, it could not argue that the Kolkata Assessing Officer lacked territorial jurisdiction merely because a substantial part of the cause of action arose within the Court's territory; the revived petition would be decided on merits including other issues raised.

Ratio vs. Obiter: Ratio - conditional liberty to revive and automatic interim stay upon revival where a higher court may overturn the precedent; ancillary procedural directions (praecipe mechanism, scope of issues on revival) are operative directions rather than obiter.

Conclusion: The notice and consequential proceedings are quashed; liberty granted to the Revenue to revive the petition if the controlling precedent is overturned by the Supreme Court on the specific issue; revival may be by praecipe and will attract an automatic stay of the impugned notice pending further orders; if the precedent is upheld, no revival is permitted.

Additional Procedural/Dispositional Points

- The Court made the Rule absolute and disposed of the petition in the terms outlined, with no order as to costs.

- The Court's exercise of jurisdiction was fact-sensitive, resting on documentary proof of change of registered office and the locus of the transaction; the decision does not purport to foreclose all territorial objections where facts differ.

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