2001 (5) TMI 26 - HC - Income Tax

Summary

Issues Involved:
1. Jurisdiction of the High Court to entertain the writ petitions.
2. Validity of the notification/clarification dated June 18, 1997, issued by the Central Board of Direct Taxes.
3. Prohibition against proceeding with the notice dated February 1, 2000.

Detailed Analysis:

1. Jurisdiction of the High Court to entertain the writ petitions:

The primary issue was whether the Punjab and Haryana High Court had the territorial jurisdiction to entertain the writ petitions filed by the petitioners. The respondents argued that no part of the cause of action arose within the territorial jurisdiction of this court, as all relevant events occurred in Mumbai and Delhi. The petitioners contended that the service of notices at Amritsar constituted a part of the cause of action, thus conferring jurisdiction.

The court examined Article 226(1) and (2) of the Constitution of India, which allows a High Court to issue directions, orders, or writs to any government, authority, or person within its territorial jurisdiction if the cause of action, wholly or in part, arises within its territory. The court referred to the Supreme Court's interpretation in *Oil and Natural Gas Commission v. Utpal Kumar Basu* and *State of Rajasthan v. Swaika Properties*, which clarified that the expression "cause of action" means the bundle of facts the petitioner must prove to entitle them to a judgment in their favor. The court concluded that mere service of notices at Amritsar could not be treated as an integral part of the cause of action.

2. Validity of the notification/clarification dated June 18, 1997, issued by the Central Board of Direct Taxes:

The petitioners sought to quash the notification/clarification dated June 18, 1997, issued by the Central Board of Direct Taxes (CBDT). However, the court noted that this notification was issued in Delhi, and therefore, any challenge to it should be made within the jurisdiction of the Delhi High Court. The court held that it did not have the jurisdiction to entertain this aspect of the petition.

3. Prohibition against proceeding with the notice dated February 1, 2000:

The petitioners also sought a writ of prohibition to restrain respondent No. 4 from proceeding with the notice dated February 1, 2000. The court observed that all events leading to the issuance of this notice occurred in Mumbai, and the notice itself was issued in Delhi. Consequently, the court concluded that the cause of action for this relief arose within the jurisdiction of the Bombay and Delhi High Courts, not the Punjab and Haryana High Court.

Conclusion:

The court upheld the preliminary objection regarding the lack of territorial jurisdiction and dismissed the writ petitions. The petitioners were advised to file their petitions either in the High Court of Bombay or the High Court of Delhi, where the cause of action arose.