1998 (8) TMI 62 - HC - Income Tax

Summary

Issues Involved:
1. Maintainability of the application under section 256(2) of the Income-tax Act, 1961.
2. Jurisdiction of the High Court to issue directions to the Income-tax Appellate Tribunal located outside its territorial jurisdiction.
3. Interpretation of section 256(1) and section 256(2) of the Income-tax Act, 1961.
4. Applicability of the principle of merger of orders in appellate proceedings.

Detailed Analysis:

1. Maintainability of the application under section 256(2) of the Income-tax Act, 1961:
The core issue is whether the application filed under section 256(2) of the Income-tax Act, 1961, in the Patna High Court is maintainable. The petitioner sought a direction to the Income-tax Appellate Tribunal, "D" Bench, Calcutta, to state the case and refer the question of law to the Patna High Court. The respondent-assessee objected to the maintainability of the application in this court.

2. Jurisdiction of the High Court to issue directions to the Income-tax Appellate Tribunal located outside its territorial jurisdiction:
The judgment emphasizes that the High Court's jurisdiction is confined to its territorial limits. Section 269 of the Income-tax Act specifies that the term "High Court" refers to the High Court within the territorial jurisdiction where the concerned Appellate Tribunal is situated. The appellate order in question was passed by the Income-tax Appellate Tribunal, "D" Bench, Calcutta. Therefore, the Calcutta High Court, not the Patna High Court, has the jurisdiction to issue directions to the Tribunal at Calcutta.

3. Interpretation of section 256(1) and section 256(2) of the Income-tax Act, 1961:
Section 256(1) allows the Appellate Tribunal to refer any question of law arising out of its order to the High Court. If the Tribunal refuses, section 256(2) permits the assessee or the Commissioner to apply to the High Court for a direction to the Tribunal to state the case and refer the question of law. The judgment clarifies that the High Court mentioned in these sections must be the one within whose territorial jurisdiction the Tribunal is located. Hence, the Patna High Court cannot direct the Calcutta Bench of the Tribunal to refer the question of law.

4. Applicability of the principle of merger of orders in appellate proceedings:
The judgment discusses the principle of merger, where the order of an original authority merges into the order of the appellate authority once an appeal is decided. This principle was upheld in the Supreme Court case Collector of Customs v. East India Commercial Company Ltd., AIR 1963 SC 1124. The appellate order of the Income-tax Appellate Tribunal, "D" Bench, Calcutta, is the operative order, and any direction or writ must be issued by the Calcutta High Court, not the Patna High Court.

Conclusion:
The application under section 256(2) filed in the Patna High Court is dismissed as not maintainable. The Patna High Court lacks jurisdiction to issue directions to the Income-tax Appellate Tribunal, "D" Bench, Calcutta. The correct forum for such an application is the Calcutta High Court, following the principle of territorial jurisdiction and the merger of orders in appellate proceedings.