1968 (1) TMI 13 - HC - Income Tax

Jurisdiction of HC under section 66(2) - penalty proceedings were originally initiated by the Income-tax Officer at Trichur and it was because of a directive by section 274(2) he made a reference to the inspecting Assistant Commissioner - held that this (Madras) court will have not jurisdiction but the Kerala High Court will have jurisdiction u/s 66(2)

Summary

Issues: Jurisdictional conflict between High Courts for section 66(2) applications

The judgment delivered by the High Court of Madras involved petitions filed by the Commissioner of Income-tax, Madras, Central, under section 66(2) of the Income-tax Act, 1922. The respondent was assessed to income tax for multiple years by the Income-tax Officer in Trivandrum, with subsequent reopening of assessment orders and initiation of penalty proceedings. The Inspecting Assistant Commissioner, Central Range, Madras, levied penalties for each year, which were later set aside by the Tribunal. The Tribunal declined to make a reference to the High Court, stating that the issues were factual and concluded by their findings. The High Court disagreed with this view, considering the matter a mixed question of law and fact, indicating a potential need for a reference. However, a jurisdictional issue was raised regarding the transfer of jurisdiction over the case from Madras to Trivandrum, based on notifications by the Central Board of Direct Taxes. This raised the question of whether the Kerala High Court or the Madras High Court had jurisdiction under section 66(2) of the Income-tax Act.

The High Court analyzed the relevant provisions of the Income-tax Act and the jurisdictional aspects involved. Section 66(2) allows either the assessee or the Commissioner to apply to the High Court if the Tribunal refuses to make a reference, with "High Court" meaning the High Court of the relevant State. The jurisdictional conflict arose due to the transfer of jurisdiction over the case to Trivandrum from Madras, impacting which High Court had jurisdiction under section 66(2). The Court noted that the Income-tax Act provisions did not directly address this specific issue. The standing order of the Appellate Tribunal indicated jurisdiction over Madras and Kerala States, but it did not provide clarity on determining the High Court's jurisdiction. The Court considered the principles of place of assessment under section 64 and the subject-matter test to determine jurisdiction.

The Court applied the principles of determining jurisdiction akin to a court's jurisdiction, considering factors such as the place where the assessee carries on business or resides. It concluded that in the absence of a statutory provision, the High Court of Kerala would have jurisdiction under section 66(2) based on these principles. Additionally, the Court viewed the penalty proceedings as a continuation of the original assessment orders, indicating that the Madras High Court would not have jurisdiction under section 66(2) due to the subject-matter test. Consequently, the petitions were dismissed, with no costs awarded in the circumstances.