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Judgment
Point for decision at the moment in all these six writ petitions is whether this Court has the territorial jurisdiction to decide these petitions. Facts in the first five petitions bearing Nos. 9 of 1990, 10 of 1990,11 of 1990,12 of 1990 and 13 of 1990 are identical and so in respect thereof, it shall be sufficient to refer to the facts of only one of them, viz,, writ petition No. 9 of 1990. Point of law involved is the same and arguments have been heard together and so all of them are being disposed of by this common judgment. In Writ Petition No. 9 of 1990, petitioner No. 1, Mansarover Commercial(P.) Ltd., a private limited company registered under the Registration of Companies Act, Sikkim 1961, has its registered office at Gangtok in Sikkim and is carrying on the business, inter alia, as commission agents in cardamom and other agricultural products in the State of Sikkim. It has asserted that all its activities and transactions have been initiated and finalised in the State of Sikkim and it has no office or establishment outside the State of Sikkim. Petitioner No. 2 is its Director.
Initially, the State of Sikkim was under a hereditary monarch, subject to British paramountcy. Later, a treaty was entered into between Sikkim and the Government of India and the latter took responsibility with regard to defence, external affairs and communications of Sikkim. Thus, it became a protectorate of the Union of India. Thereafter, the Constitution (Thirty-sixth Amendment) Act, 1975 was passed whereby Sikkim was admitted into the Union of India as a State. The said amendment inserted article 371F in the Constitution of India incorporating some special provisions with respect to the State of Sikkim. Relevant clauses of article 371F run as under.
37IF. Special provisions with respect to the State of Sikkim. ?Notwithstanding anything in this Constitution,?
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(k) all laws in force immediately before the appointed day in the territories comprised in the State of Sikkim or any part thereof shall continue to be in force therein until amended or repealed by a competent Legislature or other competent authority;
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(n) the President may, by public notification, extend with such restrictions or modifications as he thinks fit to the State of Sikkim any enactment which is in force in a State in India at the date of the notification;
By virtue of the powers under clause (n) of article 371F of the Constitution, the President, vide his Notification dated 7-11-1988, extended the Indian income tax Act, 1922 to the State of Sikkim. Later, the Central Government issued Notification dated 23-2-1989, appointing 1-4-1989 as the date on which the income tax Act, 1961 ("the Act'') came into force in the State of Sikkim in relation to the previous year relevant to the assessment year commencing on 1-4-1989. Thereafter, a press note was released by the Government of India which stated that in view of certain difficulties, an amendment was proposed in the Finance Bill, 1989, to extend the Act to the State of Sikkim from 1-4-1990, i.e., in relation to the assessment year 1990-91 and subsequent years. It further stated that any law corresponding to the Act which immediately before such commencement was in force in the State of Sikkim, would continue to be in force for and up to the previous year beginning with 1-4-1988 and ending with 31-3-1989. Thereafter, the Act was extended to the State of Sikkim by virtue of section 26 of the Finance Act, 1989 with effect from the previous year relevant to the assessment year commencing on 1 -4-1990.
Before the extension of the Act, subjects of Sikkim including the petitioner-company were governed by the Sikkim State income tax Manual, 1948. According to the petitioner-company, it was an assessee under the said Manual, 1948. The petitioner-company received a letter from its Chartered Accountant in the month of August 1990 enclosing therewith photo-copies of the printed notices dated 10-7-1990 u/s 148 of the Act calling upon the company to submit its returns for the assessment years 1986-87 to 1989-90. The notices were addressed as under:
M/s Mansarover Commercial Pvt. Ltd. C/o Shri Rattan Gupta (CA), 4356/4, Ansari Road, Daryaganj, New Delhi-110002.
The petitioners allege that they had requisitioned the services of Shri Rattan Gupta, Chartered Accountant, for providing professional services in connection with company law matters, accounts reconciliation, reconciliation of bank accounts, assistance in finalisation of accounts of the company and reconciliation of the other parties. On inquiries made by the petitioners from Shri Gupta, it appeared that the office premises of Shri Gupta had been searched by the income tax authorities and the account books which had been submitted to him for reconciliation had been seized by them. Though the account books so seized would show the address of the registered office of the company in Sikkim, still, notices were not sent to the company at its registered office at Gangtok, Sikkim. The petitioners have sought a writ of prohibition, prohibiting the respondents from taking, initiating or pursuing any further action directly or indirectly against the petitioner-company under the Act in pursuance of the notices dated 10-7-1990 mainly on the ground that the income tax authorities at Delhi had no territorial jurisdiction to issue such notices to the petitioner-company registered in Sikkim and also that there was non-compliance of section 282 of the Act, inasmuch as notices should have been served on the company through its principal officer at its registered office. The petitioner-company has also submitted that it is not liable to pay income tax as it is registered in Sikkim and is governed by the Sikkim State income tax Manual, 1948. It has further submitted that the Act of 1961 was made applicable to Sikkim only on and from 1-4-1989 and since the impugned notices relate to the period prior to 1-4-1989, the petitioner was not liable to pay income tax under that Act. Petitioners have also prayed for quashing and setting aside the impugned notices dated 10-7-1990.
The writ petition was filed on 18-8-1990. The same was admitted on 20-8-1990 and notices were issued. Further proceedings in pursuance of the impugned notices dated 10-7-1990 were stayed by way of an interim order. On 26-2-1991, after the counter-affidavit on behalf of respondent Nos. 1 to 3 had been filed, the interim stay order was modified to the extent that ''the respondents may continue with their enquiry, but, subject to further orders of this Court, the petitioners shall not be required to file returns in respect of the relevant assessment years and, further, the respondents shall not proceed to assess or raise any demand against the petitioners nor proceed to recover tax for the relevant assessment years''. The stay order was further modified on 9-4-1991 to the extent that "the respondents may continue with their enquiry and in course of the enquiry, if necessary, seek factual information from the directors of the company whose addresses shall be furnished by the learned counsel for the petitioners to respondent No. 4 by 12-4-1991 and on receipt of such requisition, the directors of the company shall furnish the necessary information and further, in course of the enquiry, it shall be open to the respondents to summon and examine witnesses relevant for the purpose of the enquiry in accordance with law". The stay order was further modified by order dated 30-11 -1991 directing the petitioners to file the returns along with the accounts and also to furnish such information as may be called for by the department. The assessment proceedings were to continue but the final assessment orders were not to be signed nor demands raised in respect of the said assessments until further orders of the Court. It was further observed that in case of failure by the petitioners to comply with any statutory requirements in course of the assessment proceedings, it was open to the concerned officer to proceed against the petitioners in accordance with law. Rejoinder to the counter-affidavit was filed by the petitioner on 25-4-1991. Respondent Nos. 1 to 3 in their counter affidavit have taken several preliminary objections. One of them is that this Court has no jurisdiction to proceed with the writ petition as the whole of the cause of action has arisen within the jurisdiction of the High Court at New Delhi and no part of it has arisen within the territorial jurisdiction of this Court. They have further submitted that the petitioners have an adequate efficacious alternative remedy-by taking these objections before the tax authorities. Moreover, the writ petition involves determination of complex disputed questions of fact which cannot be gone into by this Court in writ jurisdiction. On merits also, they have filed a detailed reply and have submitted that the petitioner-company has dummy-directors except one Shri Ravindra Singh, Chartered Accountant functioning from Delhi, the department got the statement on oath of Shri Ravinder Singh, and during the course of search proceedings of his premises u/s 132 wherein he admitted that he used to look after the day-to-day affairs of the company and that he was in charge of and responsible to the petitioner-company till March 1988, and, thereafter Shri Rattan Gupta, Chartered Accountant, took over as the only working director, the other directors being his nominees and dummies. Statement on oath of Shri Rattan Gupta was also recorded by the department. Shri Gupta operated and functioned from his office at 4316/4, Ansari Road, Darya Ganj, New Delhi. Enquiries revealed that there was no employee engaged in Gangtok for the purpose of such a huge business. No office expenses have been incurred in Sikkim. Sustained enquiries made by the department indicated that the petitioner-company had earned substantial income in New Delhi which through the medium of certain persons was siphoned into the bank accounts of these companies at Gangtok in the form of purported commission for purchase/sale of agricultural commodities, especially cardamom, obviously because at the relevant time the provisions of the Act were not applicable to the State of Sikkim. Since income had in fact accrued in Delhi, it was liable to tax in accordance with the Act. All the funds of these companies were received in Delhi where the companies had opened their bank accounts and all investments were made from Delhi. Sustained enquiries made by the department further revealed that a systematic racket was in operation whereby the undisclosed incomes of various persons earned in India were being introduced in the books of account of the company or in the books of account of its associates. It is further submitted that the detailed information in this regard being confidential in nature cannot be disclosed in an affidavit. ''However, if the Hon''ble Court so desires the same would be furnished in sealed covers''. They have further asserted that since the petitioner- company was indulging in these nefarious activities and since the books of account and other documents were found in possessing of Shri Rattan Gupta who was looking after the day-to-day affairs of the company, the impugned notices were rightly served on him.
The petitioners in their rejoinder have stated that the following issues are involved in the present writ petition:
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(a) Whether a Company registered in the State of Sikkim and having its operation relating to generation/earning of income in Sikkim can be made subject to and proceeded against under the income tax Act,1961 for the period during which the said income tax Act, 1961 was not applicable to the State of Sikkim?
(b) Whether under the facts and circumstances, a Notice u/s 148 of the income tax Act, 1961 can be issued to the respondent company?
(c) Whether an assessee can be made to pay income tax twice on its income against the established principles of law as also against various judgments of the Hon''ble Supreme Court of India where the Hon''ble Supreme Court has clearly laid down that double taxation is not permitted?
They have further asserted that the petitioner-company was registered in the State of Sikkim and has its registered office in the State of Sikkim; it carried on its business in the State of Sikkim and earned and received whole of its income in the State of Sikkim, and has been subject to Manual, 1948; its bank accounts also were in the State of Sikkim wherein all the monies earned by the company were deposited and the money deposited outside the State of Sikkim was simply transferred from the bank account in Sikkim. Books of account which were found at the premises of Shri Rattan Gupta were sent to get his professional advice since at the relevant time no Chartered Accountant was available in Sikkim and, hence, this cannot lead to the conclusion that the head and brain or control and management of the company was based at the place where the books of account were found. With regard to the preliminary objections, it was submitted that the control and management of the affairs of the company was within the territorial jurisdiction of this Court; no cause of action has arisen outside the jurisdiction of this Court and since the reliefs sought for are with regard to the action proposed to be taken against the petitioner-company for the actions/transactions within the jurisdiction of this Court, this Court has the jurisdiction to entertain the present petition. It is further alleged that since the Act was not applicable to the petitioner, the action taken or contemplated by the respondents is wholly without jurisdiction and without the authority of law and the petitioner-company has no alternative remedy, much less adequate or efficacious. They have further submitted that the petition does not involve any complex disputed questions of fact, as the whole matter could be decided on admitted facts. Moreover, since the impugned notices have not been served on the petitioner, the respondents have no jurisdiction to proceed further in pursuance of the impugned notices and since this goes to the root of the matter, this Court has the jurisdiction to decide the dispute. They have denied all other facts mentioned in the counter-affidavit.
In Writ Petition No. 1 of 1992, petitioner No. 1, Himal Enterprise (P.) Ltd., is also a company registered under the Registration of Companies Act, Sikkim, 1961 having its registered office at Gangtok and petitioner No. 2, is its Managing Director. The respondents have issued notices to the petitioners under sections 131 and 142 of the Act for the assessment years 1987-88, 1988-89, 1989-90 and 1990-91. The petitioners have challenged the notices on the ground that the petitioner-company is engaged in carrying on the business of investment in Sikkim only and has no branch office or establishment carrying on business outside Sikkim except a Liaison Office at 34, Vasant Marg, Vasant Vihar, New Delhi which is used partly as a place for the stay of the officers of the Company who visit Delhi and also as the managing director''s camp office as and when he is in Delhi and also that the company has a Liaison Office at Calcutta. The Act was not in force in respect of the assessment years 1987-88, 1988-89, 1989-90 and as such, according to the petitioners, whatever liability arose for income tax that was as per the provisions of the Sikkim State income tax Manual, 1948 and not as per the Act. Further, it is urged that since for the assessment year 1990-91 also income arose only in Sikkim, the income tax authority in Sikkim would alone have jurisdiction and not the authorities in Delhi, but the Central Government has so far not set up any office in Sikkim. The petitioners have alleged that since under the State income tax Manual, income tax is payable on turnover and since the company is not engaged in any business involving turnover, no income tax is payable by the company under the Manual but the Managing Director has paid tax on his income received by him by way of salary from the company under the Manual. Further, the petitioners have stated that on 2-11-1987, the company withdrew a sum of Rs. 95 lakhs from its bank account in the State Bank of India, Gangtok Branch, through two bank drafts and gave the same as loan to the Grindlays Bank PLC "H" Block, Connaught Circus, New Delhi for investment at the rate of 13.5 per cent per annum under certain conditions through the company''s letter dated 2-11-1987 and it was agreed in writing that the transaction of loan as well as repayment including payment of interest was to be at Gangtok and as such, income accrued or arose in Sikkim and on this the company cannot be liable to pay tax twice both under the Act and under the Sikkim State income tax Manual, 1948. Petitioner No. 2 was served with a summons dated 6-8-1991 u/s 131 (Annexure ''C''). A reply dated 9-8-1991 was sent by him. Another notice dated 27-8-1991 (Annexure ''G'') was issued to petitioner No. 1. Reply to that notice was also filed. Certain other notices were also issued and replies were also filed by the petitioners. All the notices were issued and served on the petitioners at the Delhi address at 34, Vasant Marg, Vasant Vihar, New Delhi. Validity of the notices has been challenged on the ground that u/s 282, notices should have been served on its Principal Officer at the Registered Office at Gangtok and not at 34, Vasant Marg, Vasant Vihar, New Delhi which is not even a branch office of the petitioner-company. It is further asserted by the petitioners that Sikkim being a part of India cannot be treated as a foreign land and, therefore, "the petitioner-company cannot be treated as a foreign company earning interest in India. Any income towards interest by Sikkimese company in India (New Delhi) cannot be subjected to income tax in India as a Sikkimese company is guided by its own tax laws and it is chargeable to tax only under that special law". The respondents have contested the petition alleging that the petitioner-company''s money was invested in the Grindlays Bank, Delhi, interest on the money was earned in Delhi and income was received in Delhi and then reinvested in Delhi. Besides, according to the respondents, the petitioners have a full-fledged office at 34, Vasant Marg, Vasant Vihar, New Delhi, management and control of the company was in Delhi and its Managing Director who is petitioner No. 2 was operating from Delhi but in order to avoid proper taxation, the company had nominally shown its registered office in Sikkim, and as such, the respondents who are located at Delhi had the jurisdiction to initiate and make enquiries and investigations under sections 131 and 142.
After several adjournments, arguments commenced on 8-6-1993. Principal arguments were submitted by Mr. Dastur, Senior Advocate, on behalf of the petitioners. During the course of arguments, Mr. Ahuja wanted to tender a copy of the reasons recorded by the Assistant Commissioner (Investigation) but Mr. Dastur objected, as they were not supported by an affidavit. On 9-6-1993, Mr. Ahuja tendered reasons duly supported by an affidavit giving a copy thereof to Mr. Dastur. This was also objected to by Mr. Dastur who also filed a written objection in this regard on 10-6-1993. Mr. Ahuja, during the course of his arguments, took us through several additional documents not filed with the counter affidavit as regards the proceedings taken by the department during the pendency of the writ petitions. He, of course, furnished copy of these documents and proceedings to the learned counsel for the petitioners who objected to this procedure. Shri Ahuja also wanted to show other original records containing other material which was before the assessing authority before he issued the impugned notices but we declined to see that at that stage. The learned counsel for the petitioners sought time to reply to these additional documents submitted by Mr. Ahuja. Therefore, the case was adjourned for further arguments on merits. Since Mr. Ahuja had raised a preliminary objection that this Court has no jurisdiction to entertain these petitions, we thought it proper to decide this preliminary objection before hearing further on merits.
The point for decision is whether, on the facts and in the circumstances, this Court has the territorial jurisdiction to decide the writ petitions filed by the companies having their registered offices at Gangtok to challenge the notices issued u/s 148 and sections 131 and 142 by the income tax authorities at Delhi and served also at Delhi.
Under clause (1) of article 226 of the Constitution, it. is the location or the residence of the respondent which gives territorial jurisdiction to a High Court. Under clause (2), cause of action gives jurisdiction with the result that the High Court within whose jurisdiction cause of action arises wholly or in part has the jurisdiction to entertain a writ petition against the Union of India or any other body even if the respondent is outside the jurisdiction of the High Court. All the respondents in the instant cases are located outside the jurisdiction of the Sikkim High Court, and, therefore, this High Court does not admittedly have jurisdiction under clause (1). As regards cause of action, relief (a) in all the petitions is for quashing and setting aside Notification No. S.O. 1028, dated 7-11-1988. This notification having been superseded by section 26 of the Finance Act, 1989, this relief is clearly not available. Therefore, Mr. Dastur did not press for this relief during arguments. The other reliefs in respect of the five petitions are with respect to the issue of notices u/s 148. Mr. Dastur has submitted that the impugned notices u/s 148 purportedly seek to take action with regard to the acts carried out wholly within the jurisdiction of this Court by the companies that had been registered under the Registration of Companies Act, Sikkim, 1961 and the control and management of the affairs of these companies is situated within Sikkim. Further, in any event, he contends, that the control and management of the affairs is not relevant at all, since the issues are with respect to the applicability of Sikkim law, as the whole income of the companies arose in Sikkim, and as such, no enquiry or investigation could be carried out under the Act. According to him, article 371F which was inserted by the Constitution (Thirty-sixth Amendment) Act, 1975 granted immunity to the residents of Sikkim from the operation of the Act by protecting the continued validity of the Sikkim State income tax Manual, by virtue of clause (k) of that article, and as such, the residents of Sikkim were not, during the relevant years, liable to pay tax under the Act and whatever liability they incurred towards income tax, was under the Manual, 1948. The learned counsel argues that to hold otherwise would mean that for the same income a person may be liable to pay income tax both under the Manual, 1948 and under the Act which is against the basic tenet of a tax law and so would be wholly arbitrary.
It is true that so long as the Act was not extended to Sikkim, people in Sikkim were not liable to pay tax in respect of Sikkim income under the Indian income tax Act and their liability to pay income tax was as per the Manual, 1948. That is the reason that the Sikkim Government Employees residing even in that part of India where the Indian income tax was in force, as in the case of Sikkim House in New Delhi or State Trading Corpn. of Sikkim in Calcutta, were subjected to income tax under the Sikkim State income tax Manual and not under the Indian income tax Act, irrespective of the period of their stay in Delhi or Calcutta, as they were treated as earning income in Sikkim. Clause (k) of article 371F provides that notwithstanding anything in the Constitution ''all laws in force immediately before the appointed day in the territories comprised in the State of Sikkim or any part thereof shall continue to be in force therein until amended or repealed by a competent Legislature or other competent authority''. Clause (n) says that ''the President may, by public notification, extend with such restrictions or modifications as he thinks fit to the State of Sikkim any enactment which is in force in a State in India at the date of the notification''. The combined effect of both these clauses on the present controversy is that so long as the 1961 Act was not extended to Sikkim, the Sikkim law of income tax continued to be in force in respect of all incomes earned in Sikkim, notwithstanding the other provisions of the Constitution, and the provisions of the Act would not apply to such incomes irrespective of the length of stay in that part of India where the Indian income tax Act was in force. That is the natural consequence of the State law being inapplicable in a part of India to which part the Central Law did not apply. But the Sikkim law being a State law cannot have extra-territorial operation so as to apply to the incomes earned outside Sikkim. So, the only effect of the special provisions contained in article 371F is that so long as the Act did not become applicable to Sikkim, the Act could not apply to incomes earned in Sikkim, but in respect of the incomes earned in other parts of India where the Act was in force, the Sikkim law could not operate and the Act would apply. As such, there cannot be any occasion for double taxation for the same income both under the Sikkim State income tax Manual and under the Act.
In this view of the matter, the question for decision is not about the operation of the Sikkim law but where the incomes in respect of the impugned notices issued u/s 148 of the Act arose, accrued or were received. But that is a matter to be decided by the authority that has issued the notices. The jurisdiction of the Writ Court is not appellate but supervisory and with respect to a matter of the nature of the present five petitions the writ Court has merely to decide whether the Assessing Officer had reason to believe that any income chargeable to tax under that Act had escaped assessment. The Hon''ble Supreme Court held in Income Tax Officer and Others Vs. Madnani Engineering Works Ltd., Calcutta, , that the existence of reason to believe on the part of the ITO is a justiciable issue and it is for the Court to be satisfied whether in fact the ITO had reason to believe that income had escaped assessment. In Lalji Haridas Vs. R.H. Bhatt and Another, , the Hon''ble Supreme Court said that the jurisdiction conferred on the High Court under article 226 of the Constitution is not intended to supersede the jurisdiction and authority of the ITOs to deal with the merits of all the contentions that the assessees may raise before them. Again the Supreme Court held in S. Narayanappa and Others Vs. Commissioner of Income Tax, Bangalore, , that it is open to the Court to examine whether the reasons for the belief have a rational connection or a relevant bearing to the formation of the belief and are not extraneous or irrelevant to the purpose of the section. To this limited extent, the action of the ITO in starting proceedings is open to challenge in a Court of Law. Whether the grounds are adequate or not is not a matter for the Court to investigate. Their Lordships observed in State of Uttar Pradesh and Others Vs. Maharaja Dharmander Prasad Singh and Others, that the judicial review under article 226 cannot be converted into an appeal. Judicial review is directed, not against the decision, but is confined to the examination of the decision-making process. Therefore, it is not every allegation made in the petition that is to be considered a material allegation as constituting cause of action wholly or in part but it is only those allegations that are relevant to consider whether the Assessing Officer on the materials which were before him had the reason to form the belief contemplated by section 147, that may be said to be material allegations as constituting cause of action in whole or in part. It is not in dispute that action u/s 147 in respect of all the five companies was initiated in Delhi, all the respondents are located in Delhi and the Assessing Officer recorded his reasons also there. Notices were also issued in Delhi and they were also served in Delhi. Service u/s 148 was effected in Delhi by affixation on the office premises of Shri Rattan Gupta who was merely a Chartered Accountant according to the petitioners but a Principal Officer of the Companies according to the respondents. Whether the service of the notices was valid or not is a matter concerning merit. Reality is that all the material facts which culminated in the issue and service of the impugned notices and on the basis of which the impugned notices have been challenged, keeping in view the law applicable to the matter, took place in Delhi. The question whether the income arose in Sikkim or in Delhi is an issue concerning merit to be determined by the appropriate income tax authorities as per the provisions of the Act and not by a writ Court and, as such, the allegations to show that the income was earned in Sikkim are not material.
Mr. Dastur contended that notices should have been served u/s 148 at the registered office of the companies and by serving notices on the Chartered Accountant of the companies at Delhi, the income tax authorities at Delhi could not divest the Sikkim Court of the jurisdiction which it would otherwise have, notices being an integral part of the cause of action. However, the fact remains that the notices were served in Delhi. Question of jurisdiction is to be decided on the factual state that is found to exist and not as it should have been. Therefore, without going into the question, whether service effected at Delhi was valid or not, we are of the view that the allegations regarding service of notices which was effected in Delhi do not give territorial jurisdiction to this Court.
Mr. Ahuja has submitted that no part of cause of action arose in Sikkim and has referred in support of his submission to the State of Rajasthan and Others Vs. Swaika Properties and Another, , In Re: Bharat Sugar Mills Ltd. and Another, , Kajaria Exports Ltd. and Another Vs. Union of India (UOI) and Others, and Rakesh Dhar Tripathi Vs. Union of India (UOI) and Others, . In Swaika Properties'' case (supra), the respondent-company which was registered at Calcutta had owned certain land in Rajasthan in respect of which a notice u/s 52(2) of the Rajasthan Urban Improvement Act, 1959 was issued to the respondent-company stating that it was proposed by the State Government to acquire the land u/s 52(1). Service of notice was effected at the registered office of the company at Calcutta. It was held that cause of action neither wholly nor in part arose within the territorial jurisdiction of the Calcutta High Court, and, therefore, the Calcutta High Court did not have the jurisdiction to entertain the writ petition. Cause of action means every fact which, if traversed, it would be necessary for the plaintiff to prove in order to support his right to a judgment of the Court. It was observed that cause of action is a bundle of facts which is taken with the law applicable to them gives the plaintiff a right to relief against the defendant. Service of notice at Calcutta was held to be inconsequential as it could not give rise to a cause of action within that territory unless such service of notice was an integral part of the cause of action, and it was observed that the entire cause of action culminating in the acquisition of the land arose within the State of Rajasthan. Note was taken of the fact that the notification issued u/s 52(1) became effective from the moment it was published in the Official Gazettee as thereupon the notified land became vested in the State Government free from all encumbrances and it was not necessary for the respondents to plead for the service of notice on them u/s 51 (2) for the grant of an appropriate writ, direction or order under article 226 for quashing the notification. In Bharat Sugar Mills Ltd. s case (supra), it was held that the submission that the company will sustain loss or the shareholders will sustain loss does not form part of the cause of action which needs to be proved in order to succeed that the impugned order is bad, arbitrary, unreasonable and illegal and not in accordance with the norms laid down in sub-section (3C) of section 3 of the Essential Commodities Act. In Kajaria Exports Ltd. ''s case (supra), the Calcutta High Court observed that merely having an office at Calcutta, without having anything more, does not and cannot mean that Calcutta High Court has jurisdiction to entertain the writ petition when all the respondents are situated outside the jurisdiction of that Court and no part of the cause of action arose within the jurisdiction of that Court. The Allahabad High Court held in Rakesh''s case (supra) that where the petitioner filed a petition in the Allahabad High Court but the grounds on which the reliefs were claimed did not show that the cause of action arose in Allahabad and by whatever the petitioner was aggrieved took place in New Delhi and all the respondents were also residents of New Delhi, then the fact of the petitioner''s residence being in Allahabad, not having the remotest relevance for deciding whether the cause of action, wholly or partly, arose within the territorial limits of the Allahabad High Court for entertainment of the writ petition, the said fact could not entitle him to get the relief.
Petitioner-companies have in the present five cases, challenged the jurisdiction of the respondents in issuing notices u/s 148. The notices were issued by the authorities stationed at New Delhi and were served in New Delhi. By whatever the petitioners have felt aggrieved took place in New Delhi. So, no part of cause of action arose in Sikkim. The mere fact that the companies have registered offices in Sikkim does not confer jurisdiction on this Court. In this view of the matter, the preliminary objection raised by Mr. Ahuja, learned counsel for the respondents, is upheld and it is held that this Court has no jurisdiction to entertain these five petitions.
Similar is the position with respect to petition No. 1 of 1992. u/s 131(1A), any of the tax authorities specified therein is competent to exercise the powers conferred under sub-section (1) if he has reason to suspect that any income has been concealed, or is likely to be concealed, by any person or class of persons within his jurisdiction notwithstanding that no proceedings with respect to such person or class of persons are pending before him or any other income tax authority. Powers specified in sub-section (1) are the same as are vested in a Court under the Code of Civil Procedure, 1908 when trying a suit in respect of (a) discovery and inspection; (b) enforcing the attendance of any person; (c) compelling the production of books of account and other documents; and (d) issuing commissions. The question as to where a particular income was earned or received is a matter to be decided by the competent authority as per the provisions of the Act and not by a Writ Court. Since notices were issued in Delhi and were also served in Delhi, no part of cause of action arose in Sikkim and, as such, in respect of this writ petition also, this Court does not have territorial jurisdiction. In the result, all the writ petitions are dismissed with no order as to costs.