Clause (2) of Article 226 of the Constitution of India makes it clear that the power to issue directions, orders or writs by any High Court within its territorial jurisdiction would also extend to a cause of action or even a part thereof which arises within the territorial limits of the High Court notwithstanding the fact that the seat of the authority is not within the territorial limits of the High Court. A division bench comprising of Ujjal Bhuyan J and Milind N Jadhav J, while adjudicating the matter in MSPL Ltd v. CIT Mumbai; [WRIT PETITION (L) NO.3865 OF 2020], dealt with the jurisdiction of High Court in a tax appeal case.
Petitioner is a company incorporated under the Companies Act, 1956 having its registered office in Mumbai. It is stated that since its incorporation its registered office has remained unchanged at Mumbai. Petitioner is engaged in the business of mining, running gas unit and generating power through windmills. It has two mining divisions i.e. mining division-1 and mining division-2 at Hospet, Karnataka. A search and seizure operation was carried out in the business premises of the petitioner. Assessment proceedings were drawn up and CIT passed assessment orders in lieu of the same. Petitioner claimed deduction on account of expenditure and depreciation for use of aircrafts. Assessing officer negatived the claim for the same. Accordingly, such claim was disallowed and brought to tax as income of the respective years. In so far claim of expenditure and depreciation for use of aircraft is concerned, the Assessing Officer disallowed 50% of the operational expenses as well as depreciation. Being aggrieved by the aforesaid orders of the assessing officer, the Petitioner filed a writ petition in the Honourable High Court of Bombay. One of the grounds taken in the appeals was that the search and seizure action carried out in the business premises of the petitioner was invalid as no satisfaction note was recorded prior to the search and seizure as is the requirement under section 132 of the Act.
The Court upon considering the aforesaid facts allowed the writ petition and stated that; “Because of search and seizure action under section 132 of the Act against the petitioner in connection with the mining operations at Hospet in the State of Karnataka consequential assessment proceedings were initiated. Though provisions of the Civil Procedure Code, 1908 may not be applicable to the Act as well as to proceedings before the Tribunal, nonetheless as a matter of principle, we can advert to section 20 thereof, which says that every suit shall be instituted in a court within the local limits of whose jurisdiction the defendant or in the case of multiple defendants, each of the defendants resides or carries on business or personally works for gain. This principle finds manifestation in clause 4 of the Standing Order. Whether it be a suit or an appellate proceeding before the Tribunal the place of institution of the suit would be where the defendants reside or works for gain and in case of appeal under the Tribunal Rules where the Assessing Officer is located.”