Income-tax---

----Reference---Jurisdiction---Powers of High Court---Power to direct reference--High Court can direct reference only of cases decided by Appellate Tribunal situated within its territorial jurisdiction---Patna High Court cannot direct Appellate Tribunal of Calcutta to refer to it a case decided by that Tribunal---Indian Income Tax Act, 1961, Ss. 254, 256 & " Section 256(1) of the Income Tax Act, 1961, provides for reference by the Appellate Tribunal of any question of law arising out of the appellate order under section 254 to the High Court for its opinion at the instance of either the assessee or the Commissioner. If the application in this regard goes in vain, under section 256(2), the assessee or the Commissioner may within the prescribed period apply to the High Court and if the High Court is not satisfied with the correctness of the decision of the Tribunal and is of the opinion that a question of law arises, it may require the Tribunal to state the case and refer the same to it. On receipt of such requisition, the Tribunal shall state the case and refer the same to the High Court. In view of the provisions of section 269 of the Act, the expression "High Court" occurring in section 256 of the Act has to be understood to mean the High Court within whose territorial jurisdiction the concerned Appellate Tribunal is situated. That is to say, while a particular Tribunal can make a reference to only that High Court within whose territorial jurisdiction it is situated and is competent to deal with the requisition sent by it under section 256(2), it can neither make a reference to any other High Court nor deal with the requisition sent by that High Court.

The assessee was practising as an Advocate at Dhanbad and later shifted his practice to Ranchi and was elevated as a Judge of the Patna High Court in March, 1987. His appeal was pending before the Appellate Tribunal at Patna. In the meantime, he was transferred to the Calcutta High Court. The appeal pending before the Income-tax Appellate Tribunal, Patna Bench, was transferred to the Appellate Tribunal at Calcutta. The Tribunal set aside the assessment order and allowed the assessee's appeal. The Department filed an application under section 256(1) before the Appellate Tribunal, Patna Bench, seeking reference to the Patna High Court. The said application was transferred to the Income-tax Appellate Tribunal, "D" Bench, Calcutta. On receipt of notice from the said Bench of the Appellate Tribunal, the assessee filed his reply challenging the maintainability of the reference application at the instance of the Commissioner of Income-tax, Ranchi, and, further, taking the plea that no referable question arose. The Tribunal dismissed the application. On an application to the Patna High Court to direct reference:

Held, dismissing the application, that the orders passed by the Assistant Commissioner and the Commissioner of Income-tax (Appeals) merged in the appellant order of the Income-tax Appellate Tribunal, "D" Bench, Calcutta, which lay outside the territorial jurisdiction of the Patna High Court. If the Patna High Court could not issue a writ to the Income-tax Appellate Tribunal at Calcutta it was plain that it could not also issue any direction to it to state the case and refer the question of law.

Collector of Customs v. East India Commercial Co. Ltd. AIR 1963 SC 1124 applied.

CIT v. Justice R. M. Datta (1989) 180 ITR 86 (Cal.); Election Commission, India v. Saka Venkata Rao AIR 1953 SC 210; Sandhya Rani Dutta (Smt.) v. High Court of Judicature at Patna (1998) 229 ITR 706 (Pat.) and Syed Zafrul Hassan v. State AIR 1986 Pat. 194 ref.

K.K. Vidyarthi and K.K. Jhunjhunwala for Applicant.

K.N. Jain, Binod Poddar and Biren Poddar for Respondent

JUDGMENT

SACHCHIDANAND JHA; J.---This application under sec tion 256(2) of the Income Tax Act, 1961 (in short "the Act"), at the instance of the Revenue arises out of the appellate order of the Income-tax Appellate Tribunal, "D" Bench, Calcutta in I.T.A. No.136 (Patna) of 1992. The petitioner having failed to get the question referred to the High Court under section 256(1) of the Act, has filed this application under section 256(2) seeking a direction to the said Bench of the Tribunal to state the case and refer the question to this Court for opinion. The respondent-assessee has appeared on his own and filed a counter-affidavit objecting to the maintainability of the application in this Court.

We have heard Mr. K.K. Vidyarthi, learned counsel for the petitioner, and Mr. K.N. Jain, learned counsel for the respondent assessee, on the point of maintainability.

The background of the case, so far as relevant for the decision on the point, may briefly be stated as follows.

The assessee was a practicing Advocate at Dhanbad. In the course of time he shifted his practice to the Ranchi Bench of the Patna High Court and, later, was elevated as a Judge of the High Court on March 9, 1987. During the relevant assessment year 1988-89 corresponding to the accounting year 1987-88 to which the dispute relates, he received a sum of Rs.4,31,633 which were outstanding dues for the professional work done during the previous accounting year, i.e., 1986-87. It may be mentioned here that as an advocate practising at Dhanbad he used to file his income-tax returns before the Income-tax Officer, Ward-II, Dhanbad, and for the assessment year 1988-98, also as before, he filed the return before him. It is said that after the appointment of the assessee as a Judge of the Patna High Court, his assessment records were transferred from Dhanbad to the Assistant Commissioner of Income-tax, Circle-I, Patna, and later to Ranchi. It is the case of the assessee that this was done without giving any notice and opportunity of hearing to him and without complying with the mandatory provisions of section 127 of the Act. It is further his case that he challenged the territorial jurisdiction of the Assessing Officer at Ranchi. There is a controversy about this aspect of the matter; however, for decision on the point of maintainability, we are not required to go into the same. The Assistant Commissioner of Income-tax, Salary Circle, Ranchi, added a sum of Rs.3,03,118 out of the aforesaid sum of Rs.4,31,633 after allowing deductions, as income from other sources under section 176(4) of the Act; and assessed tax accordingly. The Commissioner of Income-tax (Appeals), Ranchi, confirmed the addition. The assessee preferred second appeal before the Income-tax Appellate Tribunal, Patna Bench. In the meantime, he was transferred to the Calcutta High Court. The appeal, pending before the Income-tax Appellate Tribunal, Patna Bench, being I.T.A. No.136/Patna of 1992, was thereafter transferred to the Income-tax Appellate Tribunal, "D" Bench, Calcutta. The Appellate Tribunal at Calcutta held that the assessment order passed by the Assessing Officer, Ranchi, was in violation of the provisions of section 127 of the Act and, therefore, void.. The Tribunal further held that in view of the decision of the Calcutta High Court in CIT v. Justice R. M. Datta (1989) 180 ITR 86, the addition of the sum of Rs.3,03,118 was riot correct. On these two grounds, the Tribunal set aside the assessment order and allowed the assessee's appeal. The Department filed an application under section 256(1) of the Act (R.A. No.l/Patna of 1997), before the Income-tax Appellate Tribunal Patna Bench, seeking reference of certain questions of law to this Court. The said application was transferred to the Income-tax Appellate Tribunal, "D" Bench, Calcutta. On receipt of notice from the said Bench of the Appellate Tribunal, the assessee filed his reply challenging the maintainability of the reference application at the instance of the Commissioner of Income-tax, Ranchi, and, further, taking the plea that no referable question arises. By order, dated December 18, 1997, the Tribunal dismissed the application. The present application has been filed thereafter seeking direction to the Income-tax Appellate Tribunal, "D" Bench, Calcutta, to state the case and refer the question of law as formulated in the application for opinion. to this Court.

The only point for consideration is whether the present application is maintainable in this Court. The answer to the question turns on the question as to whether this Court is competent to issue a direction to .the Appellate Tribunal at Calcutta to make a reference to this Court.

Section 256(1) of the Act provides for reference by the Appellate Tribunal of any question of law arising out of the appellate order under section 254 to the High Court for its opinion at the instance of either the assessee or the Commissioner. If the application in this regard goes in vain, under section 256(2), the assessee or the Commissioner may, within the prescribed period, apply to the High Court and if the High Court is not satisfied with the correctness of the decision of the Tribunal and is of the opinion that a question of law arises, it may require the .Tribunal to state the case and refer the same to it. On receipt of such requisition the Tribunal shall state the case and refer the same to the, High Court. As per the provisions of section 269, the term "High Court" in the context means the High Court for the particular State.

Section 252 of the Act provides for constitution of an Appellate Tribunal by the Central Government to exercise the powers and discharge the functions conferred on the Appellate Tribunal by the Act. Section 255(1) of the Act provides that the powers and functions of the Appellate Tribunal may be exercised and discharged by Benches constituted by the President of the Appellate Tribunal from among the members thereof. Section 255(5) provides that subject to the provisions of the Act, the Appellate Tribunal shall have powers to regulate its own procedure and the procedure of Benches thereof in all matters arising out of the exercise of its power or of the discharge of its function, including the places at which the Benches shall hold their sitting. In exercise of the powers under section 255(5) of the Act the Appellate Tribunal has framed the Income-tax (Appellate Tribunal) Rules, 1963. Rule 4 (1) of the said rules lays down that a Bench shall hear and determine such appeals and applications made under the Act as the President may by general or special order direct. As regards applications under section 256(1) of the Act, rule 40 lays down (see (1987) 167 ITR (St.) 79):

"The Bench which heard the appeal giving rise to the application shall hear it unless the President, the Senior Vice-President or Vice -President as the case may be, directs otherwise."

Another provision of the rules which requires to be pointedly noticed is rule 47 which lays down (see (1987) 167 ITR (St.) 79):

"Whether a requisition is received from the High Court under subsection (2) of section (2) of section 256, or where the case is referred back under section 258, it shall be dealt with by the Bench referred to in rule 40 unless otherwise directed by the President or the Senior Vice-President or the Vice-President, as the case may be.

Mr. K.K. Vidyarthi at one stage of hearing of the case tried to go behind the order. of the transfer of the appeal (I. T. A. No. 136/Patna of 1992) to the Appellate Tribunal at Calcutta but in view of the admitted position that the order of transfer was not challenged by the Department and, in fact, the Department participated in the hearing of the appeal, he gave up the point.

The appeal in the present case having been decided by the Appellate Tribunal, Bench "D", Calcutta, in view of the provisions of rules 40 and 47 of the Appellate Tribunal Rules, it is obvious that the same Bench was competent to decide the application under section 256(1), and to deal with the requisition from the High Court under section 256(2) in the event such a requisition had been made by the concerned High Court, i.e., the Calcutta High Court. In view of the provisions of section 269 of the Act, the expression "High Court" occurring in section 256 of the Act has to be understood to mean the High Court within whose territorial jurisdiction the concerned Appellate Tribunal is situated. That is to say while a particular Tribunal can make a reference to only that High Court within whose territorial jurisdiction it is situated and is competent to deal with the requisition sent by it under section 256(2), it can neither make reference to any other High Court nor deal with the requisition sent by that High Court. Thus, while the Appellate Tribunal at Patna can make reference only to the Patna High Court under section 256(1) of the Act deal with the requisition made by it under section 256(1), the Appellate Tribunal at Calcutta, likewise, can make reference to the Calcutta High Court alone and deal with requisition made by it. It would thus follow that neither can the Patna High Court make a requisition to the Appellate Tribunal at Calcutta nor, for that matter, can the Calcutta High Court do so with respect to the Appellate Tribunal at Patna. This Court, therefore, cannot issue any, direction to the Calcutta Bench of the Appellate Tribunal to state the case and refer the question of law, as prayed for in this application.

Mr. K.N. Jain, learned counsel for the assessee, has placed frontal reliance on a decision of the Constitution Bench of the apex Court in Collector of Customs. v. East India Commercial Company Ltd., AIR 1963 SC 1124. Briefly stated the facts of that case were that the Collector of Customs, Calcutta, confiscated the goods in question and imposed personal penalty on the respondent under the Sea Customs Act. The respondent preferred an appeal before the Central Board of Revenue, New Delhi, which was dismissed. He, thereafter, filed a writ petition under Article 226 of the Constitution in the Calcutta High Court. A Full Bench of the Calcutta High Court held that although in view of the decision of the Supreme Court in Election Commission, India v. Saka Venkata Rao, AIR 1953 SC 210, it could not issue a writ against the Central Board of Revenue, which was permanently located outside the territorial jurisdiction of that High Court, as the Central Board of Revenue had merely dismissed the appeal and the real operative part of the order was that of the Collector of Customs, Calcutta, it had jurisdiction to pass an order against him notwithstanding the fact that the order had been challenged before the Central Board of Revenue and the Collector's order had merged in the order of the Board. On appeal by the Collector of Customs, the Supreme Court held that once an order of an original authority is taken in. appeal, it is the order of the latter authority which is the operative order after the appeal is disposed of, and where the appellate authority is located beyond the territorial jurisdiction of a High Court and, therefore, that High Court cannot issue a writ against the appellate authority for want of jurisdiction, it would not be open to it to issue a writ to, the original authority which may be within its territorial jurisdiction-even though the appellate authority -has merely confirmed the order of the original authority and dismissed the appeal. The principle that the decree of the lower Court merges in the decree of the appellate Court was extended and made applicable to orders passed by the Tribunals. It would be useful to quote the following passage from the judgment (page 1126):

"In law, the appellate order of confirmation is quite as efficacious as an operative order as an appellate order of reversal or modification. Therefore, if the appellate authority is beyond the territorial jurisdiction of the High Court it seems difficult to hold even in a case where the appellate authority has confirmed the order of the original authority that the High Court can issue a writ to the original authority which may even have the effect of setting aside the order of the original authority when it cannot issue a writ to the -appellate authority which has confirmed the order of the original authority. In effect, by issuing a writ to the original authority setting aside its order, the High Court would be interfering with the order of the appellate authority which had confirmed the order of the original authority even though it has no territorial jurisdiction to issue any writ to the appellate authority. We, therefore, feel that on principle when once an order of original authority is taken in appeal to the appellate authority which is located beyond the territorial jurisdiction of the High Court, it is the order of the latter authority which is the operative order after the appeal is disposed of; and as the High Court cannot issue a writ against the appellate authority for want of territorial jurisdiction it would not be open to it to issue a writ to the original authority which may be within its territorial jurisdiction once the appeal is disposed of, though it may be that the appellate authority has merely confirmed the order of the original authority and dismissed the appeal."

The above observations, in my opinion, are applicable on all fours in this case. The orders passed by the Assistant Commissioner and the Commissioner of Income-tax (Appeals) merged in the appellate order of the Income-tax Appellate Tribunal, "D" Calcutta, which lies outside the territorial jurisdiction of this Court. If this Court cannot issue a writ to the Income-tax Appellate Tribunal at Calcutta it is plain that it cannot also issue any direction to it to state, the case and refer a question of law. As a matter of fact, as noticed above, the application under section 256(1) of the Act, preferred by the Department was considered and decided by the Appellate Tribunal at Calcutta and, therefore, if they so wanted they should have filed the application seeking direction to it to state the case and refer the question of law, in the Calcutta High Court. As pointed out above, in view of the provisions of section 269 of the Act, there can hardly be any doubt that the High Court in relation to the Income-tax Appellate Tribunal, Calcutta Bench, is the Calcutta High Court and not the Patna High Court.

In fairness to counsel for the Revenue I must mention that in support of the contention that the present application is maintainable in this Court he placed reliance on Smt. Sandhya Rani Dutta v. High Court of Judicature at Patna (1998) 229 ITR 706. The point for consideration in that case was whether after creation and establishment of a permanent Bench of the Patna High Court at Ranchi with 'respect to certain districts, having exclusive jurisdiction in relation to the cases arising within those districts, reference under section 256 of the Income-tax Act can be made only before that Bench or can also be made at the main seat of the High Court at Patna. This Court held that the Tribunal is required to make reference to the Ranchi Bench of the Patna High Court in case originating from the assessment orders of the Assessing Officers of areas falling within the concerned districts over which the Ranchi Bench has exclusive jurisdiction. In coming to the said conclusion this Court followed a Full Bench decision in Syed Zafrul Hassan v. State, AIR 1986 Patna 194, which had been rendered in an entirely different context while interpreting the provisions of section 438 of the Code of Criminal Procedure. I have reservation about the correctness of the said decision. However, it is not necessary to make any in-depth examination of the matter in view of the binding precedent of the apex Court in Collector of Customs v. East India Commercial Company Ltd., AIR 1963 SC 1124, and the provision of the Act and the Appellate Tribunal Rules, referred to above.

In these premises, I hold that this application is not maintainable in this Court and same is, accordingly, dismissed.

Aftab Alam, J.---I agree

M.B.A./121FC Application dismissed.