Capegemini Technology Services India Ltd v. Deputy Commissioner of Income Tax, Circle- 1(1), Pune & Ors.

Judgment

- (PER B. P. COLABAWALLA, J.)

1. Rule. Respondents waive service. With the consent of parties, Rule made returnable forthwith and heard finally.

2. By this Petition under Article 226 of the Constitution of India, the Petitioner challenges the alleged outstanding demands of Rs.3,28,785/- for A.Y.2001-02, Rs.1,24,577/- for A.Y.2002-03 and Rs.28,87,714/- for A.Y.2003-04 and the recovery notice dated Utkarsh MARCH 24, 2026

05.02.2023 issued under Section 220 of the Income Tax Act, 1961 (“the IT Act”).

3. Brief facts of the case are as follows:- (a) Vide an order dated 16.05.2007, passed by the Delhi High Court in Company Petition No.49-51 of 2007, Flextronics Software Systems Limited (“erstwhile entity”) got amalgamated with Kappa Investment Limited. The name of the said company was subsequently changed to Aricent Technologies (Holdings) Limited. Thereafter, M/s.Aricent Technologies (Holdings) Limited got amalgamated with the Petitioner vide order dated 23.12.2022 of the National Company Law Tribunal, Mumbai Bench in CP (CAA)/183/MB/2022 and CA (CAA) /56/MB/2022. (b) In February 2023, the Petitioner received a notice under Section 220 of the Act [dated 05.02.2023] from Respondent No.2. In the said notice, the Petitioner was asked to pay the outstanding demand, inter alia, of Rs.3,28,785/- for A.Y.2001- 02, Rs.1,24,577/- for A.Y.2002-03 and Rs.28,87,714/- for A.Y.2003-04. The said notice was in the name of the erstwhile entity, namely, Flextronics Software Systems Limited. Utkarsh MARCH 24, 2026 (c) The Petitioner contends that it was not aware of any such outstanding demands. Upon receipt of the recovery notice, the Petitioner filed applications under the Right to Information Act, 2005 (“the RTI Act”) seeking copies of the orders giving rise to such demands. (d) The Petitioner received a reply from Respondent No.2 stating that for A.Y.2001-02 and 2002-03, the demands were on account of rectification/intimation orders, but no such orders were provided. Instead, illegible screenshots of the computation sheets from the system were furnished. For A.Y.2003-04, it was stated that records were not available.

(e) The Petitioner preferred appeals before the First Appellate Authority under the RTI Act, wherein directions were issued to Respondent No.2 to furnish full information. Despite such directions, no orders were supplied. (f) In these circumstances, the Petitioner contends that these demands are non-existent and the recovery notice is bad in law. Utkarsh MARCH 24, 2026

4. This matter came for hearing first on 24.02.2025. On the said date, this Court passed an order noting the objection of the Respondents regarding territorial jurisdiction. It recorded that the Petitioner had produced an order of transfer of jurisdiction dated

13.12.2023 from Respondent No.2 to Respondent No.1 i.e., ACIT/DCIT Circle-1(1), Pune. Accordingly, this Court directed Respondent Nos.1 and 2 to file affidavits by 13.03.2025 not only on the aspect of merits, but also on the issue of jurisdiction, and also appraise the Court on the status of the transfer of records. On 24.02.2025, this Court also issued notice to Respondent Nos. 2 and 4.

5. The Petitioner has effected service on the Delhi officer (Respondent No.2) and an affidavit of service to that effect has been placed on record. Despite service and the specific directions of this Court, Respondent No.2 has chosen not to file any reply or enter an appearance.

6. At the outset, Mr. Arjun Gupta, the learned counsel appearing for Respondent Nos.1 to 3, raised a preliminary objection regarding the territorial jurisdiction of this Court to entertain the present Petition. He vehemently argued that the demands in question Utkarsh MARCH 24, 2026 pertain to the erstwhile entity which was assessed in Delhi. The impugned orders/intimations giving rise to the demand were passed by the Assessing Officer in Delhi. He submitted that the Pune Officer i.e. Respondent No.1, has not performed any act in relation to the creation of these demands. He relied upon the prayer clause 12(a) in the Petition which seeks quashing and setting aside of the demand recovery notice and the computation sheets all issued by Respondent No.2 who is in Delhi. Since, the prayer is to quash and set aside the actions performed and notices issued by Respondent No.2, therefore, it is argued that the Petitioner should be relegated to the Delhi High Court. Mr. Gupta relied upon a compilation of judgments to buttress his submission. He placed reliance on the decision of the Supreme Court in Principal Commissioner of Income Tax-I V/S ABC Papers Limited [(2022) 9 SCC 1] to contend that an appeal under the Act is to be filed before the Tribunal/ Court within whose jurisdiction the Assessing Officer, who passed the order appealed against, is located. He argued that in the said judgment, even where the case of an assessee was subsequently transferred under Section 127 of the IT Act, still the Hon'ble Apex Court held that an appeal has to be filed before the Tribunal/ Court within whose jurisdiction the Assessing Officer, who passed the original order appealed against, is located. He, accordingly, Utkarsh MARCH 24, 2026 submitted that in the present case, since the recovery and demand notices have been allegedly issued and raised by an Officer in Delhi, even the Writ Petition should be filed in Delhi High Court. He also heavily relied on the Constitution Bench decision in Lt. Col. Khajoor Singh V/S Union of India [AIR 1961 SC 532] to argue that a writ must be filed where the Respondent is located. He submitted that this was a Seven Judge Constitution Bench judgment which had categorically held that it is the place of the Authority/Respondent which will decide the territorial jurisdiction of a Court to entertain a Writ Petition under Article 226 of the Constitution of India. He, further, relied on a decision of this Court dated 15.04.2025, in Trustcap Private Limited V/S ITO (Writ Petition No. 742 of 2025) wherein this Court relegated the Petitioner to the Calcutta High Court, as the notice under challenge was issued by an Officer in Kolkata. He submitted that even if the effect of the reliefs prayed for is to be felt where the Petitioner is located, the same is not sufficient to confer jurisdiction on this Court. Reliance was also placed on the decision of the Delhi High Court in Jayaswals Neco Ltd. V/S Union of India [(2007) SCC OnLine Del 2094]. He submitted that Article 226(2) of the Constitution of India, should be considered to be in addition to Article 226(1) and not as an alternative. Consequently, it is only the Utkarsh MARCH 24, 2026 Court exercising jurisdiction over the Delhi Officer which has the jurisdiction to entertain the present Petition. Since, the original authority issuing notices and raising demands is in Delhi, the Petitioner ought to be directed to approach the Delhi High Court and the present Petition should be dismissed.

7. Per contra, Mr. Dharan Gandhi, the learned counsel for the Petitioner, submitted that the objection to jurisdiction is untenable. He pointed out that the jurisdiction over the Petitioner's case was transferred from Delhi to Pune vide an order under Section 127 of the Act passed by the PCIT, Delhi-1 on 13.12.2023. This is not disputed by Respondent No.1 as well. Consequently, the Delhi Officer i.e., Respondent No.2 is now functus officio. He submitted that any relief, including the deletion of demand or stay on recovery proceeding, can now only be granted by Respondent No.1. He emphasized that the erstwhile company has amalgamated with the Petitioner, which has its registered office in Pune. It is the Petitioner in Pune who has to defend the proceedings, bear the consequences, and face the effects of the recovery notices. Since, the effect of the impugned action is felt within the territorial jurisdiction of this Court, a part of the cause of action has arisen here, thereby conferring jurisdiction on this Court to exercise its Utkarsh MARCH 24, 2026 power under Article 226 of the Constitution. Mr. Gandhi relied on a series of decisions including Kusum Ingots & Alloys Ltd. V/S Union of India [(2004) 6 SCC 254], Om Prakash Srivastava V/S Union of India [(2006) 6 SCC 207], Navinchandra N. Majithia V/S State of Maharashtra [(2000) 7 SCC 640], Nawal Kishore Sharma V/S Union of India [(2014) 9 SCC 329], Teleperformance Global Services Pvt. Ltd. V/S ACIT [(2021) 435 ITR 725 (Bom)], Uber India Systems Pvt. Ltd. V/S ACIT [(2024) 168 taxmann.com 200 (Bom)], Vincent Commercial Company Limited V/S ITO [Writ Petition (L) No. 10838 of 2025], Wills India Insurance Brokers (P.) Ltd. V/S IRDA [(2012) 22 taxmann.com 154 (Bom)] and Damomal Kauromal Raisingani V/S Union of India [AIR 1967 Bom 355], to support his contention.

8. Mr. Gandhi then argued that the decision in Lt. Col. Khajoor Singh (supra) is not applicable on the ground that it was rendered prior to the amendment of Article 226 in 1963. He submitted that Lt. Col. Khajoor Singh (supra) dealt with the issue whether cause of action can be considered as a valid criteria under Article 226 to entertain a Writ Petition. The said question was answered in negative by Utkarsh MARCH 24, 2026 the Hon'ble Supreme Court in absence of any such criteria in Article 226 at that point of time. He relied upon Article 226(2) which was introduced after the decision in case of Lt. Col. Khajoor Singh (supra) to contend that a High Court can entertain a Writ Petition, where a cause of action arises, whether in part or whole. He submitted that the legislature amended the Constitution of India, to introduce the concept of cause of action to be considered as one of the factors to confer territorial jurisdiction over a High Court to entertain a Writ Petition. He also distinguished the decision in Trustcap Private Limited (supra) on the ground that it relied on Khajoor Singh (supra) without appreciating the subsequent jurisprudence on Article 226(2). He, therefore, submitted that this Court had the jurisdiction to entertain the present Petition.

9. We have considered the rival submissions on the issue of territorial jurisdiction. The issue regarding the jurisdiction of the High Court to issue writs against authorities located outside its territories has evolved significantly. Since, a vociferous objection was raised by Mr. Gupta in this regard, it will be only apt to deal with the same in some detail. Utkarsh MARCH 24, 2026

10. Article 226(1) of the Constitution as it stood prior to its amendment by Constitution (Fifteenth Amendment) Act, 1963 read thus:- “(1) Notwithstanding anything in article 32 every High Court shall have powers, throughout the territories in relation to which it exercise jurisdiction, to issue to any person or authority, including in appropriate cases, any Government, within those territories directions, orders or writs, including writs in the nature of habeas corpus, mandamus, prohibition, quo warrantor and certiorari, or any of them, for the enforcement of any of the rights conferred by Part III and for any other purpose.”

11. Initially, in Election Commission, India V/S Saka Venkata Rao [AIR 1953 SC 210] and K.S. Rashid and Son V/S Income Tax Investigation Commission [AIR 1954 SC 207], the Hon'ble Supreme Court held that the High Court's jurisdiction was based on the location of the Authority/Respondent. This was on the basis of the interpretation of Article 226 as it then stood.

12. This view was affirmed by a Seven-Judge Constitution Bench in Lt. Col. Khajoor Singh V/S Union of India [AIR 1961 SC 532], wherein it was held that the concept of cause of action could not be introduced in Article 226 [as it then stood]. The Court held that jurisdiction depended on the person or authority passing the order Utkarsh MARCH 24, 2026 being within the territories of the High Court. It would be relevant to first refer to the issues raised and considered by the Constitution Bench as brought out in Paragraph 11 which is reproduced hereunder:- “11. The two main questions which arise, therefore, are : (i) whether the Government of India as such can be said to have a location in a particular place viz. New Delhi, irrespective of the fact that its authority extends over all the States and its officers function throughout India, and (ii) whether there is any scope for introducing the concept of cause of action as the basis of exercise of jurisdiction under Article 226. Before, however, we deal with these two main questions, we would like to clear the ground with respect to two subsidiary matters which have been urged on behalf of the appellant.” (emphasis supplied)

13. This was answered by the Court in Paragraph 16 which is reproduced hereunder:- “16. as it stands Article 226 does not refer anywhere to the accrual of cause of action and to the jurisdiction of the High Court depending on the place where the cause of action accrues being within its territorial jurisdiction. Proceedings under Article 226 are not suits; they provide for extraordinary remedies by a special procedure and give powers of correction to the High Court over persons and authorities and these special powers have to be exercised within the limits set for them. These two limitations have already been indicated by us above and one of them is that the person or authority concerned must be within the territories over which the High Court exercises jurisdiction. Is it possible then to overlook this constitutional limitation and say that the High Court can issue a writ against a person or authority even though it may not be within its territories simply because the cause of action has arisen within those territories? It seems to us that it would be going in the face of the express provision in Article 226 and doing away with an express limitation contained therein if the concept of cause of action were to be introduced in it. Nor do Utkarsh MARCH 24, 2026 we think that it is right to say that because Article 300 specifically provides for suits by and against the Government of India, the proceedings under Article 226 are also covered by Article 300. It seems to us that Article 300 which is on the same line as Section 176 of the Government of India Act, 1935, dealt with suits as such and proceedings analogous to or consequent upon suits and has no reference to the extraordinary remedies provided by Article 226 of the Constitution. The concept of cause of action cannot in our opinion be introduced in Article 226, for by doing so we shall be doing away with the express provision contained therein which requires that the person or authority to whom the writ is to be issued should be resident in or located within the territories over which the High Court has jurisdiction. It is true that this may result in some inconvenience to persons residing far away from New Delhi who are aggrieved by some order of the Government of India as such, and that may be a reason for making a suitable constitutional amendment in Article 226. But the argument of inconvenience, in our opinion, cannot affect the plain language of Article 226, nor can the concept of the place of cause of action be introduced into it for that would do away with the two limitations on the powers of the High Court contained in it.” (emphasis supplied)

14. In fact, in paragraph 17, the Court went on to hold as under:- “17. We have given our earnest consideration to the language of Article 226 and the two decisions of this Court referred to above. We are of opinion that unless there are clear and compelling reasons, which cannot be denied, we should not depart from the interpretation given in these two cases and indeed from any interpretation given in an earlier judgment of this Court, unless there is a fair amount of unanimity that the earlier decisions are manifestly wrong. This Court should not, except when it is demonstrated beyond all reasonable doubt that its previous ruling, given after due deliberation and full hearing, was erroneous, go back upon its previous ruling, particularly on a constitutional issue. In this case our reconsideration of the matter has confirmed the view that Utkarsh MARCH 24, 2026 there is no place for the introduction of the concept of the place where the impugned order has effect or of the concept of functioning of a Government, apart from the location of its office concerned with the case, or even of the concept of the place where the cause of action arises in Article 226 and that the language of that Article is plain enough to lead to the conclusion at which the two cases of this Court referred to above arrived. If any inconvenience is felt on account of this interpretation of Article 226 the remedy seems to be a constitutional amendment. There is no scope for avoiding the inconvenience by an interpretation which we cannot reasonably, on the language of the Article, adopt and which the language of the Article does not bear.” (emphasis supplied)

15. Thus, the Court had specifically ruled out the concept of the place where the impugned order has effect or of the concept of functioning of a Government or the concept of cause of action as being relevant to exercise jurisdiction under Article 226 of the Constitution of India. On the contrary, the Court held that if any inconvenience is felt on account of this interpretation of Article 226, the remedy seems to be a constitutional amendment.

16. In this context, it now, becomes imperative to refer to subsequent developments. The legal position underwent a sea change with the Constitution (Fifteenth Amendment) Act, 1963, which inserted Clause (1-A) [renumbered as Clause (2) by Constitution (Forty-second Amendment) Act, 1976] to Article 226. This amendment specifically conferred jurisdiction on High Courts within whose territories the cause MARCH 24, 2026 Utkarsh of action, wholly or in part, arises, notwithstanding that the seat of the Government or authority is not within those territories. The same reads thus:- “226. Power of High Courts to issue certain writs. - (1) Notwithstanding anything in article 32, every High Court shall have power, throughout the territories in relation to which it exercises jurisdiction, to issue to any person or authority, including in appropriate cases, any Government, within those territories directions, orders or writs, including [writs in the nature of habeas corpus, mandamus, prohibition, quo warranto and certiorari, or any of them, for the enforcement of any of the rights conferred by Part III and for any other purpose. (2) The power conferred by clause (1) to issue directions, orders or writs to any Government, authority or person may also be exercised by any High Court exercising jurisdiction in relation to the territories within which the cause of action, wholly or in part, arises for the exercise of such power, notwithstanding that the seat of such Government or authority or the residence of such person is not within those territories. (3) Where any party against whom an interim order, whether by way of injunction or stay or in any other manner, is made on, or in any proceedings relating to, a petition under clause (1), without - (a) furnishing to such party copies of such petition and all documents in support of the plea for such interim order; and (b) giving such party an opportunity of being heard, makes an application to the High Court for the vacation of such order and furnishes a copy of such application to the party in whose favour such order has been made or the counsel of such party, the High Court shall dispose of the application within a period of two weeks from the date on which it is received or from the date on which the copy of such application is so furnished, whichever is later, or where the High Court is closed on the last day of that period, before the expiry of the next day afterwards on which the High Court is open; and if the application is not so disposed of, the interim order shall, on the expiry of that period, or, as the case may be, the expiry of the said next day, stand vacated. (4) The power conferred on a High Court by this article shall not be in derogation of the power conferred on the Supreme Court by clause (2) of article 32.” Utkarsh MARCH 24, 2026

17. Thus, it is apparent that the concept of cause of action which was not accepted by the Supreme Court in case of Lt. Col. Khajoor Singh (supra) due to absence of any such specific provision, was specifically brought into the Constitution of India by the Constitution (Fifteenth Amendment) Act, 1963. Now, after the insertion of Article 226(2), every High Court exercising jurisdiction in relation to the territories within which the cause of action, wholly or in part, arises, shall have powers to issue directions, orders or writs to any Government, authority or person notwithstanding that the seat of such Government or authority or the residence of such person is not within those territories. Thus, even if the authority concerned is not within the territorial jurisdiction of a High Court, still the High Court will have to power to issue writ to such authority, provided the cause of action, wholly or in part, arises within the jurisdiction of such High Court.

18. Article 226(2) of the Act, came up for consideration before the Hon'ble Supreme Court in number of cases. In Navinchandra N. Majithia V/S State of Maharashtra [(2000) 7 SCC 640], the Supreme Court held that the High Court before which the Writ Petition is filed must ascertain whether any part of the cause of action has arisen Utkarsh MARCH 24, 2026 within the territorial limits of its jurisdiction. The relevant paragraphs in the said decisions are as under:- “17. From the provision in clause (2) of Article 226 it is clear that the maintainability or otherwise of the writ petition in the High Court depends on whether the cause of action for filing the same arose, wholly or in part, within the territorial jurisdiction of that Court. … 27. … 35. Tested in the light of the principles laid down in the cases noted above the judgment of the High Court under challenge is unsustainable. The High Court failed to consider all the relevant facts necessary to arrive at a proper decision on the question of maintainability of the writ petition, on the ground of lack of territorial jurisdiction. The Court based its decision on the sole consideration that the complainant had filed the complaint at Shillong in the State of Meghalaya and the petitioner had prayed for quashing the said complaint. The High Court did not also consider the alternative prayer made in the writ petition that a writ of mandamus be issued to the State of Meghalaya to transfer the investigation to Mumbai Police. The High Court also did not take note of the averments in the writ petition that filing of the complaint at Shillong was a mala fide move on the part of the complainant to harass and pressurise the petitioners to reverse the transaction for transfer of shares. The relief sought in the writ petition may be one of the relevant criteria for consideration of the question but cannot be the sole consideration in the matter. On the averments made in the writ petition gist of which has been noted earlier it cannot be said that no part of the cause of action for filing the writ petition arose within the territorial jurisdiction of the Bombay High Court.