Orchid Mercantiles Private Limited & Anr v. The Assistant Commissioner Of Income Tax, Benami Prohibition Unit,Hyderabad & Ors

IN THE HIGH COURT OF JUDICATURE AT CALCUTTACIVIL APPELLATE JURISDICTIONAPPELLATE SIDE HEARD ON: 12.05.2023 DELIVERED ON: 12.05.2023 CORAM: THE HON’BLE CHIEF JUSTICE T.S. SIVAGNANAMAND THE HON’BLE MR. JUSTICE HIRANMAY BHATTACHARYYA MAT 754 of 2023 With I.A. No. CAN 1 of 2023 + I.A. No. CAN 2 of 2023 Orchid Mercantiles Private Limited & Anr. Vs. The Assistant Commissioner of Income Tax, Benami Prohibition Unit,Hyderabad & Ors. With MAT 618 of 2023 With I.A. No. CAN 1 of 2023 Orchid Mercantiles Private Limited & Anr.Vs. The Assistant Director of Income Tax (Investigation), DDIT/ADIT (INV) –3(1), Kolkata & Ors. Appearance:- Mr. Mokaranm HossainMr. Soumik GanguliMs. Kumkum MukherjeeMr. Sourat Nandy ………..For the Appellant Mr. Manmeet Singh Arora, SPPMr. Soumen Bhattacharya ……….For the Respondents JUDGMENT (Judgment of the Court was delivered by T.S. SIVAGNANAM, C.J.) 1.Since the issues involved in these appeals are common, both the appealsare taken up for hearing analogously and are being decided by thiscommon judgement and order.are taken up for hearing analogously and are being decided by thiscommon judgement and order. 2.These intra-Court appeals have been filed by the writ petitionerschallenging the orders passed by the learned Single Benches on 1[st]February, 2023 in W.P.A. 1189 of 2023 and 14[th] March, 2023 in W.P.A.3576 of 2023. challenging the orders passed by the learned Single Benches on 1[st]February, 2023 in W.P.A. 1189 of 2023 and 14[th] March, 2023 in W.P.A.3576 of 2023. 3.Both the writ petitions have been dismissed on the ground that this Courtdoes not have territorial jurisdiction. does not have territorial jurisdiction. 4.After we have elaborately heard the learned advocates for the parties, wefind that the cause of action, which has arisen for initiating proceedingsunder the provisions of Prohibition of Benami Property Transaction Act,1988 (for short, “Benami Act”) and the provisions of the Income Tax Act,1961 (for the short, “the IT Act”) are outside the jurisdiction of this Court.find that the cause of action, which has arisen for initiating proceedingsunder the provisions of Prohibition of Benami Property Transaction Act,1988 (for short, “Benami Act”) and the provisions of the Income Tax Act,1961 (for the short, “the IT Act”) are outside the jurisdiction of this Court. 5. 6. 7. 8. It may be true that the appellants have got the registered office in Kolkatabut however, that will not be the test. Mr. Manmeet Singh Arora, learned Special Public Prosecutor appearing forthe respondent nos.1 to 3 assisted by Mr. Soumen Bhattacharya, learnedstanding counsel submits that the matter is now seised of by the 3[rd]respondent, the authority who is situated at Chennai and the matter isbeing proceeded strictly in terms of the provisions of the Benami Act/ITAct. From the prayers sought for in the writ petitions, we find that the writpetitioners seek to quash the summons issued under the Benami Act/ITAct. Unless and until it is shown that the authority, who has issued thesummons lacks jurisdiction to do so, a challenge to a summons cannot beentertained. Apart from that, the provisions of the Benami Act provide adetailed procedure by which the alleged benamdar and the allegedbeneficial owner will not be entitled to opportunity at each stage of thematter. Therefore, a summons cannot be interdicted, more particularly onthe grounds, which have been canvassed in the writ petitions, which wefind to be fully factual. From the prayers sought for in the writ petitions, we find that the writpetitioners seek to quash the summons issued under the Benami Act/ITAct. Unless and until it is shown that the authority, who has issued thesummons lacks jurisdiction to do so, a challenge to a summons cannot beentertained. Apart from that, the provisions of the Benami Act provide adetailed procedure by which the alleged benamdar and the allegedbeneficial owner will not be entitled to opportunity at each stage of thematter. Therefore, a summons cannot be interdicted, more particularly onthe grounds, which have been canvassed in the writ petitions, which wefind to be fully factual. Learned advocate appearing for the appellants would submit that theappellants are ready and willing to co-operate with the proceedings initiatedunder both the enactments by the respondents but the difficulty would befor the 2[nd] appellant to appear before the authority either at Hyderabad orat Chennai. The learned Special Public Prosecutor appearing for the respondents wouldsubmit the question of personal appearance at this stage does not arise as the matter has already crossed the stage and the proceedings have to beinitiated in terms of the procedure under the Benami Act. 9.In any event, we make an observation that in case the appellants areunable to appear in person before the concerned authority either atHyderabad or at Chennai, a request can be made by the 2[nd] appellant toappear through video conferencing and if that request is feasible ofconsideration, it will be well open to the respondents to consider the same.In any event, as agreed to by the appellants, they shall co-operate in theinvestigation process commenced by the respondent authorities.unable to appear in person before the concerned authority either atHyderabad or at Chennai, a request can be made by the 2[nd] appellant toappear through video conferencing and if that request is feasible ofconsideration, it will be well open to the respondents to consider the same.In any event, as agreed to by the appellants, they shall co-operate in theinvestigation process commenced by the respondent authorities.10.With the above observations, the appeals are dismissed along with all theconnected applications. connected applications. 11.There shall be no order as to costs. 12.Urgent Photostat certified copy of this order, if applied for, be furnished tothe parties expeditiously upon compliance of all legal formalities.the parties expeditiously upon compliance of all legal formalities. (T.S. SIVAGNANAM) CHIEF JUSTICE CHIEF JUSTICE I agree, (HIRANMAY BHATTACHARYYA, J.) Pallab/K.S. AR(Ct.)