Writ jurisdiction arises where tax demand consequences are felt; recovery without underlying orders is unsustainable.

The Petitioner, a company with its registered office in Pune, is the successor-in-interest to an erstwhile entity, Flextronics Software Systems Limited, following a series of amalgamations.

In February 2023, the Petitioner received a recovery notice under Section 220 of the Income Tax Act, 1961 ("IT Act"), issued by Respondent No. 2 (based in Delhi), claiming outstanding tax demands for A.Y. 2001-02 to A.Y. 2003-04.

The Petitioner sought the underlying assessment and rectification orders via applications under the RTI Act, 2005, but the Respondents failed to provide them, instead furnishing "illegible screenshots" and claiming records for certain years were unavailable.

Subsequently, jurisdiction over the Petitioner’s case was transferred from Delhi to Pune via an order under Section 127 of the IT Act on December 13, 2023.

The Petitioner challenged the demands as non-existent. The Revenue raised a preliminary objection regarding territorial jurisdiction, arguing that the challenges should be brought before the Delhi High Court as the impugned notices originated there.

1. Whether the Bombay High Court has territorial jurisdiction to entertain the petition under Article 226(2) of the Constitution when the impugned demands originated from an officer in Delhi, but the Petitioner and current jurisdictional officer are in Pune.

2. Whether tax demands can be sustained in the absence of underlying assessment or rectification orders being served upon or produced for the assessee.

Article 226(2) of the Constitution of India, which empowers a High Court to issue writs if the cause of action arises, wholly or in part, within its territorial limits, irrespective of the seat of the authority.

Kusum Ingots Alloys Ltd. v. Union of India, which clarified that even a "small fraction" of the cause of action confers jurisdiction.

Nawal Kishore Sharma v. Union of India, establishing that the place where consequences of an order are felt constitutes part of the cause of action.

Regarding Section 127 of the IT Act, the court applied the "transfer of case" principle, which renders the transferring officer functus officio and vests jurisdiction over completed and pending proceedings in the transferee officer.

Bharat Serums and Vaccines Limited v. DCIT, holding that demands appearing on the portal without underlying orders are liable to be quashed.

The Court rejected the Revenue's reliance on Lt. Col. Khajoor Singh v. Union of India (1961), noting that it was rendered prior to the 15th Constitutional Amendment which introduced the "cause of action" criteria in Article 226(2).

The Court reasoned that a substantial part of the cause of action arose in Pune because: (a) the Petitioner is located there; (b) the recovery notice was received there; and (c) the "coercive recovery actions" and consequences are felt there.

Crucially, the Section 127 transfer order moved the "case" to Pune, meaning the Pune Officer (Respondent No. 1) is now the only authority capable of granting relief or withdrawing the demand.

On the merits, the Court observed that despite explicit directions and RTI orders, the Department failed for over a year to produce the basic assessment orders creating the demand.

Drawing an adverse inference, the Court held that the demands were non-existent as "old matters cannot be allowed to suddenly surface on the portal without underlying orders".

It quashed and set aside the outstanding tax demands of ₹3,28,785 (A.Y. 2001-02), ₹1,24,577 (A.Y. 2002-03), and ₹28,87,714 (A.Y. 2003-04), along with the recovery notice dated February 5, 2023.

The Court further directed Respondent No. 1 to withdraw and remove these demands from the Income Tax portal.

Rule made absolute with no order as to costs.