Vrinda Sharad Bal Vs ITO (Bombay High Court)
The Bombay High Court quashed orders dated 6 December 2022 and 23 December 2022 transferring Vrinda Sharad Bal’s income tax case to Nashik under Section 127 of the Income Tax Act. The transfer followed notices issued under Section 153C for A.Ys. 2014-15 to 2020-21 based on a search conducted in the case of C & M Farming Group, Nashik.
The assessment of the searched person had already been completed on 29 September 2021. The Petitioner submitted that, consequently, there was no requirement to transfer her case to Nashik. The Revenue did not dispute this fact and also stated that the Petitioner’s PAN had already been transferred back to Mumbai on 8 January 2024.
The Court held that the transfer orders would serve no purpose since they were based on administrative convenience and coordinated investigation in the case of C & M Farming Group, whose assessment had already been completed. Accordingly, both transfer orders were quashed and the Petitioner’s assessment was directed to be conducted in Mumbai under the appropriate charge. All rights and contentions on the merits were kept open. Rule was made absolute with no order as to costs.
Core Issue: Whether the assessee’s assessment could be transferred from Mumbai to Nashik under section 127 on the ground of administrative convenience and coordinated investigation when the assessment of the searched person, on whose search the proposed coordinated investigation was based, had already been completed.
High Court Finding: The Bombay High Court held that once the assessment of C & M Farming Group had already been completed on 29.09.2021, there was no continuing justification for transferring the petitioner’s assessment to Nashik for coordinated investigation. The transfer orders dated 06.12.2022 and 23.12.2022 were therefore quashed and the assessment was directed to be conducted in Mumbai.
Cases Relied Upon: The Court relied upon Pegasus Assets Reconstruction Private Limited v. Principal Commissioner of Income Tax, Mumbai-3 & Ors., Writ Petition No. 1067 of 2022, reported at 2024 (2) TMI 1418 – Bombay High Court. On identical facts involving C & M Farming Group, the Court had held that after completion of the searched person’s assessment on 29.09.2021, there was no requirement to transfer the assessee’s case to Nashik.
Outcome: The writ petition was allowed to the extent of the challenge to the section 127 transfer orders. The petitioner’s assessment was directed to be conducted in Mumbai, while all rights and contentions of the parties on the merits remained open.
Cases Discussed
Pegasus Assets Reconstruction Private Limited V/S Principal Commissioner of Income Tax, Mumbai-3 & Ors. (Writ Petition No.1067 of 2022) — The Bombay High Court’s order dated 5 February 2024 was relied upon for the proposition that after completion of the assessment of C & M Farming Group, there was no requirement to transfer the assessee’s case to Nashik.
FULL TEXT OF THE JUDGMENT/ORDER OF BOMBAY HIGH COURT
1. Rule. Respondents waive service. With the consent of parties Rule made returnable forthwith, and heard finally.
2. The above Writ Petition is filed seeking the following reliefs:-
“(a) Hold, adjudge and declare that the Impugned Notices under s 153C dated 25 August 2022 for Ays 2014-15 to 2020-21 (Exhibits F-1 to F-7) are illegal, arbitrary, without jurisdiction and liable to be set aside;
b. Hold, adjudge and declare that the Impugned Order dated 6 December 2022 And Impugned Order dated 23 December 2022 for centralisation/transfer of Petitioner’s case under s 127 of the Act (Exhibit M and Exhibit N) is illegal, arbitrary, without jurisdiction and liable to be set aside;
c. Issue a writ of Certiorari or a writ in the nature of certiorari or any other appropriate writ, order or direction, quashing the Impugned Notices under s 153C dated 25 August 2022 for Ays 2014-15 to 2020-21 (Exhibits F-1 to F-7) as being wholly without jurisdiction, illegal, and arbitrary;
d. Issue a writ of Certiorari or a writ in the nature of certiorari or any other appropriate writ, order or direction, quashing the Impugned Order dated 6 December 2022 and Impugned Order dated 23 December 2022 for centralisation/transfer of Petitioner’s case under s 127 of the Act (Exhibit M and Exhibit N) as being wholly without jurisdiction, illegal and arbitrary;”
3. At the outset the learned advocate appearing on behalf of the Petitioner has only pressed prayer clause (d) of the above Writ Petition. He submitted that in the facts of the present case, the assessment of the searched person, namely, C & M Farming Group, Nashik was completed on 29th September 2021. It is on the basis of the search conducted on C & M Farming Group, Nashik that Notices under Section 153C dated 25th August 2022 for A.Y.2014-15 to A.Y.2020-21 were issued to the Petitioner. It was submitted that it is pursuant to the issuance of these notices that an order was passed on 6th December 2022 and 23rd December 2022 for centralization/transfer of the Petitioner’s case to Nashik by invoking Section 127 of the Act. It was submitted that since the assessment of the searched person, namely, C & M Farming Group, Nashik has already been completed on 29th September 2021, there was no requirement for transfer of the Petitioner’s case to Nashik as ordered in the impugned orders dated 6th December 2022 and 23rd December 2022 respectively.
4. The learned counsel for the Petitioner also brought to our attention the order passed by this Court on 5th February 2024 in the case of Pegasus Assets Reconstruction Private Limited V/S Principal Commissioner of Income Tax, Mumbai-3 & Ors. (Writ Petition No.1067 of 2022) wherein this Court has already passed an order that since the assessment of the searched person, namely, C & M Farming Group, Nashik was completed on 29th September 2021 there is no requirement of transferring the case of that Assessee to Nashik and consequently quashed the transfer order. In addition to the aforesaid, the learned counsel for the Petitioner also brought to our attention the additional affidavit filed by the Revenue dated 20th April 2024 and more particularly paragraphs 8, 9 and 10 thereof which read as under:-
“8. I say that the PAN of the Petitioner during the pendency of this Writ Petition was transferred back, restoring the status quo ante, from DCIT/ACIT Central Circle-2, Nashik to Income Tax Officer 22(3)(1) Mumbai on 08.01.2024 following the order of the Hon’ble High Court staying the order passed u/s.127(2) of the Act. Therefore, presently the PAN of the Petitioner is now with the Income Tax Officer 22(3)(1) Mumbai. The present status of the PAN as taken from ITBA is annexed herewith and marked as Exhibit-R/1.
9. It is respectfully submitted that the case of the assessee was centralized with the charge of DCIT (Central Circle)-2, Nasik in accordance with the existing laws. Therefore, it is humbly prayed that the Writ Petition be dismissed.
10. Without prejudice to what is prayed in above para 9, if the Hon’ble High Court considers that Centralization to Nasik charge may bring hardship to the assessee in making compliance towards statutory notices during proceedings u/s.153C of the Act. It is humbly prayed that the Hon’ble Court may kindly issue directions to Centralize the case in Mumbai only and the Hon’ble Court may be pleased to dispose the Writ Petition accordingly.”
(emphasis supplied)
5. The learned counsel therefore submitted that the impugned orders dated 6th December 2022 and 23rd December 2022 for centralization/transfer of the Petitioner’s case to Nashik under Section 127 of the Act be quashed and set aside.
6. Mr.Sharma, the learned counsel appearing on behalf of the Revenue did not dispute the factual position that the searched person’s assessment has in fact been completed on 29th September 2021.
7. Having heard the learned counsel for the parties, we are clearly of the view that the impugned orders dated 6th December 2022 and 23rd December 2022 for centralization/transfer of the Petitioner’s case to Nashik under Section 127 of the Act would serve no purpose. We say this because these orders were passed on the basis that a transfer is required for administrative convenience and co-ordinated investigation in the case of C & M Farming Group. Since the Assessment Order itself has been passed for the relevant assessment year in the case of C & M Farming Group on 29th September 2021, we see no reason why the Petitioner’s case should be transferred to the Nashik Commissionerate. In these circumstances, we hereby quash and set aside the impugned orders dated 6th December 2022 and 23rd December 2022 respectively.
It is directed that the assessment of the Petitioner shall be conducted in Mumbai only under the appropriate charge.
8. We clarify that all rights and contentions of the parties are kept open and we have not opined one way or the other on the merits of the matter which shall be decided in accordance with law.
9. Rule is made absolute in the aforesaid terms and the Writ Petition is also disposed of in terms thereof. However, there shall be no order as to costs.
10. This order will be digitally signed by the Private Secretary/ Personal Assistant of this Court. All concerned will act on production by fax or email of a digitally signed copy of this order.
