Case Law Details
HIGH COURT OF GUJARAT
Shree Ram Vessel Scrap (P.) Ltd.
versus
Commissioner of Income-tax-VI
SPECIAL CIVIL APPLICATION NOS. 16883, 16886, 16888 & 16896 OF 2012
JANUARY 23, 2013
JUDGMENT
Akil Kureshi, J.
These group of petitions arise out of a common background. They have been heard together and would be disposed of by this common judgment.
2. Facts are brief and virtually undisputed. The petitioners are members of the same family/group companies. They have been filing income tax returns regularly. Search operations were carried out by the income tax authorities at the premises of the petitioners on or around 17.2.2012. Assessment proceedings arising out of such search were pending before the respective Assessing Officers who are all authorities situated at Bhavnagar. Respondent Commissioner of Income Tax, Ahmedabad passed an order on 15.6.2012 under section 127(2) of the Income Tax Act, 1961 (“the Act” for short) transferring such pending assessments from Bhavnagar to Ahmedabad. Such orders were challenged by the petitioners before this Court in Special Civil Application No.11843/2012 and connected petitions. Such petitions were disposed of on 10.10.2012 on the assurance of the Revenue that Commissioner shall withdraw such order and pass such further fresh orders as may be found necessary after following the due process of law.
3. Thereupon the Commissioner issued show cause notice dated 11.10.2012 in which it was stated as under :
“At the outset, it is to intimate that the centralization order passed u/s 127(20 of the IT Act on 15th June, 2012 in your case is withdrawn. A fresh opportunity is being given to you to explain as to why your case should not be centralized at Ahmedabad for effective and coordinated investigation in your group cases. Accordingly, you are granted an opportunity to convey your objections in writing if any, within 10 days from the date of receipt of this letter. If you want to present your case personally or through your Authorized Representative, then the hearing is fixed on 30/10/2012 at 11.30 a.m. at the above mentioned address.”
4. The petitioners opposed the proposal for transfer of pending assessment cases by filing replies. In the said replies, it was contended that the assessees file their returns at Bhavnagar or Mumbai where they are regularly assessed. It would therefore, be difficult for the assessees to attend the assessment proceedings at Ahmedabad. It was also contended that there is no rationale behind transferring the cases to Ahmedabad for coordinated investigation since such investigation can as well be centralized at Bhavnagar or Mumbai. Ground for proposed transfer is therefore, unjustified. They indicated that they have no objection if the cases are centralized either at Bhavnagar or Mumbai.
5. The Commissioner however, passed his impugned order dated 12.11.2012 and transferred all the cases to Assistant Commissioner, Central Circle-1(3), Ahmedabad. In his order, he considered the objections of the assessees but did not accept them observing that the assessees are attending the cases before the Commissioner(Appeals) at Ahmedabad. There is no requirement that the assessees should have their business activities in Ahmedabad also. It was observed that income tax department does not have Central Range Office at Bhavnagar. The assessees were therefore, offered any one of the places namely, Surat, Baroda, Rajkot and Ahmedabad where the department has centralized offices. The authorized representatives of the assessees however, did not accept any such other alternative places. The Commissioner further observed that it is necessary that group cases are centralized at one place in Gujarat where the department has offices under Central Range for carrying out coordinated investigations as no centralization proposal from Mumbai office has been received in respect of this group of assessees. It is this fresh order passed by the Commissioner which the petitioners have challenged in these petitions.
6. Learned senior counsel Shri Saurabh Soparkar appearing for the petitioners questioned the order raising following contentions :
(1) The reason indicated in the show cause notice for transferring of the cases namely, “for effective and coordinated investigation” is too vague and general. It does not specify the grounds on which the department desired to transfer the cases. In absence of any opportunity to meet with such grounds, requirement of hearing cannot be stated to have been fulfilled.
(2) In any case, such reason is not sufficient permitting the department to transfer the cases. He submitted that this is the only ground on which the cases have been transferred by the Commissioner. Counsel further submitted that the cases could have been centralized either at Bhavnagar or Mumbai where the petitioners file their returns having their establishments and businesses.
(3) Counsel lastly submitted that none of the assessees were assessed at Ahmedabad. All the assessees were filing their regular returns and were being assessed either at Bhavnagar or Mumbai. Transfer of cases at places where none of the assessees have their establishments, would be wholly impermissible.
(4) In support of his contention that the reason indicated in the show cause notice and adopted in the final order for transferring the cases namely “for effective and coordinated investigation” is not sufficient to exercise powers under section 127(2) of the Act, counsel relied on following decisions :
(1) Ajantha Industries v. CBDT [1976]102 ITR 281(SC).
(2) Naresh Kumar Agarwal v. Union of India [2010] 320 ITR 361(Cal.)
(3) Anil Kumar Kothari v. Union of India [2010] 191 Taxman 203 (Gau).
(4) Vijayasanthi Investments (P.) Ltd. v. Chief CIT [1991] 187 ITR 405
(5) Power Controls v. CIT [2000] 241 ITR 807.
7. On the other hand, learned counsel Mrs. Mauna Bhatt for the respondent opposed the petitions contending that the statutory requirements as contained in section 127(2) of the Act were followed before passing of the impugned order. Opportunity of hearing was granted to the petitioners. Their objections were considered and disposed of by a speaking order. Reasons were recorded in the order itself. Such order was duly communicated. She therefore, submitted that all the requirements for exercise of power under section 127(2) of the Act as interpreted by various Courts were fully complied with.
7.1 Counsel submitted that the assessments which have been transferred arise out of search operations in connection with group of persons/companies belonging to the same family/ group. It was therefore, necessary that such assessments be consolidated before a single Assessing Officer. She submitted that all assessments arising out of search operations are placed at the disposal of centralized wing of the department. This was done as per instructions contained in CBDT circular dated 17.9.2008. She submitted that in the said circular it is provided that :
“Instances have come to notice of the Board that Search cases are not being centralized promptly, thereby causing delay in initiation of the search assessment proceedings, deferment of payment of taxes and finally resulting in completion of search assessments at the fag end of the limitation period.
2. In super session of existing Board’s instruction no. 8/2002 dated 14th August, 2002 on above subject, I am directed to inform that following procedure for early centralization of search cases should be followed :
(c) In regions where there is no central circle or the group is assessed in more than one CCIT region or involving more than one CIT charges, then the DGIT(Inv.) should identify the CIT charge in which the group searched will be centralized in consultation with the CCIT in whose jurisdiction the main case of the group are assessed to tax within seven days of initiation of search.”
7.2 Counsel submitted that the reasons stated in the show cause notice for transferring the cases cannot be stated to be vague or general. The final order clarified that the cases were being transferred at Ahmedabad since it was necessary that group cases are centralized at one place in Gujarat. Since the department did not have a Central Circle office in Bhavnagar, the cases were transferred at Ahmedabad after giving option to the assessees if they so preferred that the cases be transferred either at Surat, Baroda, Rajkot or Ahmedabad.
7.3 In support of her contention that the reason “for effective and coordinated investigation” cannot be stated to be insufficient or vague or general, counsel relied on the following decisions :
(1) General Exporters v. CIT [2000] 241 ITR 845
(2) Arti Ship Breaking v. DIT (Investigation) [2000] 244 ITR 333
(3) Redwood Hotel (P.) Ltd. v. Chief CIT [2003] 259 ITR 191
(4) Virendra Kumar Jain v. CIT [2006] 283 ITR 541
(5) Trimurti Fragrances P. Ltd. v. CIT [2006] 283 ITR 547
(6) Rimjhim Ispat Ltd. v. CIT [2007] 164 Taxman 90(All.)
(7) Charan Pal Singh v. CIT [2008] 307 ITR 132(Punj. & Har.).
(8) J.R. Tantia Charitable Trust v. Dy. CIT [2011] 203 Taxman 348
8. Having thus heard learned counsel for the parties, we may peruse the record more closely. In the show cause notice dated 11.10.2012, the Commissioner conveyed to the petitioners that opportunity is being given to explain why your cases should not be centralized at Ahmedabad for effective and coordinated investigation in the group cases. The petitioners raised objections and contended that none of the petitioners have establishments at Ahmedabad. They are assessed at Bhavnagar or Mumbai. Cases can therefore, be consolidated at one of those two places but not at Ahmedabad. It would be inconvenient for the petitioners to travel to Ahmedabad regularly. Such objections were considered by the Commissioner but rejected in the speaking order dated 12.11.2012. In the said order he recorded and considered the objections in the following manner :
“5. I have considered the objections of the assessees. The main objection of this group of assessees is that since the business of the assessees is either at Bhavnagar or Mumbai and they do not have any business activities at Ahmedabad, therefore, their cases may be centralized either at Bhavnagar or Mumbai. This request of the assessees cannot be accepted particularly when the appeal matters before CIT(A) and higher authorities are being attended by them at Ahmedabad only. For this purpose there is no requirement that the assessees should have their business activities in Ahmedabad also. Further the IT department, Gujarat does not have office under Central Ranges at Bhavnagar. Therefore, the Authorized Representatives was asked to chose any one of the places namely, Surat, Baroda, Rajkot and Ahmedabad where the IT department have Central Circle Offices. However, it was informed by the A.R. that none of the places would suit their assessees. It is necessary that the group cases are centralized at one place in Gujarat where the department has offices under Central Range for carrying out coordinated investigations as no centralization proposal from Mumbai office has been received in respect of this group of assessees. In view of the above, the objections of the A.R. Are over-ruled and it is ordered that their cases be centralized with the ACIT, Central Circle-1(3), Ahmedabad. Accordingly, following jurisdictional order is being passed…”
9. From the above, it can be seen that the reason for transfer of cases from Bhavnagar to Ahmedabad was that for group cases arising out of common search operations, they were required to be consolidated. Further, in view of the fact that the assessments arose out of search operations, they were required to be centralized and placed at the disposal of central wing of the Income-tax department. Since Bhavnagar did not have such wing, they were under proposal for transfer at Ahmedabad. During the course of hearing, the authorized representatives of the petitioners was offered that the cases could be transferred either at Surat Baroda or Rajkot. The authorized representatives however, did not accept such alternative. It was thereupon that the Commissioner proceeded to finalize the proposal contained in the show cause notice to transfer all the cases at Ahmedabad.
10. Question is does this order suffer from any legal infirmity? This issue we need to judge from the angle of sufficient opportunity being given and sufficiency of reasons on which transfer was effected.
11. Section 120 of the Act pertains to jurisdiction of the Income Tax authorities. Section 124 pertains to jurisdiction of the Assessing Officer. Ordinarily, Assessing Officers assume jurisdiction to frame assessment in terms of provisions made in these sections.
12. Section 127 of the Act pertains to power to transfer cases and reads as thus :
“127. Power to transfer case.- (1) The Director General or Chief Commissioner or Commissioner may, after giving the assessee a reasonable opportunity of being heard in the matter, wherever it is possible to do so, and after recording his reasons for doing so, transfer any case from one or more Assessing Officers subordinate to him (whether with or without concurrent jurisdiction) to any other Assessing Officer or Assessing Officers (whether with or without concurrent jurisdiction) also subordinate to him.
(2) Where the Assessing Officer or Assessing Officers from whom the case is to be transferred and the Assessing Officer or Assessing Officers to whom the case is to be transferred are not subordinate to the same Director General or Chief Commissioner or Commissioner,-
(a) where the Directors General or Chief Commissioners or Commissioners to whom such Assessing Officers are subordinate are in agreement, then the Director General or Chief Commissioner or Commissioner from whose jurisdiction the case is to be transferred may, after giving the assessee a reasonable opportunity of being heard in the matter, wherever it is possible to do so, and after recording his reasons for doing so, pass the order;
(b) where the Directors General or Chief Commissioners or Commissioners aforesaid are not in agreement, the order transferring the case may, similarly, be passed by the Board or any such Director General or Chief Commissioner or Commissioner as the Board may, by notification in the Official Gazette, authorize in this behalf.
(3) Nothing in sub-section (1) or sub-section (2) shall be deemed to require any such opportunity to be given where the transfer is from any Assessing Officer or Assessing Officers (whether with or without concurrent jurisdiction) to any other Assessing Officer or Assessing Officers (whether with or without concurrent jurisdiction) and the offices of all such officers are situated in the same city, locality or place.
(4) The transfer of a case under sub-section (1) or sub-section (2) may be made at any stage of the proceedings, and shall not render necessary the re-issue of any notice already issued by the Assessing Officer or Assessing Officers from whom the case is transferred.
Explanation.- In section 120 and this section, the word “case”, in relation to any person whose name is specified in any order or direction issued there under, means all proceedings under this Act in respect of any year which may be pending on the date of such order or direction or which may have been completed on or before such date, and includes also all proceedings under this Act which may be commenced after the date of such order or direction in respect of any year.”
Section 127(2) of the Act empowers the Director General or Chief Commissioner or the Commissioner as the case may be to transfer a case from one Assessing Officer to another after giving the assessee a reasonable opportunity of being heard wherever it is possible to do so and after recording his reasons for doing so by passing an order. The requirement of exercise of power is thus an opportunity of hearing wherever it is possible to do so, recording of reasons and passing of an order. In case of Ajantha Industries (supra), the Supreme Court interpreted such requirement as to also communication of the reasons recorded to the assessee. In such decision, it was held that while making an order for transfer under section 127 of the Act, requirement of recording reasons is a mandatory direction, non communication of the same to assessee would not be saved by showing that reasons existed in file although not communicated to the assessee.
13. In the present case, the Commissioner issued show notice indicating tentative reasons on which he proposed transfer of the cases. The petitioners were allowed to raise their objections. Their authorized representative was also heard in person. After undertaking such steps, he passed a speaking order disposing of the objections. Such order was communicated to the petitioners. Insofar as procedural requirements of section 127(2) of the Act are concerned, thus stood satisfied. It is not even the case of the petitioners that opportunity of hearing was not given or that the reasons were not communicated.
14. Case of the petitioners however, is somewhat different. They contended that the expression “for effective and coordinated investigation” used in the show cause notice being too general and vague would not satisfy requirement of putting the petitioners to notice why cases were under proposal for transfer. They further contended that in any case such reason is not sufficient to permit the transfer. In this context, we may advert to the authorities cited by both the sides.
(1) In case of Naresh Kumar Agarwal (supra), learned Single Judge of Calcutta High Court opined that expression “coordinated investigation and assessment” used in the show cause notice would not be sufficient as the assessee should be intimated about the reasons in a comprehensive manner in order to enable him to make effective representation.
(2) In case of Anil Kumar Kothari(supra), learned Single Judge of Gauhati High Court referring to Supreme Court judgment in case of Ajantha Industries (supra) and Naresh Kumar Agarwal (supra) held and observed as under :
“13. Section 127 mandats that assessee must be given a reasonable opportunity of being heard while exercising the power to transfer cases. Although a rider “wherever it is possible to do so” is also there, it is not the case of the respondents that it is not possible to do so. Further, the order is to be passed after recording the reasons for doing so. Apart from the fact that the petitioner was not provided with any opportunity of being heard in the matter, the reasons assigned in the order dated 24-7-2007 which is “administrative convenience and for co-ordinating effective investigation” also cannot be said to be the reasons as envisaged in section 127(1) of the Act. It is in this context, Mr. Kapoor, learned counsel for the petitioner has referred to the aforesaid two decisions rendered by Andhra Pradesh High Court and Calcutta High Court. In both the decisions, the High Courts have emphasized on the need to assign detailed reasons while holding that it is not sufficient merely to show in the notice that the transfer is proposed to “facilitate the detail and co-ordinated investigation”. In the Andhra Pradesh High Court decision the said quoted portion, was assigned to be the reasons, which did not find favour of the court.”
(3) In case of Vijayasanthi Investments (P.) Ltd. (supra), Division Bench of Andhra Pradesh High Court observed as under :
“12. From the aforesaid decisions, it is clear that, in the matter of the transfer of a case under section 127 of the Act, it is necessary that the authority which proposes to transfer the case must, wherever it is possible to do so, give the assessee a reasonable opportunity of being heard with a view to enable him to effectively show cause against the proposed transfer. The notice must also propose to give a personal hearing. It is also necessary to mention if the notice the reasons for the proposed transfer so that the assessee could make an effective representation with reference to the reasons set out. It is not sufficient merely to say in the notice that the transfer is proposed “to facilitate detailed and co-ordinated investigation.” The reason cannot be vague and too general in nature but must be specific and based on material facts. It is again not merely sufficient to record the reasons in the file but it is also necessary to communicate the same to the affected party.”
(4) In case of Power Controls (supra), Division Bench of Delhi High Court struck down the transfer of assessment proceedings on the ground that the reasons recorded in the file were not communicated to the assessees. While doing so, the Court clarified that they were not holding that administrative convenience or coordinated investigation cannot be a valid ground for transferring the cases belonging to a particular group to a single Assessing Officer. We may reproduce the observations of the Court in this context :
“19. We are, therefore, of the view that the petitioners have not been granted adequate opportunity to being heard before their cases were ordered to be transferred from Delhi of Faridabad. We may, however, clarify at this stage that we are not holding for a moment that “administrative convenience” and/or “coordinated investigation” cannot be a valid ground for transferring the cases belonging to a particular group to a single assessing officer. It would be a good ground for transfer but the requirement of law, which has to be observed before transferring the assessee’s case from one officer to another, is that the assessee must be appraised of the basic and broad facts, which, in the opinion of the authorities concerned, necessitate coordinated investigation by a single assessing officer, to enable the assessee to put forth his viewpoint on the issue so that a considered decision is taken to prevent unnecessary harassment to the assessee and at the same time the object of the transfer is achieved, which of course is the prime consideration in such like matters.”
From the above it can be seen that in the above decisions Courts have taken a view that the reason for coordinated and effective investigation or similar such expression would not be a sufficient ground for transferring the assessment proceedings. We may record that Calcutta High Court in case of Naresh Kumar Agarwal (supra) had opined that such ground indicated in the show cause notice would not satisfy the requirement of hearing being a vague and general ground. On the other hand Gauhati High Court in case of Anil Kumar Kothari (supra) concluded that such reason for passing the transfer order would be vitiated since such ground would not be sufficient to transfer the cases. Delhi High Court in case of Power Controls (supra) however, did not approve such logic.
15. We may now advert to the decisions taking a different view.
(1) In case of Virendra Kumar Jain (supra), Division Bench of Allahabad High Court was dealing with assessment proceedings arising out of search operation involving a firm/ group of companies and their partners/Directors while proposing to transfer the cases from Kanpur to Delhi on the ground that it was necessary for coordinated and meaningful investigation. Such transfers were challenged by the parties affected. Allahabad High Court rejected the petitions making following observations :
“6. In the case of Peacock Chemicals P. Ltd. v. CIT and Mahesh Chand Vishan Swarup v. CIT (Bench presided over by B.P.J. Reddy), it is consistently held that the paramount consideration for transfer should be public interest and the reason to have co-ordinated investigation in the matter of one family members or group of company/ firm is a good ground. In the instant case, the authority has recorded its satisfaction and given good reason which cannot be faulted.
7. The contention of the petitioner that the Department should have furnished information with them (as claimed by them in their reply) is not at all sound as the Department cannot be compelled or required at the initial stage to disclose the “material” or “information” as it may “embarrass or prejudice” the assessment. The legal position is crystal clear and settled by a catena of the decisions of this Court and the apex court on this issue. this Court cannot go into the “sufficiency” of the reasons : There is no pleading that the impugned order of transfer is due to “bias” or “mala fide” or otherwise “arbitrary”. The reasons indicated in the impugned order cannot be said to be irrelevant. Reference may be made to the decision of this Court in the case of Madhav Sharan Agrawal v. CIT We may refer to our judgment rendered today, i.e., February 23, 2006 in Writ Petition No. 355 of 2005 : Trimurti Fragrances (P.) Ltd v. CIT [2006] 283 ITR 547, wherein we had an occasion to deal with this aspect in detail.”
(2) In case of Trimurti Fragrances (P.) Ltd. (supra), Division Bench once again upheld the transfer of assessment proceedings on the ground that for coordinated investigation, it was necessary to do so. It was observed as under :
“23. In the instant case, this Court takes notice of the fact that otherwise also the distance between Kanpur and Delhi can be covered within a few hours and that the persons involved are already having their business transactions and activities between Kanpur and Delhi. The inconvenience projected by the assessee in question cannot be said to be of that magnitude which could prevail over other relevant considerations.
24. In view of the above, we find that there has been sufficient compliance with principles of natural justice and the impugned order of transfer cannot be said to be arbitrary or devoid of any rationale or in any way based on irrelevant considerations. It is to be noted that there is no case of the petitioner that the impugned order of transfer suffers from bias or mala fides.
25. In that view of the matter, the impugned order of transfer dated February 22, 2005/annexure 3 to the writ petition does not suffer from any manifest error, apparent on the face of record, warranting the interference of this Court under Article 226 of the Constitution of India.”
(3) In case of Charan Pal Singh (supra), Division Bench of Punjab and Haryana High Court examined the legality of an order transferring the cases from Baroda to Chandigarh on the ground that search and seizure operations were carried out on the business premises of the company and its Directors, some of the persons of the group were being assessed at Chandigarh and therefore, for centralization of these cases, it was vital from the point of view of coordinated investigation in the group to protect the interest of the Revenue, it was necessary to transfer the cases. When such order was challenged, Punjab and Haryana High Court rejected the petition making following observations :
“9. Undoubtedly, the order of transfer of assessment file of an assessee to a far off place puts the assessee in a great inconvenience and ought not to be ordered unless necessary in public interest to safeguard revenue by centralization of cases for co-ordinated investigation. Such an order cannot be passed arbitrarily and can be justified only if there are valid reasons. The principles of natural justice as well as the statutory provision require that the reasons must be recorded in writing in the order itself and disclosed to the assessee to enable the assessee to take its remedies against such an order. At the same time, the power conferred for transfer cannot be interfered with having regard to the object for which such power is conferred. The impugned order records the reason, that is need for centralization for effective and co-ordinated investigation. The nexus between the petitioner and the Baroda company cannot be held to be non-existent. The decisions relied upon by learned counsel for the Revenue support the submission that if it was necessary for co-ordinated and effective investigation, transfer under section 127 of the Act could be justified. In the present case, there is nothing to show that there was any extraneous consideration or that reasons given were non existent or irrelevant.”
(4) In case of General Exporters (supra), learned Single Judge of Madras High Court held that transfer of assessment cases for coordination of investigation is a good ground. It was a case where the assessment proceeding was transferred from Madras to New Delhi. Learned Judge observed as under :
“As noticed above, the very object of transfer is to achieve the object of the Act. If coordinated investigation is necessary for the purpose of proper assessment, prevention of evasion of tax, collection of tax and other relevant matters, then the proper and coordinated investigation is a good ground for transfer of the case. It cannot be laid down as a proposition of law that the said ground cannot be a valid ground for transfer. In a given case, the same may not be a good ground for transfer, on being noticed that the coordinated investigation in no way will help to achieve the object of the Act. No doubt, transfer of a case from the place where the assessee has its place of residence of business to another place causes inconvenience but if it is necessary in the public interest, then the transfer on the ground of proper and coordinated investigation cannot be held to be impermissible in law. I find myself in disagreement with the view that coordinated or centralized investigation will not be a ground of transfer under section 127 of the Act. I am in agreement with the view taken by the different High Courts, as mentioned above, holding that proper and coordinated investigation would be relevant ground to exercise the power under section 127 of the Act.”
(5) In case of Redwood Hotel (P) Ltd. (supra), learned Single Judge of Kerala High Court upheld transfer of assessments passed under section 127(1) of the Act observing that “Of-course it is for the Department to consider consolidation of all the files of the firms and the companies and the partners and the directors, including those who are now assessed at Calicut and send it to the appropriate station. This is a matter for consideration by the Department. It was further observed that “However, I make it clear that there is no scope for interference by this Court in these matters which are purely administrative in nature; except when there is allegation of mala fides or want of jurisdiction. No assessee has a vested right to have his assessment decided by any officer or at any place. It is for the head of the department to allocate work among the officers under him subject to the Act and Rules.
(6) In case of J.R. Tantia Charitable Trust (supra), learned Single Judge of Rajasthan High Court upheld the order of transfer of assessment from Sriganganagar to Bikaner office for coordinated investigation and administrative convenience. It was observed as under :
“10. In the opinion of this Court, while it is true that Section 127 of the Act requires the competent authority to record his reasons for transferring any case from one Assessing Authority to another, such reasons apparently appear to have been recorded and communicated to the petitioner vide Annex-3 dated 10.06.2009, namely, that such transfer of case from Sriganganagar to Bikaner was required for coordinated investigation as the petitioner trust was a case closely connected with the search, since the search was conducted under the warrant of authorization under Section 132 of the Act purportedly issued in the name of three individuals (S/Sh. Shyam Sunder Tantia, Jagdish Rai Tantia and Anil Tantia). There is no dispute from the side of the petitioner-Trust that these persons against whom warrant under Section 132 of the Act was issued and executed, a search was carried-out at their place, are family members and are related with the petitioner-Trust being its trustees. On the other hand, Revenue has contended that even name of petitioner-Trust was mentioned in the search warrants. Therefore, it cannot be said that there was no reasons for transfer of the proceedings from Sriganganagar to Bikaner. Adequate opportunity was given to the petitioner to raise its objections against such transfer, but except filing a preliminary reply, Annex-2 dated 02.06.2009, in which the assessee really asked for further reasons in order to enable him to file appropriate objections, no such objections were really filed by it even though the assessee was specifically called upon to do so vide Annex-3 dated 10.06.2009 in which reasons for such transfer were even communicated to the assessee- Trust.
11. Therefore, in absence of any objection, order of transfer (Annex-4) under Section 127 of the Act, passed by Commissioner of Income Tax on 07.07.2009, cannot be held to be falling foul with the provisions of Section 127 (1) of the Act. In fact, under the said order, all the proceedings of all the family members of person searched under Section 132 of the Act of 1996 including, the petitioner-Trust, whose name was mentioned in such warrants under Section 132 of the Act also and, therefore, all connected cases were transferred from Sriganganagar to Bikaner to one Assessing Authority, and as many as 15 cases of the said family, were transferred by the learned Commissioner of Income Tax from Sriganganagar to Bikaner for coordinated investigation and administrative convenience. It is not in dispute that said Commissioner had power to transfer the proceedings of assessment from one range to another under his charge as per the provisions of Section 127 of the Act. Therefore, the said order under Section 127 of the Act is found to be perfectly valid and legal.”
(7) In case of Rimjhim Ispat Ltd. (supra), Allahabad High Court held and observed as under :
“23. From the aforesaid decisions the following position emerges:
The assessee has to be assessed by an officer who has been vested with jurisdiction over an area where the persons carries on a business or profession under Section 124(1) of the Act. The exigencies of the tax collection may require the Income Tax Authorities to transfer the case of a particular assessee from the assessing officer of the area within which he resides or carries on business to another Income Tax officer under subsections (1) and (2) of Section 127 of the Act. The order of transfer is not a material infringement of the assessees’ rights. Before transferring the case from one officer to another a notice has to be given to the assessee. The notice should briefly state the reasons why it is proposed to transfer the case. Before ordering transfer reasons have to be recorded and it has to be communicated to the assessee. The officer has to apply his mind to the materials on record or information available while passing an order, of transfer.”
(8) We may also notice that before this Court in case of Arti Ship Breaking (supra) transfer of pending assessments came up for consideration. The thrust of the argument of the petitioners in the said cases was that the reasons though may have been recorded by the Commissioner for passing the order of transfer, same were not communicated to the petitioner. In view of decision of the Supreme Court in case of Ajantha Industries (supra), the order would be bad in law. While not accepting such a contention, this Court in the context of reasons recorded for effecting the transfer observed as under :
“We have gone through the record and we have also perused the reasons which have been given by the concerned authority for transferring the case of the petitioner under sec. 127 of the Act. It is clear that the case of the petitioner has been transferred from Bhavnagar to Rajkot for administrative reasons. It has been submitted by learned advocate Shri Naik and it has been stated in the affidavit filed by the Dy. Commissioner of Income Tax (Central Circle-I), Rajkot, that after completion of the work with regard to the search, the work pertaining to assessment was handed over to the Office of the Commissioner of Income Tax (CC-I). In the instant case, the search was carried out at Bhavnagar and as there is no office of the CIT (CC) at Bhavnagar, for administrative reasons, it was thought it proper by the transferring authority to transfer the case of the petitioner assessee from Bhavnagar to the office of the Dy. Commissioner of Income Tax (CC-I), Rajkot. The said administrative reason appears to be just and reasonable. Looking to the said administrative reason which has been also incorporated in the reasons recorded by the concerned Commissioner, we do not think that this court should interfere with the said decision with regard to the transfer.”
We are conscious that observations of the Court in the said case cannot be seen as laying down ratio since this issue was not directly at issue before the Bench. Nevertheless, the Bench did make certain observations which have considerable relevance.
16. From the above it can be seen that there is cleavage of opinion between different Courts on the issue. Some of the Courts have taken a view that indication of reason of “for effective and coordinated investigation” or the like would not be sufficiently clear. If such reasons are indicated in the show cause notice, would not put the assessee to sufficient notice on the grounds on which the competent authority proposed to transfer the cases. Some Courts have held that such reasons for transferring the case would not be sufficient. On the other hand several Courts of the country have taken a view that such reasons are sufficient to permit transfer of cases.
17. We would therefore, like to express our opinion on the issue.
18. Section 127 of the Act, as already noticed, pertains to power to transfer cases. Sub-section(1) empowers the Director General, Chief Commissioner or the Commissioner after giving the assessee a reasonable opportunity of being heard wherever it is possible to do so and after recording his reasons, transfer any case from one more or more Assessing Officers subordinate to him to any other Assessing Officer or Assessing Officers also subordinate to him. Like-wise, under sub-section(2) of section 127 after following similar procedural requirements, it is open for the Director General, Chief Commissioner or Commissioner to transfer a case from one Assessing Officer to another who is not subordinate to him in agreement with the authority to whom he may be subordinate. Sub-section(3) of Section 127 provides that nothing contained in sub-section(1) or sub-section(2) shall be deemed to require giving of any such opportunity where the transfer is from any Assessing Officer to another and offices of all such officers are situated in the same city, locality or place. Sub-section(4) of Section 127 provides that the transfer of a case under sub-section(1) or sub-section(2) may be made at any stage of the proceedings and shall not render necessary the re-issuance of any notice already issued by the Assessing Officer from whom the case is transferred.
19. Exercise of power under sub-section(1) and sub-section(2) of the Act comes with certain procedural requirements namely, of granting a reasonable opportunity of being heard in the matter wherever it is possible to do so, of recording of reasons for passing such order and as provided by the Supreme Court in Ajantha Industries (supra) communicating such reasons also to the assessee. Subject to fulfillment of such procedural requirements, the authority under section 127 enjoys considerable discretion while exercising the power contained in sub-section (1) or sub-section (2) thereof. Such discretion of-course has to be exercised for achieving the public purpose and not for any arbitrary or irrelevant consideration. On the other hand, it can also be seen that transfer of a pending case from one Assessing Officer to another outside of a city, locality or place is likely to cause considerable inconvenience to an assessee. Therefore, even though an assessee may not have a vested right to insist that his assessment be completed only at one place or by a particular Assessing Officer, nevertheless, the reasons for transfer must be weighty enough to off-set against such personal inconvenience of an assessee. In exercise of power under section 127 thus we are concerned with larger public interest on one hand and personal inconvenience on the other. However, as long as such powers are exercised bona fide, for public purpose and in the interest of Revenue, the role of the Court to dissect such reasons and to come to a different conclusion would be extremely limited. It is by now well settled that judicial review against the administrative order in exercise of writ jurisdiction, the Court is concerned with the decision making process and not the final decision itself. Unless the reasons which prompted the competent authority to transfer the case can be stated to be wholly irrelevant or arbitrary, the Court would not interfere with such reasons. Of-course an order of such nature can and need to be quashed if it is demonstrated that same is passed either without jurisdiction or is actuated by mala fide either in fact or in law.
20. In case of State of U.P. v. Johri Mal AIR 2004 SC 3800, Supreme Court observed as under :
“28. The Scope and extent of power of the judicial review of the High Court contained in Article 226 of the Constitution of India would vary from case to case, the nature of the order, the relevant statute as also the other relevant factors including the nature of power exercised by the public authorities, namely, whether the power is statutory, quasi judicial or administrative. The power of judicial review is not intended to assume a supervisory role or done the robes of omnipresent. The power is not intended either to review governance under the rule of law nor do the courts step into the areas exclusively reserved by the suprema lex to the other organs of the State. Decisions and actions which do not have adjudicative disposition may not strictly fall for consideration before a judicial review court. The limited scope of judicial review succinctly put are :
(i) Courts, while exercising the power of judicial review, do not sit in appeal over the decisions of administrative bodies;
(ii) A petition for a judicial review would lie only on certain well-defined grounds.
(iii) An order passed by an administrative authority exercising discretion vested in it, cannot be interfered in judicial review unless it is shown that exercise of discretion itself is perverse or illegal.
(iv) A mere wrong decision without anything more is not enough to attract the power of judicial review; the supervisory jurisdiction conferred on a Court is limited to seeing that Tribunal functions within the limits of its authority and that its decisions do not occasion miscarriage of justice.
(v) The Courts cannot be called upon to undertake the Government duties and functions. The Court shall not ordinarily interfere with a policy decision of the State. Social and economic belief of a Judge should not be invoked as a substitute for the judgment of the legislative bodies. (See Ira Munn v. State of Ellinois, 1876 (94) US (Supreme Reports) 113)
30. It is well-settled that while exercising the power of judicial review the Court is more concerned with the decision making process than the merit of the decision itself. In doing so, it is often argued by the defender of an impugned decision that the Court is not competent to exercise its power when there are serious disputed questions of facts; when the decision of the Tribunal or the decision of the fact finding body or the arbitrator is given finality by the statute which governs a given situation or which, by nature of the activity the decision maker’s opinion on facts is final. But while examining and scrutinizing the decision making process it becomes inevitable to also appreciate the facts of a given case as otherwise the decision cannot be tested under the grounds of illegality, irrationality or procedural impropriety. How far the court of judicial review can re appreciate the findings of facts depends on the ground of judicial review. For example, if a decision is challenged as irrational, it would be well-nigh impossible to record a finding whether a decision is rational or irrational without first evaluating the facts of the case and coming to a plausible conclusion and then testing the decision of the authority on the touch-stone of the tests laid down by the Court with special reference to a given case. This position is well settled in Indian administrative law. Therefore, to a limited extent of scrutinizing the decision making process, it is always open to the Court to review the evaluation of facts by the decision maker.”
In case of State of N.C.T. of Delhi v. Sanjeev alias Bittoo AIR 2005 SC 2080, the Court observed as under :
“15. One of the points that falls for determination is the scope for judicial interference in matters of administrative decisions. Administrative action is stated to be referable to broad area of Governmental activities in which the repositories of power may exercise every class of statutory function of executive, quasi-legislative and quasi-judicial nature. It is trite law that exercise of power, whether legislative or administrative, will be set aside if there is manifest error in the exercise of such power or the exercise of the power is manifestly arbitrary (See State of U.P. and Ors. v. Renusagar Power Co. and Ors. , AIR (1988) SC 1737. At one time, the traditional view in England was that the executive was not answerable where its action was attributable to the exercise of prerogative power. Professor De Smith in his classical work “Judicial Review of Administrative Action” 4th Edition at pages 285-287 states the legal position in his own terse language that the relevant principles formulated by the Courts may be broadly summarized as follows. The authority in which discretion is vested can be compelled to exercise that discretion, but not to exercise it in any particular manner. In general, discretion must be exercised only by the authority to which it is committed. That authority must genuinely address itself to the matter before it; it must not act under the dictates of another body or disable itself from exercising discretion in each individual case. In the purported exercise of its discretion, it must not do what it has been forbidden to do, nor must it do what it has not been authorized to do. It must act in good faith, must have regard to all relevant considerations and must not be influenced by irrelevant considerations, must not seek to promote purposes alien to the letter or to the spirit of the legislation that gives it power to act, and must not act arbitrarily or capriciously. These several principles can conveniently be grouped in two main categories: (i) failure to exercise a discretion, and (ii) excess or abuse of discretionary power. The two classes are not, however, mutually exclusive. Thus, discretion may be improperly fettered because irrelevant considerations have been taken into account, and where an authority hands over its discretion to another body it acts ultra vires.
16. The present trend of judicial opinion is to restrict the doctrine of immunity from judicial review to those classes of cases which relate to deployment of troupes, entering into international treaties, etc. The distinctive features of some of these recent cases signify the willingness of the Courts to assert their power to scrutinize the factual basis upon which discretionary powers have been exercised. One can conveniently classify under three heads the grounds on which administrative action is subject to control by judicial review. The first ground is ‘illegality’ the second ‘irrationality’, and the third ‘procedural impropriety’. These principles were highlighted by Lord Diplock in Council of Civil Service Unions v. Minister for the Civil Service, [1984] 3 All. ER. 935, (commonly known as CCSU Case). If the power has been exercised on a non-consideration or non- application of mind to relevant factors, the exercise of power will be regarded as manifestly erroneous. If a power (whether legislative or administrative) is exercised on the basis of facts which do not exist and which are patently erroneous, such exercise of power will stand vitiated. (See Commissioner of Income-tax v. Mahindra and Mahindra Ltd., AIR (1984) SC 1182. The effect of several decisions on the question of jurisdiction has been summed up by Grahame Aldous and John Alder in their book “Applications for Judicial Review, Law and Practice” thus:
“There is a general presumption against ousting the jurisdiction of the Courts, so that statutory provisions which purport to exclude judicial review are construed restrictively. There are, however, certain areas of governmental activity, national security being the paradig, which the Courts regard themselves as incompetent to investigate, beyond an initial decision as to whether the government’s claim is bona fide. In this kind of non-justiciable area judicial review is not entirely excluded, but very limited. It has also been said that powers conferred by the Royal Prerogative are inherently unreviewable but since the speeches of the House of Lords in council of Civil Service Unions v. Minister for the Civil Service this is doubtful. Lords Diplock, Scaman and Roskil appeared to agree that there is no general distinction between powers, based upon whether their source is statutory or prerogative but that judicial review can be limited by the subject matter of a particular power, in that case national security. May prerogative powers are in fact concerned with sensitive, non-justiciable areas, for example, foreign affairs, but some are review able in principle, including the prerogatives relating to the civil service where national security is not involved. Another non-justiciable power is the Attorney General’s prerogative to decide whether to institute legal proceedings on behalf of the public interest.”
17. (Also see Padfield v. Minister of Agriculture, Fisheries and Food, (LR (1968) AC 997).
18. The Court will be slow to interfere in such matters relating to administrative functions unless decision is tainted by any vulnerability enumerated above; like illegality, irrationality and procedural impropriety. Whether action falls within any of the categories has to be established. Mere assertion in that regard would not be sufficient.”
21. In the present case, we notice that that petitioners belonged to the same family or group. They were subjected to common search operation. Their assessments were therefore, under proposal for transfer. A show cause notice was issued to all of them in which the Commissioner called upon them to explain why the cases should not be centralized at Ahmedabad for effective and coordinated investigation. After considering their objections and permitting the oral submissions by the authorized representative, the Commissioner passed the order transferring the cases on the ground that cases were required to be centralized. Since Bhavnagar did not have Central Range Office, they could be transferred at Ahmedabad. Their request that cases be consolidated at Bhavnagar or Mumbai was considered but not accepted. They were instead offered alternative places for transfer of cases within the jurisdiction of Surat, Baroda or Rajkot Office. They did not accept the offer. It was thereupon that the Commissioner proceeded to finalize his proposed transfer of cases from Bhavnagar to Ahmedabad.
22. We do not find that the Commissioner committed any error either in law or in facts. Reason for transfer was clearly indicated in the show cause notice namely, for centralization of cases and for effective and coordinated investigation. Such reasons were further elaborated while dealing with and disposing of the objections of the petitioners in the final order of the transfer. Before doing so, the authorised representative of the petitioners was offered three other alternatives Rajkot, Baroda and Surat where the department had centralized wing. We do not find that the reasons either lacked clarity or sufficiency. When it is pointed out that several places of the company were subjected to common search operation, it is but natural that it would be in the interest of Revenue and perhaps also in the interest of the assessees that cases be consolidated and be placed before one single Assessing Officer. This would avoid duplication of collection of evidence and assessment of evidence. This would also avoid conflict of opinions. The reason that being search cases they had to be placed before a centralized circle office also cannot be stated to be irrelevant. The department for internal convenience and efficient functioning, if has created a special branch for dealing with search cases and has decided to conduct assessments of such cases under such wing, surely assessee cannot have any objection to the same. Assessee has no right in law to insist that his case be kept out of consideration of such branch. Assessees were offered alternative of placing their cases either at Rajkot, Baroda or Surat. It is not even suggested before us that such offer was not made. Under the circumstances we do not find any infirmity in the orders under challenge.
23. We therefore side with the school of thought that the reason “for effective and co-ordinate investigation” for transfer of assessment cases is neither vague or ground not insufficient. Particularly in the present case when through show cause notice and during hearing of such notices, it was clearly brought to the notice of the assessees the need for transfer of cases, no case for interference is made out. Learned counsel Shri Soparkar submitted that all the judgments taking contrary view pertain to cases which are transferred from one place to another where at-least one assessee is being assessed. This to our mind is not the relevant factor. It may be a factual aspect common to all cases. None of the decisions is based on such fact. Neither Section 127 of the Act, nor any of the decision brought to our notice provides that assessment cases can be transferred from one place to another only as long as at-least one of the case of the group is pending at such place. Section 127 of the Act does not recognize or provide any such limitation on exercise of the powers. Discretion is wide and may be required to be exercised in varieties of situations. We neither can, nor propose to foresee all of them
24. Before closing we may touch upon one aspect which was placed before us by the counsel for the petitioners. At the outset, it was pointed out that the decision of the Division Bench of this Court in case of Arti Ship Breaking (supra) was in case of Millennium Houseware v. CIT [2012] 207 Taxman 129 referred to larger Bench by another Bench under an order dated 12.3.2012. It was pointed out that such decision is pending. It was therefore, urged that present petitions could also be admitted since earlier petitions are admitted and pending consideration by larger Bench. We have not accepted such a formula for the following reasons :
(1) Firstly, the issue referred to the larger Bench in the said order dated 12.3.2012 is wholly different. In case of Millennium Houseware (supra), this Court had taken a view that by virtue of subsequent judgments of Supreme Court in case of Managing Director, ECIL v. B. Karunakar AIR 1994 SC 1074 and State Bank of Patiala v. S.K. Sharma AIR 1996 SC 1669 despite the decision in case of Ajanta Industries (supra), in facts of the case non communication of the reasons for transferring the case would not vitiate the proceedings. It was this issue which a subsequent Division Bench found unable to persuade itself. It is this reason why the reference has been made to larger Bench. We are not concerned with this aspect at all. Further, counsel urged that since similar petitions are admitted these petitions should also be admitted. Ordinarily, when a similar issue is admitted and pending for consideration, though neither admission nor interim relief is treated as binding precedent, conventionally the Court normally adopts a similar view and does not dismiss the petition. In the present case, however, admission of the petitions would require granting of interim relief. If such interim relief is granted staying the transfer orders, petitions would stand allowed without adjudication if not heard in near future. On the other hand, if no interim relief is granted, the petitions would be rendered infructuous by the time the same are taken up for hearing. We had therefore, instead of admitting the petitions, heard learned counsel for the parties for final disposal thereof.
25. In the result all the petitions are dismissed.
