HIGH COURT OF CHHATTISGARH
Commissioner of Income-tax, Raipur
versus
Union of India
YATINDRA SINGH, CJ.
AND Pritinker Diwaker, J.
Writ Appeal Nos. 27 to 40 of 2013
Date of Pronouncement – 14.03.2013
Anand Dadariya for the Appellant. Vivek Shrivastava, H.S. Ahluwalia and B.P. Sharma for the Respondent.
JUDGMENT
1. These writ appeals are against the order of the single judge dated 09.10.2012, quashing transfer of search assessment proceeding of the Assessees to the Assistant Commissioner of Income Tax, Central Circle-1 Visakhapatnam (the ACIT-Visakhapatnam) under sub-section (2) of Section 127(2) {127 (2)} of the Income Tax Act, 1961 (the Act).
THE FACTS
2. A search was conducted in the premises of M/s Maa Mahamaya Group of Companies (the Mahamaya group), as well as residential and official premises of its directors, partners, and employees on 19.08.2011 at different places, namely at Dhamtari, Visakhapatnam and Kolkata. It was at the instance of the Director of Investigation, Hyderabad (the DIT, Hyderabad).
3. In the present batch of writ appeals, the assessment of the Assessees are being done at Dhamtari and Raipur in the State of Chhattisgarh. A suggestion, in form of a letter dated 27.12.2011, was received by the Commissioner, Income Tax, Raipur from the Commissioner of Income Tax, Hyderabad for centralisation of cases for post search and seizure operations for the co-ordinated investigation with the ACIT-Visakhapatnam.
4. Later, a show-cause notice was issued on 18.01.2012 to the Assessees asking them to show cause against the transfer. The Assessees filed their objections.
5. After considering the objections, initially, five cases were transferred on 02.04.2012. Thereafter, a further suggestion was received for re-considering nine other cases for centralisation for co-ordinated investigation. Another order was passed on 31.05.2012, centralising those cases as well.
6. The Assessees in the aforesaid cases, filed different writ petitions. These petitions were consolidated and were allowed by the single judge on 09.10.2012, basically on the ground that the word ‘co-ordinated investigation’ was vague and no opportunity can be said to have been given to the Assessees. Hence, the present writ appeals by Income Tax Department (the Department).
POINTS FOR DETERMINATION
7. We have heard counsel for the parties. The following two points arise for determination in the case:
(i) Whether the present appeals are maintainable;
(ii) In case the answer to the aforesaid question is in affirmative, then whether the transfer orders are invalid.
1st POINT: TRANSFER ORDER IS ADMINISTRATIVE ORDER
8. The counsel for the Assessees placed reliance on WA-1006 of 2012 SKS Ispat v. Union of India decided on 12.12.2012 (the SKS-Ispat case) and submits that:
♦ The transfer order under Section 127(2) of the Act is a quasi-judicial order as it has to indicate the reasons and it cannot be passed unless a reasonable opportunity is given to the Assessees;
♦ The writ petitions were filed for quashing of the quasi judicial orders and they have been quashed by the single judge;
♦ The order passed by the single judge was under Article 227 and no writ appeal is maintainable against the order of the single judge under section 2(1) of the Chhattisgarh High Court (Appeal to Division Bench) Act, 2006 (the 2006-Act).
9. In order to decide this point, it is necessary to decide whether the impugned orders of transfer were quasi-judicial orders or not.
10. In AK Kraipak and others v. Union of India and others, AIR 1970 SC 150 (the AK-Kraipak case) (paragraph 13), the Supreme Court observed that the dividing line between an administrative power and a quasi-judicial power was thin. And in order to determine the nature of power, the point to consider is-the nature of the power, to whom it was conferred, the framework of the law conferring that power, the consequences from the exercise of that power, and the manner in which that power was expected to be exercised.
11. In the AK-Kraipak case, the Supreme Court did not decide the question, whether the power of selection/ appointment was administrative or judicial but went on to say that the principles of natural justice were nothing but to ensure fairness and were applicable to the administrative proceedings as well.
12. Section 127(2) of the Act provides that transfer can only be done if opportunity is afforded to an assessee and after recording reasons. But merely for this reason it cannot be said to be quasi judicial in nature.
13. A transfer order has civil consequences; especially when the cases are transferred from one city to another. Even if there was no such statutory provision, the transfer, beyond a city could not be effected unless an opportunity was given and was for relevant considerations. This was required to be done to ensure fairness. The fact that there is a statutory provision, does not by itself, make the function to be a judicial. It is not conclusive of this fact.
14. The transfer order does not decide the rights of the parties in the assessment. The ultimate order deciding the right is the order of the assessment; it decides the basis and the tax to be paid: this order is a judicial order. The transfer order is merely for administrative reason and it cannot be said that nature of power is judicial.
15. In Kashiram Aggarwalla v. Union of India and others [1965] 56 ITR 14 (SC) (the Kashiram case), the transfer order was under 127(1) of the Act; unlike the present cases, where the transfer orders are under Section 127 (2) of the Act. The question involved was, whether the transfer order in that case was invalid as no reasons were recorded.
16. In the Kashiram case, the Supreme Court held that the mandatory requirement of recording reasons was not to be applicable, as the transfer orders were in the same city and only wards were changed but the Court did observe about the nature of transfer orders under section 127.
17. The Supreme Court, in the Kashiram case, observed that transfers are made on grounds of administrative convenience and are in nature of administrative order.
18. Similar views were expressed by a division bench of the Gujrat High Court in Arti Ship Breaking v. DIT [2000] 244 ITR 33, where transfer order was upheld though reasons were not indicated on the ground that transfer was on administrative reasons.
19. In this case, a search was held at different places and documents were seized. It is necessary to see them together before passing the order of assessment. The transfer order is for administrative convenience for making co-ordinated investigation. The authority is exercising administrative and not judicial power. The judicial power is to be exercised after co-ordinated investigation, while passing search assessment orders.
20. In our opinion, the authority while passing the transfer orders, did not exercise judicial power. It is an administrative order and not a quasi judicial order. The SKS-Ispat case is not applicable.
21. It is not disputed that in case the order was not a quasi judicial, then the writ appeal would be maintainable. We have already held that power to transfer the assessment cases is not a quasi judicial in nature; no judicial power is exercised: the writ appeal is maintainable.
2nd POINT:TRANSFER ORDER IS EQUATED
22. The counsel for the Assessees placed reliance on decisions (see below)1 and submits that:
