Section 127 does not spell out under what facts and circumstances a transfer of a case can be made. However, in a case of inter-city transfer statute requires compliance of two requirements –first, to vie the assessee a reasonable opportunity of hearing, wherever it is possible to do so and secondly, reasons with regard to transfer should be recorded. In the instant case there is no dispute that the principles of natural justice have been complied with and reasons have been recorded. Thereafter, reasons have been communicated.
It is clear from the submissions as noted that the interim order passed by the Allahabad High Court was the sheet anchor for challenging the order of transfer and it had prompted the petitioner to move the writ petition. Success or failure of a writ petition depends on its ultimate outcome. An interim order is passed usually at the nascent stage considering the balance of convenience and inconvenience. In such context the word ‘failed’ is a misnomer. Yet the said interim orders had prompted the petitioner to submit “that the move of the Income Tax Authorities to centralise all the cases in New Delhi had failed” and order of transfer dated “August 9, 2005 passed by the respondent no.1 is liable to be quashed and/or set aside on this ground alone”. Besides, as noted, while passing the interim order on 5th October, 2005, the learned single judge had considered “the earlier order passed by the Division Bench of the Allahabad High Court, Lucknow Bench under similar circumstances at the instance of the other petitioners of the Sahara group.” Moreover, the stand of the petitioner that the proposed transfer of file on the ground of interlacing and interconnection of funds and business activities “are in the nature of a sweeping observation” (reply dated 19th July, 2005) is similar to the stand taken by the group as is evident from paragraph 8 of the judgement in Sahara Airlines. The objection on the ground of `inconvenience’ pleaded in the instant writ petition was also a ground taken before the Allahabad High Court. In Pannalal Binjraj (supra) it has been held by the Apex Court that “There is no fundamental right, in an assessee to be assessed in a particular area or locality. Even considered in the context of section 64(1) and (2) of the Act this right which is conferred upon the assessee to be assessed in a particular area or locality is not an absolute right but is subject to the exigencies of tax collection.” Though, in Pannalal Binjraj the Supreme Court was considering the provisions contained in the Income Tax Act, 1922, the settled proposition of law is that the inconvenience of an assessee should give way to the exigencies of tax collection. Therefore, a comparison of the issues and pleadings in the present case with the cases before Allahabad High Court and the order passed on 5th October, 2005 by the learned single judge leaves no manner of doubt that the issues are identical.
On the question whether the impugned order directing transfer only on the ground of interlacing and interconnection of funds and business activities of the Sahara Group is sufficient to warrant transfer, it is to be noted that the notice dated 30th June, 2005 proposing transfer of the case to New Delhi was issued on three grounds – (i) that there is an interlacing and inter-connection of funds and of business activities among st the entities of the Sahara Group, ii) that the Sahara Group had earlier filed an application before the Chief Commissioner of Income Tax (Central)(North), New Delhi for the transfer of cases being assessed in the Central Circle Lucknow on the ground that administrative/ control offices of most cases of the group had shifted to Delhi and iii) that at present most of the offices of the Group including that of M/s. Sahara Airlines Limited and Sahara India (firm) are located at Delhi and many companies are also assessed at Delhi. Admittedly transfer of the case has been directed only on the ground of interlacing of funds and interconnection of business activities among various entities of the Sahara Group. I find from the order impugned that the petitioner is a partner in Sahara Mass Communication Limited, Delhi. The petitioner had received unsecured loans through optionally fully convertible unsecured debentures and had given advances and loans to various persons. It has made investments in Sahara Airlines Limited, Sahara India Corporation Limited, Sahara India Financial Corporation Limited, Sahara Sanchar Limited and in many other institutions. The petitioner has entered into joint ventures with various other companies of Sahara Group for development of housing projects. As on 30th June, 2005 out of 4371 employees only 28 are posted in Calcutta and on the same date only one out of eight directors are based in Kolkata. The Company is developing a real estate project near Lonavala in Maharashtra. As noted that though observation regarding interlacing and interconnection of funds and business activities among st the various entities of the group have been stated to be as ‘`sweeping observation’ ‘ and in the reply dated 9th August, 2005 it has been stated the transactions “have been made in the usual course of business after complying with all provisions of law and have been duly reflected and disclosed in the accounts,” in the writ petition there is no averment that the findings in the order impugned are perverse. These financial transactions, whether inter-corporate transactions or interlacing of funds and interconnection of business activities among st the various entities of Sahara Group, have led the Revenue to propose and, thereafter, in the absence of denial of facts, to pass an order of transfer under section 127(2) of the Act for the purpose of coordinated investigation. Coordination in this context would mean bringing in the assessment records of all the companies, firms and individual assesses of the Sahara Group including that of the petitioner under one umbrella – that is, under one single Assessing Officer to have a correct picture of the transactions after investigation. In the instant case it assumes significance since there are inter corporate transactions within the Sahara group. What is important is that with the exception of Y. Moideen Kunhi (supra), in all other judgements cited Courts have consistently upheld in all cases belonging to a group, coordinated investigation as valid in public interest. Therefore, in the cases of a group, coordinated investigation is a relevant ground for transfer. In the present case since there is neither any denial of the facts by the petitioner who is a member of the Sahara group nor are the reasons for transfer unconvincing and vague, the order directing coordinated investigation under a single assessing officer cannot be called into question even in the absence of allegation of evasion of tax, because the twin requirements under section 127 of the Act have been complied with. It is to be noted that in Pannalal Binjraj (supra) it has been held “Even so the exigencies of tax collection have got to be considered and the primary object of the Act, viz., the assessment of income-tax, has got to be achieved.” The transfer of file for coordinated investigation is a step in achieving the said primary object. With regard to the judgements cited I find in Dwarka Prosad Agarwalla (supra) it has been held that “in appropriate cases facility of investigation or the requirement of investigation could be a valid and substantial ground for transferring the case from one officer to another.” With the sole exception in Y. Moideen Kunhi, similar views have been taken in Jharkhand Mukti Morcha (supra), in Power Controls (supra) and in Sameer Leasing (supra). Since in Lords Distillery (supra) it was contended that the petitioner had no connection with Radico Khaitan Limited, the facts are not applicable to the instant case. However, the facts and circumstances leading to transfer for the purpose of coordinated investigation is open to judicial scrutiny. In the instant case, as evidently facts have gone uncontroverted and unchallenged and as the twin requirements under section 127 have been complied with, the action of the revenue cannot be faulted just because transfer has been directed only on one ground out of the three as proposed since it has been found to valid and cogent.