2006 (2) TMI 96 - HC - Income Tax

Transfer Of Case - centralising the cases - mere fact that the assessee is supplier of the main ingredient of gutkha , namely, supari, to M/s. Trimurti Fragrances P. Ltd. would show that there is inter se close commercial connection apart from close family associations and that is, in our considered opinion a very valid, genuine and compelling ground for consolidating and centralising the cases - we find no manifest error apparent on the face of the record in the impugned order of transfer

Summary

Issues:
Transfer of cases under section 127(2) of the Income-tax Act, 1961 from Kanpur to Delhi based on connections with Shikhar Gutkha group.

Analysis:
The writ petitions challenged an order transferring cases from Kanpur to Delhi under section 127(2) of the Income-tax Act, 1961, based on connections with the Shikhar Gutkha group. The petitioners, Virendra Kumar Jain and Vijay Kumar Pradeep Kumar, objected to the transfer, claiming no connection with the group. However, the Commissioner of Income-tax explained the connections during the hearing, citing relationships between partners and directors of the petitioners' firms and the Shikhar Gutkha group. The Commissioner emphasized the need for coordinated investigation following a search and seizure operation. The petitioners argued for disclosure of evidence, but the authority justified the transfer based on the connections established. The authority referred to the necessity for centralization of cases belonging to a particular group for effective investigation, citing legal precedents supporting such transfers.

In response to objections, the authority highlighted the close relationships and commercial connections between the petitioners' firms and the Shikhar Gutkha group. The authority noted the involvement of family members and the supply of supari, a key ingredient in gutkha production, as grounds for centralizing the cases in Delhi. Legal precedents emphasized public interest and coordinated investigations as valid reasons for transfers. The court rejected the petitioners' contention that the Department should have disclosed evidence at the initial stage, citing legal principles prohibiting such disclosures to prevent prejudice in assessments. The court also dismissed claims of bias or arbitrariness in the transfer decision, highlighting the relevance of the reasons provided by the authority.

The court considered the submission that the supply of supari alone was not sufficient reasoning for the transfer, but upheld the decision based on the close commercial and family connections between the petitioners' firms and the Shikhar Gutkha group. The court found no error on the face of the record in the transfer order, ultimately dismissing the writ petitions challenging the transfer of cases from Kanpur to Delhi. The court concluded that the reasons provided for the transfer were valid and in line with legal principles governing such decisions.

The court relied on legal precedents and established principles to uphold the transfer of cases, emphasizing the need for coordinated investigations and the presence of significant connections between the petitioners' firms and the Shikhar Gutkha group as justifications for centralizing the cases in Delhi.