TMI Blog2000 (2) TMI 72X X X X Extracts X X X X X X X X Extracts X X X X ..... ation on November 25, 1996 to the Director-General of Incometax (Investigation), Madras, to transfer the assessment files from Trivandrum to Chennai. On August 8, 1997, the first-respondent passed the order transferring the assessment files from Trivandrum office to Chennai. The said transfer took effect from August 11, 1997. This order was passed exercising powers under section 127 of the Income-tax Act, 1961. The first-respondent on the basis of the report submitted by the Assistant Commissioner of Income-tax, dated August 5, 1999, issued a showcause notice to the petitioners under section 127 of the Income-tax Act, to show cause why the files relating to the case of the petitioner, in W. P. No. 17218 of 1999, in a group of cases, have to be transferred from the Assistant Commissioner of Income-tax, Central, Circle-I(6), Chennai, to the Deputy Commissioner-II, Central Circle, Trivandrum. A reply was filed on September 8, 1999, raising objections to the said transfer. After considering the said objections, the first-respondent in the order dated September 25, 1999, retransferred the cases, the particulars of which are mentioned in column (3) of the Schedule annexed in the order. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. Section 5(7A) of the Indian Income-tax Act, 1922, contained a similar provision for transfer. It authorised the Commissioner of Income-tax to transfer the case from one Income-tax Officer to another, subordinate to him, and the Central Board of Revenue was authorised to transfer any case from one Income-tax Officer to another. In the said provision, an opportunity of hearing the affected has not been provided. But, under section 127 of the Income-tax Act, the Legislature has introduced the concept of natural justice and the requirement of recording reasons for making an order of transfer and communication of the same to the assessee. It also gives power for transfer of a case from the jurisdiction of one Commissioner to another. It is also he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to the object sought to be achieved by the enactment of section 5(7A) of the Act as set out in para. 4 of the affidavit of Shri V. Gouri Shankar, Under Secretary, Central Board of Revenue, quoted above, and come to its own conclusion as to the bona fides of the order and if it is not satisfied that the order was made by the authorities in bona fide exercise of the power vested in them under section 5(7A) of the Act, it will certainly quash the same. The standard of satisfaction which would have to be attained will necessarily depend on the circumstances of each case and the court will arrive at the conclusion one way or the other having regard to all the circumstances of the case disclosed in the record. The court will certainly not be powerless to strike down the abuse of power in appropriate cases and the assessee will not be without redress. The observations of Fazl Ali J., in State a West Bengal v. Anwar Ali Sarkar [1952] 3 SCR 284 at pp. 309-3 10 that the authority will say 'I am not to blame as I am acting under the Act' will not necessarily save the order from being challenged because even though the authority purported to act under the Act its action will be subject to sc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be looked at from two points of view, viz., (1) does it admit of the possibility of any real and substantial discrimination, and (2) does it impinge on a fundamental right guaranteed by the Constitution ? Article 14 can be invoked only when both these conditions are satisfied. Applying this test, it is clear that the discretion which is vested in the Commissioner of Income-tax or the Central Board of Revenue, as the case may be, under section 5(7A) is not at all discriminatory. It follows, therefore, that section 5(7A) of the Act is not violative of article 14 of the Constitution and also does not impose any unreasonable restriction on the fundamental right to carry on trade or business enshrined in article 19(1)(g) of the Constitution. If there is any abuse of power it can be remedied by appropriate action either under article 226 or under article 32 of the Constitution and what can be struck down is not the provision contained in section 5(7A) of the Act but the order passed thereunder which may be mala fide or violative of these fundamental rights. This challenge to the vires of section 5(7A) of the Act, therefore, fails." The Division Bench of the Rajasthan High Court i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imsy grounds nor the same should be exercised for extraneous or irrelevant considerations. If the transfer is being made for the purpose of coordinated investigation for the purpose of assessment and collection of tax in a more convenient or efficient way, then it will be a good ground for transfer." From the abovesaid decisions, it is clear that the transfer of a file can be made on the basis of public interest and to implement the provisions effectively. While doing so, the convenience of the assessee cannot stand in the way. But the said power should not be exercised arbitrarily or on flimsy grounds, nor for extraneous or irrelevant considerations. The said requirement can easily be assessed from the reasons given in the order, as it is mandatory on the part of the officer to give such reasons under section 127 of the Income-tax Act. So, now, this court has to test the validity as well as sustainability of the order on the basis of the abovesaid decided cases. In the impugned order dated September 23, 1999, the Commissioner of Income-tax, Central-I, Chennai-34, exercising powers under section 127 of the Income-tax, Act, 1961, transferred the cases mentioned therein from t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o effectively discharge their statutory functions and also there should not be any inconvenience or harassment of the assessee by such transfer. But no assessee can claim a basic right of being assessed by one officer rather than another. In the present case, originally the files were transferred as requested by the petitioners from the Assistant Commissioner of Income-tax, Central Circle, Trivandrum, to Central Circle-I(6), Chennai, by notification dated August 8, 1997, as directed by the Commissioner of Income-tax, Central Circle-I(6), Chennai, for coordinated investigation. The said order was passed on the request made to the Director-General of Income-tax (Investigation), Chennai, by Shri G. Mohandas in his petition dated November 25, 1996, on the basis that he had shifted his residence permanently to Chennai, and his accountant and senior advocates were based at Chennai. But, subsequently, the Assistant Commissioner of Income-tax, Central Circle-I(6), Chennai, filed a report that the said Mohandas and the other individuals of his group are generally residing in Kerala, that the business of the group is carried on, controlled substantially from Kerala and the properties and a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... retransferring the file to Trivandrum, and the authorities, also cannot discharge their official functions effectively. On the other hand, learned standing counsel appearing for the respondents has submitted that the authorities found it very difficult to serve the notices in the Chennai office, and the authorised representatives of the petitioners are residing only at Trivandrum and so the authorities are not able to complete the assessments at all. On that basis, learned standing counsel has further submitted that the order of the Commissioner of Income-tax is well founded in retransferring the files to Trivandrum so as to enable the authorities to discharge their functions effectively. Further, the retransfer has been made only on the basis of the report of the Assistant Commissioner of Income-tax, Central Circle 1(6), Chennai-34. Though the impugned order does not speak about the proceedings of the Assistant Commissioner of Income-tax dated August 5, 1999, in the counter it is stated that the basis for passing the impugned order is the order of the Assistant Commissioner, and the said report was submitted by the Assistant Commissioner as called for by the Commissioner of Inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the petitioners are in Kerala State. In spite of the said fact, the earlier order of transfer was passed by the first respondent on August 8, 1997. From the typed set of papers produced, I am able to see that till the date of the earlier, order of transfer passed by the first respondent, the notices and orders of the respondents were addressed to the petitioners' address at Trivandrum, though copy has been marked to the Chennai address. But, after passing the said transfer order dated August 8, 1997, all the communications had been sent to the address at Chennai of the petitioners and not to the address at Trivandrum. Further, it is not the case of the respondents that those communications were not served, and they were returned to them for non-delivery. From the abovesaid facts, it is clear that the case of the respondents that the petitioners are not residing at Chennai cannot be accepted. Though this court cannot sit in appeal on the reasonings, to find out whether any arbitrariness is involved in such transfer of files, this court has to find out the correctness of the reasonings given in the impugned order. When the petitioners are able to establish that the registered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Board) introduced during the last year and will remain in force till April 1, 2000. But, this Government circular has subsequently been modified in another circular dated July 27, 1999, the portion of which runs as follows : "It is being, further clarified that where the process involves decentralisation of cases from Central charges to the jurisdictional Commissioners of Income-tax (CsIT) charges, prior approval of the Board is not necessary provided Permanent Account Numbers (PANs) have already been allotted to all such cases. To ensure this, Permanent Account Numbers of all such assessees should invariably be included in the order under section 127 effecting decentralisation. However, decentralisation of cases should take place only after the search assessments have been completed and/or no investigations are pending in such cases." Even in the Circular No. 770, dated September 16, 1998, issued by the Government of India, it is stated that any instructions with reference to transfer of cases are purely administrative in nature and the same do not in any way curtail the statutory powers vested in the income-tax authorities by law, and, while no case would be transferred in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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