TMI Blog2009 (1) TMI 109X X X X Extracts X X X X X X X X Extracts X X X X ..... n this judgment. 2. The writ petition having W. P. No. 1920 of 2005 was filed by M/s. Sahara India Commercial Corporation Limited, a public limited company within the meaning of the Companies Act, 1956, having its registered office at Kolkata challenging the legality and/or validity of a show-cause notice dated June 30, 2005, issued under section 127(2) of the Act intimating the proposal for transfer of the case of the petitioner from Kolkata to New Delhi and the order dated August 9, 2005, passed by respondent No. 1 transferring the case of the petitioner from the Deputy Commissioner of Income-tax, Circle B, Kolkata, respondent No. 2 to the Deputy Commissioner of income-tax, Central Circle 6, New Delhi and the Assistant Commissioner of Income-tax, Central Circle 6, New Delhi, respondents Nos. 3 and 4, respectively. The matter was moved on October 5, 2005, when an order was passed, the relevant portion of which is as under: "The petitioner herein has challenged the validity and/or legality of the Order No. 7/2005-06, dated August 9, 2005, issued by the Commissioner of Income-tax, Kolkata-III, regarding centralization of "SAHARA" group of cases on the ground that the responden ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the judgment and order dated February 8, 2006, whereby those petitions have been dismissed. The said judgment has since been reported in Sahara Airlines Ltd. v. Director-General of Income- tax (Investigation) [2006] 286 ITR 33 (All). It appears from the said application that from the said judgment a batch of special leave petitions before the Supreme Court of India was preferred by the Sahara group of companies which too by order dated March 3, 2006, was dismissed. The order passed by the apex court is as under: "Heard learned counsel for the petitioners. No merits. The special leave petitions are dismissed." 4. Learned senior advocate appearing for the petitioner reiterating the statement in the writ petition submitted that the company is incorporated in Kolkata and the dispute is regarding transfer of file to New Delhi. In the matter decided by the Lucknow Bench of the Allahabad High Court in Sahara Airlines [2006] 286 ITR 33 (All) the question was whether assessment would be at Lucknow or at New Delhi and it has been held that it would be in New Delhi for investigation and assessment. In the instant case, request was never made by the petitioner for transfer o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that while passing the order of transfer, law as postulated in section 127 of the Act has been adhered to. The Revenue had issued show-cause notice dated June 30, 2005. The petitioner had furnished written replies dated July 19, 2005, and August 9, 2005. Opportunity of hearing was granted. Thereafter, order dated August 9, 2005, was passed. Referring to the reply dated July 19, 2005, it was submitted that it does not deal with the ground of interlacing and interconnection of funds. Though it appears from the audited accounts of the assessee for the assessment year 2004-05 that there were interlacing and interconnection of business activities as there being joint ventures and transfer of funds within the Sahara group, in the reply dated July 19, 2005, it has been stated to be as a "sweeping observation". Moreover, the annexure to the reply dated August 9, 2008, regarding the presence of employees and directors based in Kolkata and details of the bank accounts do not support the cause of the petitioner. Further, neither the petitioner sought the reasons for co-ordinated investigation nor has challenged the order impugned on the ground of perversity. Centralisation of cases is being ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s contained in section 127 of the Act which is as under: "127. Power to transfer cases. -(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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d across cities and towns of the country. There is, however, an interlacing and interconnection of funds and of business activities amongst the various entities of the group. 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 the administrative/control offices of most of cases of this group has shifted to Delhi. It is a fact that presently most of the offices of the group has shifted to Delhi. It is a fact that presently most of the offices of the group concerns, including that of M/s. Sahara Airlines Ltd. and of Sahara India (Firm), are located in Delhi and many of the companies are also assessed to tax at New Delhi. In view of the above, I am of the opinion that for co-ordinated investigation and assessment, the cases of the Sahara group should be centralized in New Delhi. It is, therefore, proposed to transfer your case to New Delhi and centralise the same under the jurisdiction of the Chief Commissioner of Income-tax (Central), New Delhi. You are hereby afforded an opportunity of being heard in the matter in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n, inter alia, on the points, such as, total number of employees of the company and those posted in Kolkata, list of directors and their addresses, details of bank accounts, details of unsecured loans given to others exceeding Rs. 1 crore as on March 31, 2005, etc. In response the assessee's representative filed the desired information on August 9, 2005, however, in regard to the details of unsecured loans given to others and copies of accounts of Sahara India Ltd., Sahara Indian Financial Corpn. Ltd. and Sahara India (Firm) stated it was that the accounts are under audit and the figures are not readily available. It was further seen from the return filed by the assessee for the assessment year 2004-05 that : (a) The assessee has entered into joint ventures with various other companies of the Sahara group for development of housing projects. The names of some of their companies are Sahara India Financial Corporation Ltd., Sahara India Corporation Ltd., Sahara India Investment Corporation Ltd., Sahara India International Corporation Ltd., Sahara India Mass Communication Ltd., Sahara India Developers Pvt. Ltd. and Sain Processing and Weaving Mills Ltd. (b) The assessee is also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee's case deserved to be centralised with other cases of the Sahara group at Central Circle, New Delhi. Accordingly, the assessee's case is herewith transferred to the DCIT, (Central Circle-6, New Delhi, in exercise of powers vested in me under section 127(2) of the Income-tax Act, 1961. 6. This order will take effect from August 9, 2005. (Sd.) ................. V K. Bhatia, Commissioner of Income-tax, Kol-III Kolkata." (emphasis supplied) 10. In order to deal with the first question it is necessary to refer to the pleadings in the writ petition. In paragraph 5 of the petition it has been stated that the petitioner is a part of "Sahara India Pariwar" which includes various companies, firms, charitable institutions individuals, etc. There are more than 50 income-tax assessees in Sahara India Pariwar. Of the major assessees, 33 are assessed at Lucknow, 9 at Mumbai, 1 at Pune and 2 including your petitioner at Kolkata. Your petitioners state that the promoters of the Sahara India Pariwar are also assessed at Lucknow. The headquarters of the Sahara India Pariwar is located at Lucknow. In paragraph 6, the petitioner has pleaded about the facts regarding the fil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5 assessees at Lucknow whose cases were sought to be transferred have already approached the hon'ble Allahabad High Court, Lucknow Bench, and the hon'ble High Court has been pleased to stay the operation of the purported orders of transfer. Your petitioner states that in any view of the matter, it is apparent that the move of the income-tax authorities to centralise all the cases at New Delhi has failed. Your petitioner states that the said purported order dated August 9, 2005, passed by respondent No. 1 is liable to be quashed and/or set aside on this ground alone." 11. 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" ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 the Sahara group for development of housing projects. As on June 30, 2005, out of 4371 e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cies 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 co-ordinated investigation is a step in achieving the said primary object. With regard to the judgments cited, I find in Dwarka Prosad Agarwalla [1982] 137 ITR 456 (Cal) 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 [1993] 204 ITR 29 (Karn) similar views have been taken in Jharkhand Mukti Morcha [1997] 225 ITR 284 (Patna), in Power Controls [2000] 241 ITR 807 (Delhi) and in Sameer Leasing [1990] 185 ITR 129 (Delhi). Since in Lords Distillery [2007] 294 ITR 147 (Cal) 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 cir cumstances leading to transfer for the purpose of co-ordinated investigation is open to judicial scrutiny. In the instant case, as evidently facts have gone uncontroverted and unchallenged and as th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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