TMI Blog2009 (12) TMI 73X X X X Extracts X X X X X X X X Extracts X X X X ..... enior Counsel for S.Hemalatha For Respondents: Mr.R.Sathyamoorthy SSC for Income Tax JUDGEMENT Heard both sides. 2. The petitioner in the writ petition challenged the order of the first respondent passed under section 127 of the Income Tax Act 1961, transferring the case of the assessee trust from the Income Tax Officer, Ward No.I,(2), Nagercoil to the Deputy Commissioner of Income Tax, Circle-I, Division-I, Thiruvananthapuram. 3. Noorul Islam Education Trust (herein after called as assessee trust) is registered under section 12-A of the Income Tax Act, 1961 and as on 10.09.2001 the jurisdiction over the asseessee trust was vesting with the Income Tax Officer, Ward No.1(2) Nagercoil. Mr.A.P.Majeed Khan, is the Chairman of the assessee trust and he has got income from the house properties and business and the jurisdiction over the A.P.Majeed Khan, founder and Chairman of the assessee trust was vesting with the Deputy Commissioner of Income Tax, Circle-I, Division-I, Tiruvananthapuram. A search under Section 132 of the Income Tax Act 1961 was conducted on 11.09.2001 in the case of A.P.Majeed Khan and the assessee-trust itself and after the conclusion of the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us objections and that was considered by the Commissioner of Income Tax, Ward No.1, Madurai and the Commissioner of Income Tax, Ward No.1, Madurai, also after meeting various points and objections raised by the assessee-trust, passed the impugned order, which is challenged in this writ petition. 6. Mr.Subramaniam, the learned Senior Counsel appearing for the petitioner, submitted that without properly appreciating the provisions of Section 127, 158BC and 158BD, the impugned order was passed and as per Section 127 (2)(a) of the Income Tax, the Commissioner of Income Tax, must have applied its mind and must have stated the reasons for transferring the case of the assessee trust to Thiruvananthapuram and no valid reason has been stated. 7. He would further submit that the transfer order was consequent to the search conducted under section 132 of the Income Tax Act and also on the basis of the 'Block assessment' in respect of A.P.Majeed Khan and the assessment of A.P.Majeed Khan was already over and has become final and therefore, the case of the assessee-trust need not be transferred to Thiruvananthapuram and it is also against the provisions of Section 158 BC 158 BD. 8. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Directors General or Chief Commissioners or Commissioners, by the Directors General or Chief Commissioners or Commissioners concerned or, if they are not in agreement, by the Board or by such Director General or Chief Commissioner or Commissioner as the Board may, by notification in the Official Gazette, Specify." Therefore, in case of dispute about the jurisdiction of Assessing Officer and if the question is one relating to assessment within the jurisdiction of different Directors General or Chief Commissioners or Commissioners, by the Directors General or Chief Commissioners or Commissioners concerned or, if they are not in agreement, by the Board or by such Director General or Chief Commissioner or Commissioner as the Board may, by notification in the Official Gazette, specify. Therefore, when the assessment relates to different areas, then it can be decided by the authorities concerned, if there are in agreement and if they are not in agreement, by superior Officer named therein. 13. Section 127(2) (a) (b), also deals with the same and Section 127(2)(a) (b) reads as follows: "Where the Assessing Officer or Assessing Officers from whom the case is to be transferred and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in dispute that the assessee-trust is coming within the jurisdiction of Commissioner of Income Tax No.1, Madurai and the Assessing Officer, is the Income Tax Officer, Ward No.1,(2) Nagercoil and A.P.Majeed Khan, is the Chairman of the trust was under the jurisdiction of the Deputy Commissioner of Income Tax No.1,Thiruvananthapuram and after search, the jurisdiction over A.P.Majeed Khan, was notified to vest with the Assistant Commissioner of Income Tax, Central Circle, Thiruvananthapuram. Therefore, both the assessee-trust and A.P.Majeed Khan are coming under the jurisdiction of two Commissioners of Income Tax and as per Section 127(2)(a), the case can be transferred, if the Commissioner of Madurai and Thiruvananthapuram are in agreement, then the Commissioner of Income Tax, Madurai, after recording his reasons for doing so. Therefore, the preliminary requirement is the two Commissioners must be in agreement for such transfer and in that case, either of the Commissioner can pass, an order of transfer after giving opportunity to the assessee. 17. In this case, it is admitted and has also been made clear in the impugned order that the jurisdiction over the assessee-trust was no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and seizure operation u/s.132 of the Income Tax Act, 1961, was conducted on 11.09.2001 in the case of Shri A.P.M.Abdul Majid Khan, the Author Managing Trustee, Thiruvananthapuram, and other related assessees, detailed coordinated centralized investigation is necessary in this group of cases. Therefore, this transfer of your case to Trivandram is proposed." 20. Even in the notice under section 127(2), no whisper is made about an agreement between the two Commissioners or two authorities and it has been stated that for detailed co-ordinated Centralized Investigation, transfer is necessary in this group of cases. No details have been stated for having coordinated Centralized Investigation, except the statement that a search and seizure operation under section 132 of the Income Tax Act 1961 was conducted on 11.09.2001, in the case of A.P.M.Abdul Majid Khan, the Author Managing Trustee, and other related assesses. The notification, did not even state what are the related assessees with A.P.M.Abdul Majid Khan. In the impugned order, also the agreement between the two officials was not stated and 10 reasons have been stated for transferring the case of the assessee-trust from Na ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... while participating in the assessment proceedings.'' 25. It has also been held in the above judgment as follows: "Section 127 of the Income-tax Act, 1961, confers power to transfer the case of an assessee on the discretion of the authority competent when it is felt necessary to do so in the interests of the Revenue and for proper assessment of tax and collection thereof. The discretion is not guided or controlled by the provisions of section 124. Section 124 is a provision defining the jurisdiction in normal circumstances, whereas section 127 can be attracted only when it is felt by the Commissioner or the Central Board of Direct Taxes or the authority competent that it is proper or appropriate to exercise power under the provision in the interests of the Revenue and for proper adjudication of the tax liability or collection thereof. thus, as a sequel to the principle, it follows that the transfer of cases can be ordered for facilitating the task of effective investigation and for best and co-ordinated assessment. The discretion to pass such an order has to be exercised keeping in mind the inbuilt restraint that such an action should not be taken arbitrarily or for any extra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1956] 31 ITR 565 (SC) Pannalal Binjraj Annother vs/. The Union of India and others, the action of the 1st respondent cannot be challenged. 27. In the first case, it has been held that "the question whether the case is a fit one for transfer or not is a matter for consideration and decision by the Commissioner of Income-Tax. Unless the order of the Commissioner is ex-facie perverse or is vitiated by patent error on the face of the record, the court should not interfere under article 226 of the Constitution of India." 28. In the 2nd case, it has been held " wherein assessment is to take place with respect to the group of persons, common family members, business concerns having closed interaction and above all one of them resides at Delhi one of the directors/partners himself admits that heavy "cash amount" recovered from his premises at Delhi, belongs to his father at Kanpur and that out of 26 cases of the same group in question. 16 cases were assessed at Delhi. Otherwise also the distance between Kanpur and Delhi can be covered within a few hours and that the persons involved are already having their business transactions and activities between Kanpur and Delhi." 29. In th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by virtue of the provisions contained in section 245-1 of the Income-tax Act, 1961, and could not be reopened. Therefore, no practical or useful purpose would be served by the transfer of the case of the petitioner to Cuttack in a situation where the main cases with which the case of the petitioner was alleged to be connected, could not be reopened. 33. In the above reported case, the case of the petitioner was transferred from Nagaon to Cuttak in order to facilitate coordinated and centralize investigation of the 'Block assessment' case of the relatives of the petitioner. The order of transfer was on the ground that a portion of the undisclosed income of the relatives of the petitioner had fund its way to the petitioner. While dealing with that contention the High Court has held as stated above. In this case, admittedly, the 'Block assessment' order in respect of A.P.Majeed Khan, in respect of the undisclosed income has become final and therefore, there is no use in transferring the assessment of the assesee-trust to Thiruvanandapuram. The other reason stated in impugned order is that the assessee trust has also submitted 'Block return' in response to the notice, before the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed in two senses. Sometimes it is used to denote conduct which is evidence of an intention by a party,conducting himself, to abandon an equitable right; sometimes it denotes conduct from which another party would be justified in inferring such an intention. [Krishan Dev Ram Pari, AIR 1964 Him Pra 34]. There can be no acquiescence where both parties are unaware of their rights in the disputed property and both are labouring under some mistake about their respective rights. Abdul Khair v. S.M.James, AIR 1957 Pat 308; 36 Pat 362. If a party having a right stands by and sees another dealing with the property in a manner inconsistent with that right, and makes no objection while the act is in progress, he cannot afterwards complain. That is the proper sense of the work acquiescence. Duke of Leeds v. Amherst, 2 p.124. Delay and acquiescence do not bar a party's right to equitable relief on the ground of undue influence, unless he knew that he had a right or, being a free agent at the time, deliberately determined not to inquire what his rights were or to act upon them Jugal Kishore v. Charoo Chandra,AIR 1939 pc 159." "As per concise Oxford English Dicticnary toe word "Acquiesce" ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cation of Section 127 of the Act, has been stated in the judgment reported in [2002] 257 I.T.R. page 577, in the case of Rajesh Mahajan and others vs. Commissioner of Income Tax, as follows: "Firstly, it is essential that the show-cause notice issued under section 127 of the Act, disclose to the assessee the reason/basis for the contemplated action in terms of the mandate of the rules of natural justice. Exceptions to this essential ingredient would be the same as exceptions to the rules of natural justice. Secondly, an assessee has the right to file objections on the receipt of a show-cause notice issued under section 127 of the Act. In the absence of such liberty, the assessee cannot be stated to have been afforded a "reasonable opportunity" as is contemplated by the aforesaid provision. Thirdly, the reasons recorded in the final order passed under section 127 of the Act (by which the concerned/competent authority decides to execute the proposed action contemplated in the show-cause notice), must not only take into consideration the objections raised by the assessee, but the reasons recorded in the order must also have a direct nexus/bearing to the object sought to be achieved ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not disclosed in the impugned order that the undisclosed income submitted by the A.P.Majeed Khan, in the Block assessment discloses any transaction with the assessee trust. Therefore, there is no need for transfer the assessment from Nagercoil to Thiruvananthapuram. 43. In the impugned order, 10 reasons were stated for justifying the transfer and the reasons are not legally sustainable for the reasons stated below. a. The first reason was that the search was conducted under Section 132. That cannot be a reason for transfer, unless incriminating materials are found showing the inter-lacing and interconnecting transactions. b. The 2nd reason that the authorities competent to make Block assessment should be, an Assessing Officer not below the rank of an Assistant Commissioner and therefore, it has to be transferred to Thiruvananthapuram. Admittedly, in this case the Block assessment in respect of A.P.Majeed Khan was already over and the Assessee trust also filed Block assessment before the Thiruvananthapuram office by submitting a 'Nil' income and there is no finding that in the Block assessment filed by both the assessees, there are materials to show that interlacing of fund ..... X X X X Extracts X X X X X X X X Extracts X X X X
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