TMI Blog2011 (2) TMI 1242X X X X Extracts X X X X X X X X Extracts X X X X ..... of IT cases qua petitioners named (supra) is held to be not sustainable and deserves to be set aside. - Civil Writ Petition Nos. 13272, 13277, 13280, 13299, 13303, 13410 and 13411 of 2010 - - - Dated:- 2-2-2011 - Ajay Rastogi, J. Anant Kasliwal and Vaibhav Kasliwal for the Appellant J.K. Singhi and Anuroop Singhi for the Respondent JUDGEMENT Since common controversy has been raised in a bunch of instant petitions, hence heard together at joint request and they are being finally disposed of at admission stage by common order. Main controversy raised herein for consideration relates to common order dt. 26/09/2010, by which Commissioner of income Tax, Jaipur (I) in exercise of powers u/s 127(2) of Income-tax Act, 1961 ("IT Act") transferred IT cases of petitioners (Kamaljeet S.Ahluwalia-CWP-13411/2010, Pawan Ahluwalia-CWP-13303/2010 Prashant Ahluwalia-CWP-13299/2010, M/s Kamaljeet S. Ahluwalia-CWP-13410/2010, M/s Kaype Enterprises-CWP-13277/2010, M/s Kamal Sponge Power and Steel Ltd.-CWP-13272/2010 and Smt. Indu Ahluwalia-CWP-13280/2010) from Dy. Commissioner of Income-tax, Circle-2, Jaipur to DC/ACIT, Rourkela (Orissa). Facts being common to the con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of cases of Ahluwalia group as representative on behalf of assessees (petitioners herein) and no individual notice indisputably was issued to the respective assessees referred to in the notice dt. 11/01/2010. However, KJS Ahluwalia submitted objections pursuant to the notice dt. 11/01/2010 and objections raised vide his reply dt. 16/01/2010 (Ann. R/6) were sent for comments to the Commissioner of IT, Sambalpur whose comments were again sent to KJS Ahluwalia, to which he submitted detailed objections in counter; and after affording him an opportunity of hearing and taking note of final comments sent vide letter dt. 02/09/2010 from Director of IT (Inv.), Bhubneshwar, the Commissioner of IT Jaipur-I after being satisfied vide common order dt. 26/09/2010 took its decision to transfer IT cases of KJS Ahluwalia group of assets/petitioners from assessing officer (DCIT Circle-II Jaipur) to AC/DC-IT, Rourkela. it is the cause of grievance of petitioners for approaching this Court by way of a bunch of instant petitions. It is a matter of record that M/s KJS Ahluwalia (CWP-13410/2010) besides being an individual assessee, is a proprietary Firm and at the same time, KJS Ahluwalia (CWP ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... department about the facts. As regards petitioners (M/s Kaype Enterprises-CWP-13277/2010, Smt. Indu Ahluwalia CWP-13280/2010, Prashant Ahluwalia-CWP-13299/2010 and Pawan Ahluwalia-CWP-13303/2010), Counsel submits that they are individual assessees and no notice was individually served upon either of them and KJS Ahluwalia was never authorised by each of them to act on their behalf - in absence of serving notice and affording opportunity individually to the assessees (petitioners, ibid), the decision taken in transferring IT cases of these four petitioners is in clear violation of S. 127(2) of IT Act. Counsel further submits that the power can be exercised u/s 127(2)(a) by the authority only after the agreement being arrived at between the assessing authority to whom such assessing officers are subordinate, the authority from whose jurisdiction the case is to be transferred after giving the assessee a reasonable opportunity of being heard in the matter, and after recording reasons for doing so, may pass the order of transferring the cases; and according to Counsel, indisputably in instant cases, individual notice has not been served upon these four petitioners, and their rig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order impugned; and it is only after final order being passed regarding centralization and transfer of cases of members of KJS Ahluwalia group, for the first time, in instant petitions, objection has been raised by other assessees that notices have not been individually served upon each of them and once KJS Ahluwalia appeared and contested on behalf of all the assessees (petitioners herein) of KJS Ahluwalia group be considered to be adequately represented and the notice being served upon KJS Ahluwalia may be treated to be notice being served upon all members of KJS Ahluwalia despite being individual assessees. Counsel for the Revenue submmits that once KJS Ahluwalia represented on behalf of all other members of KJS Ahluwalia group, the requirement of S.127(2) was complied with made in its true spirit. Detailed correspondence has been placed on record to show the due application of mind of the competent authority regarding examining the objections submitted by KJS Ahluwalia were taken note of after comments being obtained from Commissioner/Director of IT Bhubneshwar from whose jurisdiction cases were to be transferred, and after being satisfied, order was passed transferring the IT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 is possible to do so, and after recording his reasons for doing so, pass the order; (b) where the Directors General or Chief Commissioners or Commissioners aforesaid are not in agreement, the order transferring the case may, similarly, be passed by the Board or any such Director General or Chief Commissioner or Commissioner as the Board may, by notification in the Official Gazette, authorize in this behalf. ** ** ** Explanation:- In section 120 and this section, the word "case", in relation to any person whose name is specified in any order or direction issued thereunder, means all proceedings under this Act in respect of any year which may be pending on the date of such order or direction or which may have been completed on or before such date, and includes also all proceedings under this Act which may be commenced after the date of such order or direction in respect of any year." Section 127 as envisaged confers power to transfer cases of an assessee at the discretion of competent authority that it is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he file although not communicated to the assessee." Afore quoted principles have consistently followed by various High Courts regarding scope of section 127(1) and (2) of IT Act and what has been observed by Apex Court clearly mandates that it is mandatory to record reasons since it is not a mere formality and contravention whereof being in violation of principles of natural justice on account of omission to communicate the reasons is not expiated. A series of decisions were cited by Counsel for the petitioners on the principle of reasons being not communicated under the order impugned passed u/s 127(2) of IT Act or reasonable opportunity of hearing being not afforded to the assessee or that final order not setting part of reasons for communicating to the assessee, the act in that eventuality was held to be bad in law and could not be said to be in conformity with statutory requirement as provided u/s 127(2) of IT Act. In a recent decision, Delhi High Court in ATS Infrastructure Ltd. v. Commissioner of Income-tax (2009(318) ITR 299), had an occasion to examine scope of order passed by the authority in exercise of powers u/s 127(2) of IT Act and taking note of earlier judgme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hluwalia who manages the day to day affairs of the iron mines at Barbil resides at Rourkela and Barbil in Orissa. (c) Huge expenditures under the head "Rejects Removal" has been claimed in the P and L account of the mining concerns and on examination of statements of some of the parties recorded u/ss.131 and 133a of the I.T. Act., by the ADIT (Inv.), unit-1 (1), Bhubneshwar put a question mark on the genuineness of these expenses as some of the parties at Kolkata, Hyderabad and Bangalore, in whose names these expenses have been shown have denied to give services to the assessee and they have admitted that they have acted as entry provider only. The names of such parties are not disclosed here as the investigation/assessment is yet to be completed and disclosure may adversely affect the further proceedings of the department. The ADIT (Inv.) has also given a chart in one case where the money channelized back to the one of the company of the assessee in form of share application. (d) Therefore, keeping in view of the above nature of discrepancies the physical inspection of mines and enquiries from various parties in whose name the expenses specifically "Removal of Rejects" hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Director of M/s Kamal Sponge Power and steel Ltd. (CWP-13272/2010), M/s Kamaljeet Singh Ahluwalia (CWP-13410/2010 - proprietory Firm) besides being individual assessee as KJS Ahluwalia (CWP-13411/2010) and is representing on their behalf in these three writ petitions, ibid and atleast notice served upon him can be construed to be notice served upon assessees (KJS Ahluwalia, M/s Kamal Sponge and Power steel and M/s Kamaljeet Singh Ahluwalia); and opportunity of hearing being afforded regarding these troika assessees ibid, while the authority passed order impugned dt. 26/09/2010. At the same time, it has not been controverted by the respondents authority that the notice to the assessees (Pawan Ahluwalia (CWP-13303/2010), Prashant Ahluwalia (CWP-13299/2010), Smt. Indu Ahluwalia (CWP-13280/2010) and M/s Kaypee Enterprises (CWP-13277/2010) despite individual assessees, was never served and at no point of time, they were called upon at any stage in regard to centralization and transfer of their IT cases from Jaipur to Rourkela. Whereas the defence of respondents authority that Kamlajeet S. Ahluwalia was always representing all the assessees; as such no individual notice to the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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