TMI Blog2012 (4) TMI 463X X X X Extracts X X X X X X X X Extracts X X X X ..... is still the law of the land and has not been overruled by any competent bench of the Supreme Court whereas a co-ordinate Division Bench has taken a contrary view, judicial decorum demands that we should refer the matter to a larger bench for deciding the question - matter referred to LB. - SPECIAL CIVIL APPLICATION No. 18243 of 2011 to 18251 of 2011 - - - Dated:- 12-3-2012 - MR.BHASKAR BHATTACHARYA, MR.JUSTICE J.B.PARDIWALA, JJ. MR SN SOPARKAR, Sr. Advocate with MRS SWATI SOPARKAR for Petitioner(s) MR MANISH R BHATT, Sr. Advocate with MRS MAUNA M BHATT for Respondent(s) CAV JUDGMENT (Per: HONOURABLE THE ACTING CHIEF JUSTICE MR.BHASKAR BHATTACHARYA) By these Special Civil Applications, the writ-petitioners have challenged the order dated July 29, 2011 passed by the Commissioner of Income Tax, Valsad transferring the cases of the petitioners in exercise of power conferred under sub-section (2) of Section 127 of the Income Tax Act, 1961. 2. The facts giving rise to filing of these applications may be summed up thus:- The petitioner is a firm of which the partners are citizens of India and an assessee under the Income tax Act, 1961 (Act). O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Central Circle-4, Surat. In respect of all the nine cases, the warrant of authorization under Section 132 of the Act have been issued. In view of the above reference letter, a show cause notice dated July 11, 2011 was issued to the petitioners proposing to centralize the petitioners' case from Vapi to Surat. The petitioners filed objections and for effective and coordinated investigation in the search cases of the same group, the order impugned in the applications was passed. The said order was passed after considering the objections raised by the petitioners and also in compliance of the directions and instructions indicated above. The principles of natural justice have been complied with and the impugned order was required to be passed in compliance with the directions/suggestions issued by the DGIT (Inv), Ahmedabad, CIT (Central)-1, Ahmedabad and Chief Commissioner of Income Tax, Surat for administrative convenience related to assessment in cases involving search assessment. 4. An affidavit-in-rejoinder was given by the petitioners thereby reiterating the stance of the writ-petitioners in the original applications and contending that centralization might be requi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d contentions of Mr Soparkar and has by strongly relying upon a Division Bench decision of this Court in the case of Arti Ship Breaking vs. Director of Income Tax (Investigation) and others reported in (2000) 244 ITR 333 contended that mere non-assignment of reason in the order of transfer cannot invalidate the order if the reason for transfer is subsequently communicated. Mr Bhatt contends that in the case before us once in the affidavit filed by respondent No.1 the reason for transfer is disclosed, the requirement of Section 127 of the Act is fully complied with and the petitioners cannot take advantage of the order of the Supreme Court in the case of Ajanta Industries (supra). Mr Bhatt contends that the said decision in the case of Ajanta Industries (supra) has been explained by the above Division Bench of this Court thereby holding that mere non-disclosure of reason cannot lead to a conclusion that the order was illegal. In support of his contention, Mr Bhatt also relied upon the following decisions :- (i) General Exporters vs. CIT reported in (2000) 241 ITR 845 (MAD) (ii) Rathi And Co. vs. Union of India reported in (2004) 267 ITR 295 (GAUHATI); (iii) Trimurti Fragran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee. Mr. Sharma drew our attention to a decision of the Delhi High Court in Sunanda Rani Jain v. Union of India (1), where the learned single judge has taken a contrary view. For the reasons, which we have given above, we have to hold that the said decision is not correct. The appellant drew our attention to a decision of this court in Shri Pragdas Umer Vaishya v. Union of India (2), where rule 55 of the Mineral Concession Rules, 1960, providing for exercise of revisional power by the Central Government was noticed. It was held that under rule 55 the Central Government in disposing of the revision application must record its reasons and communicate these reasons to the parties affected thereby. It was further held that the reasons could not be gathered from the notings in the files of the Central Government. Recording of reasons and disclosure thereof is not a mere formality. Mr. Sharma drew our attention to a decision of this court in Kashiram Aggarwalla v. Union of India (3). It is submitted that this court took the view that orders under section 127(1) are held in that decision to be purely administrative in nature passed for consideration of convenience and no possible p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 127(1) is a serious infirmity in the order for which the same is invalid. The judgment of the High Court is set aside. The appeal is allowed and the orders of transfer are quashed. No costs. 11. We find that a Division Bench of this court in the case of Arti Ship Breaking vs. Director of Income Tax (Investigation) and others reported in (2000) 244 ITR 333 considered the similar question as to whether non-discloser of reason in the order of transfer vitiates the order and in spite of referring the above decision of the Supreme Court decided to ignore such vital defect. The following observations of the Division Bench are quoted below: The last submission which has been made by learned advocate, Shri Puj, is with regard to transfer of the cases from Bhavnagar to Rajkot. It has been submitted by him that in pursuance of the search which had been carried out, the cases of the firm and its partners have been transferred to Rajkot. It has been submitted by him that as per the provisions of section 127(2) of the Act, before transferring the cases from Bhavnagar to Rajkot, the transferring authority ought to have recorded the reasons and communicated the same to the concerned asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... petition was filed, but, looking to the affidavit in reply filed by the respondent concerned and the submissions made by the learned advocate, Shri Naik, it is clear that the reasons were recorded by the concerned authority on the file. The said reasons have already been communicated to the petitioner in the present proceedings. In the circumstances, it cannot be said that the order with regard to the transfer of the case from Bhavnagar to Rajkot is without any application of mind. It is also true that the petitioner had raised certain objections with regard to the transfer when, by a show-cause notice, the petitioner was called upon to show cause as to why its case should not be transferred to Rajkot. It appears, that the said objections were considered but for administrative exigencies, ultimately the impugned order with regard to transfer was passed under the provisions of section 127 of the Act. Thus, it cannot be said that the objections filed by the petitioner were not considered by the concerned authority before passing the impugned order with regard to the transfer of the petitioner s case from Bhavnagar to Rajkot. The learned advocate, Shri Naik, appearing for the resp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1994 SC 1074, and State Bank of Patiala v. S. K. Sharma, AIR 1996 SC 1669, the principles laid down in the case of Ajantha Industries (supra) is no longer a good law. According to their lordships in the above two later decisions it was held that at times non-communication of a report or reasons recorded by the authority would not vitiate the entire enquiry or the proceedings especially when even after furnishing the report or reasons to the concerned person no different consequences would have followed. 13. We have gone through those two decisions minutely. 14. In the case of Managing Director, ECIL v. B. Karunakar (supra), it was held that although on account of the 42nd Amendment of the Constitution, it was no longer necessary to issue a notice to the delinquent employee to show cause against the punishment proposed and, therefore, to furnish a copy of the Inquiry Officer's report along with the notice to make representation against the penalty, whenever the Inquiry Officer is other than the disciplinary authority and the report of the Inquiry Officer holds the employee guilty of all or any of the charges with proposal for any punishment or not, the delinquent employee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this, in turn, raised the question whether each and every violation of rules or regulations governing the enquiry automatically vitiates the enquiry and the punishment awarded or whether the test of substantial compliance should be invoked in cases of such violation and whether the issue has to be examined from the point of view of prejudice. It was further pointed out that as far as the position obtaining under the Code of Civil Procedure and Code of Criminal procedure is concerned, there are specific provisions there under providing for such situation. There is Section 99 of the Code of Civil Procedure and Chapter 35 of the Code of Criminal Procedure. Section 99, C. P. C. says, no decree shall be reversed or substantially varied nor shall any case be remanded in appeal on account of any misjoinder or non-joinder of parties or causes of action or any error, defect or irregularity in any proceedings in the suit, not affecting the merits of the case or the jurisdiction of Court. Section 465(1) of the Criminal Procedure Code, which occurs in Chapter 35 similarly provides that subject to the provisions hereinbefore contained, no finding, sentence or order passed by a Court of comp ..... X X X X Extracts X X X X X X X X Extracts X X X X
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