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2016 (4) TMI 87 - GAUHATI HIGH COURT

2016 (4) TMI 87 - GAUHATI HIGH COURT - [2016] 383 ITR 367 - Denial of fair opportunity - Held that:- Denial of a fair opportunity to the assessee through disclosure of appropriate reasons germane to the objective intended to be achieved, at the stage of show cause notice and therefore the consequential order(s) dated 31.8.2015 and 31.7.2015, are found to be unsustainable and the same are quashed. The matter is however remanded back to the respective Principal Commissioners of Income Tax, Guwahat .....

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, Advocate & Mr. A. Goenka, Advocate For the Respondents : Mr. S. Sarma, Standing Counsel Writ Petition (C) No.5870/2015 Writ Petition (C) No.5871/2015 Writ Petition (C) No.5872/2015 Writ Petition (C) No.5845/2015 Writ Petition (C) No.5876/2015 Writ Petition (C) No.5879/2015 Writ Petition (C) No.6625/2015 Writ Petition (C) No.6626/2015 Writ Petition (C) No.6632/2015 Writ Petition (C) No.6657/2015 Writ Petition (C) No.6658/2015 Writ Petition (C) No.6659/2015 Writ Petition (C) No.6694/2015 Wri .....

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IKAM CHAND CHAUDHARY, KAMNA FRAGNANCE PRIVATE LIMITED, SHRI SUMIT MALOO, MS. SHEWETA BAID, KUBER SECURITIES, S. M. PRODUCTS SHRI BAJRANG LAL MALOO, SON OF LATE SOHAN LAL MALOO, SHRI BHAWANI SHANKAR SHARMA, M/S. CHHATRA SINGH BAID & SONS (HUF), SHRI CHHATRA SINGH BAID, PRIYA FASHION WEAR PRIVATE LIMITED, VIKASH KUMAR MALU & SONS (HUF), JUDGMENT ( Hrishikesh Roy, J. ) Heard Mr. U.K. Borthakur, the learned counsel appearing for the petitioners. The respondents are represented by Mr. S. Sarm .....

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os.6694/2015, WP(C) Nos. 6686/2015, WP(C) Nos.6681/2015 & WP(C) Nos.6689/2015], the show cause notice for transferring the case was issued on 29.7.2015 by the Principal Commissioner of Income Tax, Guwahati-2 and the said notice reads as under:- …………………………….. Sub: Notice u/s.127(2) of the Income-tax Act, 1961 - transfer of your case from ACIT, Circle-4, Guwahati to DCIT, Central Circle-28, New Delhi-reg. Sir, The CCI .....

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therefore proposed to transfer your case from ACIT, Circle-4, Guwahati to DCIT, Central Circle-28, New Delhi. You are hereby provided with an opportunity to represent your case either in person or through an authorized representative or by way of written submission, if any on 07.08.2015 at 10:00 AM at 2nd floor, Aayakar Bhawan, Christian Basti, G.S. Road, Guwahati-781005. In case of failure to comply with this notice, it will be presume that there is no objection to the proposed transfer of you .....

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ip;………….. Sub: Centralisation of Search & Seisure cases ………………… Sir, 1. Your case is proposed to be transferred u/s. 127 of the Income-tax Act,1961 from the ACIT, Circle-2, Guwahati to the O/o. Assistant/Deputy Commissioner of Income-tax, Central Circle-28, New Delhi. 2. Opportunity of being heard is hereby granted to furnish your comments on or before 30/07/2015. In case your comments are not received by 30/07/2015 .....

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d as to why, their respective cases should not be transferred out of the jurisdiction of the income tax officer at Guwahati to the officer at New Delhi. 6. In their respective replies, the assessees contended that the reasons/grounds are not disclosed for transferring the cases to New Delhi in the show cause notice and accordingly request was made to convey the reason for the proposed action and further not to pass any order on the proposed transfer, without communication of the reasons. 7. Ther .....

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ed by the respective counsel representing the assessees and the Revenue and therefore the following order will cover all the cases. 9.1 The learned counsel Mr. U.K. Borthakur for the petitioners refer to both show cause notices to contend that reasons are not disclosed to the assessee as to why their cases are required to be transferred to New Delhi. To be precise, if centralizing the case is the objective, it is not shown why all the cases could not be clubbed under one Income Tax Officer at Gu .....

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the counter affidavit in the WP(C) No.6676/2015 (Bhawani Shankar Sharma vs. Union of India), where the deponent income tax officer stated that coordination of investigation is not required in this case and therefore the order under Section 127(2) of the Income Tax Act was recalled and the case of this assessee was re-transferred to the ITO-1(1), Guwahati. 9.3 According to the petitioners, the show cause notice without containing the real reason was defective and therefore the consequential heari .....

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assessee and in the instant case, the competent Officer at Guwahati could have easily coordinated/centralized the assessment work, for all these litigants. 10.1. On the other hand Mr. S. Sarma, the learned standing counsel for the Income Tax Department submits that most of the assessees involved in the present cases are residents of Delhi and that is one of the reason for transferring these cases to the jurisdiction of the Delhi based Income Tax Officer. 10.2. The learned lawyer for the Revenue .....

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re to record the reason in the order which was communicated to the assessees, violates the principle of Natural Justice. The issue was answered by the Apex Court by stating that when law requires reasons to be recorded in a particular order, which prejudicially affects the interest of any person, such order ceases to be simple administrative order and non-communication of reason in such order will infringe the principles of Natural Justice. 12. The Calcutta High Court in (1998) 233 ITR 0377 (Cho .....

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cited by both sides in support of their respective contention is Rathi and Co. and Ramesh and Co. vs. Union of India reported in [2004] 267 ITR 295 (Gauhati) and therefore this case deserves careful consideration. The challenge here was to an order passed by the CIT, Guwahati-II, transferring the income tax and wealth tax cases of the petitioner from the jurisdiction of the Assessing Officers at Guwahati to the Assessing Officer in Calcutta. Here also, a prior notice was issued to the assessee b .....

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e absence of reason in the show cause notice and requested intimation of the reason, for facilitating effective representation in the proceeding under Sub-Section (2) of Section 127 of the Income Tax Act. Therefore the decision in Rathi and Co. (Supra) should not detain us in the present cases. 14. When a notice under Section 127 of the Income Tax Act is issued, it must prima facie show due application of mind and reasons must also be disclosed so that an effective opportunity is provided to the .....

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f the Income Tax Act. 15. That apart, the order passed under Section 127 of the I.T. Act is a quasi judicial order and it must be established that such order was passed upon due application of mind to the relevant facts having a bearing on the issue for invoking the powers under Section 127(2) of the Income Tax Act. Here we find that the competent authority acted at the request of the CCIT (Central), New Delhi and noticing the reversal of the stand in the WP(C) No.6675/2015, we can reasonably in .....

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the Guwahati based Principal Commissioner of Taxes. 17. In a given situation, centralizing of the cases can be for a bonafide objective but the appropriate reason under the ratio of Ajantha Industries (Supra) must be disclosed in the notice itself and the failure to do so would vitiate the notice and also the transfer order, consequent upon that inadequate notice. 18. Furthermore, while centralizing the cases can be a good ground for invoking the powers under Section 127(2) of the Income Tax Ac .....

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