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2016 (7) TMI 974 - GUJARAT HIGH COURT

2016 (7) TMI 974 - GUJARAT HIGH COURT - TMI - Transfer of cases - petitioner's assessment came to be transferred from DCIT (Circle2)( 1)(1), Ahmedabad to ACIT (Central Circle) Moradabad (U.P.) - Held that:- For multiple reasons, this notice would fail the test of granting reasonable opportunity of hearing. Mere issuance of notice inviting attendance of an assessee for hearing of a case for transfer of the assessment can hardly be stated to be fulfillment of requirement of hearing. On what primaf .....

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mpetent at Ahmedabad is proposed to be transferred some 700 kms away at Moradabad in U.P. In other words, the authority asked the assessee to imagine the possible grounds why the case would be considered for transfer and then to meet such grounds by making representation. He thus made the procedure of giving hearing a mere formality. - After attempting on couple of occasions to elicit further response from the Commissioner, the petitioner raised written objections under letter dated 04.01.20 .....

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er of assessment, the petitioner had raised such detailed objections shortly thereafter. However, the fundamental action of the authority was flawed since at no point of time, the petitioner was given any idea why the assessment was under transfer. - orders set aside. - SPECIAL CIVIL APPLICATION NO. 9010 of 2016 - Dated:- 18-7-2016 - MR. AKIL KURESHI AND MR. A.J. SHASTRI, JJ. FOR THE PETITONER : MR.NARESH JAIN, ADVOCATE for MR SP MAJMUDAR, ADVOCATE FOR THE RESPONDENT : MRS MAUNA M BHATT, ADVOCAT .....

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ACIT, Circle12( 1), New Delhi, as the registered office of the petitioner company was situated within his jurisdiction. In the year 2011, the petitioner shifted its corporate office to Ahmedabad and due to which the jurisdiction of the petitioner for assessment was transferred to Ahmedabad. At the request of the petitioner, its pending appeals for the earlier assessment years 2006-07 to 2008-09 were also transferred to Ahmedabad. 4. On 3031/ 07/2015, search and seizure operations were carried o .....

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e matter sited above, I am directed to intimate you that the hearing is fixed in your case, in respect to transfer your case at Moradabad (UP). In view of the above, you are requested to attend the hearing fixed on 23.11.2015 at 1230 p.m. at Room No.101, 1st Floor, Navjivanm Trust Building, Ahmedabad. 6. In response to such notice, the petitioner replied under letter dated 23.11.2015 and sought adjournment. On 21.12.2015, the petitioner wrote yet another letter and demanded certain information a .....

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s its records at Ahmedabad since 2008-09. 2) That on 30th and 31st July search and seizure operations was conducted at the residential premises of directors of the company at their residence at Gandhidham under the provisions of section 132 of Income tax Act by DDIT (Investigation) Moradabad (U.P.) and simultaneously survey was also conducted at the factory premise of the company situated at Gandhidham. 3) That on the same days search and seizure was conducted in the premises of cousin brothers .....

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.] with the search and seizure operations with cousin brothers assessed at Moradabad. Even copy of letter of DDIT Moradabad requesting for transfer of case is not made available to company. d) Primafacie there is nothing which require transfer of case of the Company at Moradabad even for shortwhile if it is assumed that there are some information relating to company and others assessed at Moradabad the same be communicated to Ahmedabad Income Tax Authorities for necessary action. In view of abov .....

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ech Ltd. Before passing an order u/s 127(2) of the Act, sufficient opportunity of being heard was given vide this office letter dated 03.11.2015 in view of change of cities. The assessee asked for an adjournment vide letter dated 14.12.2015. This was granted. The assessee on the reporting date asked for the copy of letter from I.T. Authorities at Moradabad, but has not intimated any difficulties as such. The assessee was well aware of search in connected cases at Moradabad. Hence, it can be take .....

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. SCHEDULE Sr. No. Name of the Assessee PAN Assessing Officer 1 2 3 From (4) To (5) 1 M/s. Genus Electrotech Ltd AABCG9645H Dcit, Cir-2(1) (1), Ahmedabad ACIT, Central Circle, Moradabad 2. This change of jurisdiction is ordered for the sake of coordinated enquiries in search and seizure cases. This order shall take effect from 30.12.2015. 8. This order, the petitioner has challenged in the present proceedings primarily on the ground of breach of principles of natural justice. First contention of .....

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er of assessment would therefore, cause great prejudice and inconvenience to the petitioner. 9. On the other hand, learned counsel Mrs.Bhatt for the department opposed the petition contending that the notice for transfer was issued. The competent authority while exercising powers under section 127(2) of the Income Tax Act, 1961 ('the Act' for short) has recorded proper reasons in the order of transfer. All the requirements of exercise of powers under section 172(2) of the Act were thus, .....

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decision of the Supreme Court in case of Dharampal Satyapal Limited v. Deputy Commissioner of Central Excise, Gauhati and others, reported in 2015 (8) SCC 519. 10. Section 127 of the Act pertains to power of the prescribed Revenue authorities to transfer cases. Under subsection (1) thereof, such authority after giving the assessee a reasonable opportunity of being heard wherever it is possible to do so and after recording reasons for doing so, is authorized to transfer any case from one or more .....

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rt of the statute. It is not even the case of the department that no such hearing was necessary. In the present case, requirement of issuing a notice and allowing the petitioner to raise objections why the case should not be transferred, were therefore, the fundamental and essential requirements before the power of transfer could have been exercised. In this context the question would be, whether mere issuance of notice without any indication whatsoever of the grounds on which the assessment is .....

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his notice would fail the test of granting reasonable opportunity of hearing. Mere issuance of notice inviting attendance of an assessee for hearing of a case for transfer of the assessment can hardly be stated to be fulfillment of requirement of hearing. On what primafacie grounds or reasons the case is to be transferred, was nowhere indicated in this notice. The petitioner was left to imagine such grounds and meet with them by making a representation in writing or orally if he so desired. By n .....

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eet such grounds by making representation. He thus made the procedure of giving hearing a mere formality. 13. After attempting on couple of occasions to elicit further response from the Commissioner, the petitioner raised written objections under letter dated 04.01.2016 and specifically raised four grounds why the case should not be transferred. The petitioner did refer to the search and seizure operations at the residential premises of the director of the company and survey action at the factor .....

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under transfer. 14. The fact that in the present case, the petitioner was aware about the parallel search and survey proceedings would not change the contours of law. The administrative law which has over a long period of time been well refined recognizes certain elements of principles of natural justice inbuilt in any administrative order having adverse civil consequences which cannot be jettisoned by bringing the theory of empty formality or no prejudice. 15. A similar question came up for co .....

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ons for the proposed action, it would be impossible for the noticee to put forth its point of view with regard to the reasons for the proposed action. The views of the noticee are to be considered by the authority before taking any decision to confirm or drop the notice. A show cause notice to be effective must be adequate so to enable a party to effectively object/respond to the same. The authority concerned is obliged to consider the objections, if any, and thereafter reach a finding one way o .....

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ion Bench of this Court while upholding that effective and coordinated investigation is a valid reason for transfer of an assessment, upheld the action of transfer passed by the competent authority in the said case. In said case also, it was noticed that the notice for transfer had indicated primafacie reasons for transfer of assessment. We may reproduce relevant portion of the judgment: 21. Exercise of power under subsection( 1) and subsection( 2) of the Act comes with certain procedural requir .....

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e has to be exercised for achieving the public purpose and not for any arbitrary or irrelevant consideration. On the other hand, it can also be seen that transfer of a pending case from one Assessing Officer to another outside of a city, locality or place is likely to cause considerable inconvenience to an assessee. Therefore, even though an assessee may not have a vested right to insist that his assessment be completed only at one place or by a particular Assessing Officer, nevertheless, the re .....

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icial review against the administrative order in exercise of writ jurisdiction, the Court is concerned with the decision making process and not the final decision itself. Unless the reasons which prompted the competent authority to transfer the case can be stated to be wholly irrelevant or arbitrary, the Court would not interfere with such reasons. Ofcourse an order of such nature can and need to be quashed if it is demonstrated that same is passed either without jurisdiction or is actuated by m .....

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e oral submissions by the authorised representative, the Commissioner passed the order transferring the cases on the ground that cases were required to be centralised. Since Bhavnagar did not have Central Range Office, they could be transferred at Ahmedabad. Their request that cases be consolidated at Bhavnagar or Mumbai was considered but not accepted. They were instead offered alternative places for transfer of cases within the jurisdiction of Surat, Baroda or Rajkot Office. They did not accep .....

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of the transfer. Before doing so, the authorised representative of the petitioners was offered three other alternatives Rajkot, Baroda and Surat where the department had centralized wing. We do not find that the reasons either lacked clarity or sufficiency. When it is pointed out that several places of the company were subjected to common search operation, it is but natural that it would be in the interest of Revenue and perhaps also in the interest of the assessees that cases be consolidated an .....

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