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ANUBEN LALABHAI BHARWAD Versus PRINCIPAL COMMISSIONER OF INCOME TAX-3, AND 1

2016 (8) TMI 167 - GUJARAT HIGH COURT

Transfer of cases - application of mind - Held that:- The power exercised by the authority under Section 127 of the Act is thoroughly uncalled for in the absence of any linkage material of any nature. - In view of facts prevailing on record, it clearly transpires that the authority has not acted in the spirit in which it has to act while dealing with an issue of transfer. By merely reproducing and taking out the words from the statutory provisions, the order cannot be said to be passed upon .....

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is ordered to be transferred back from the office of DCIT,Central Circle-3, Surat to ITO, Ward No.3(2)(2), Ahmedabad and (iii) petitioner of SCA No.4475 of 2016 is ordered to be transferred back from the office of DCIT,Central Circle-3, Surat to ITO, Ward No.3(3)(4), Ahmedabad and the respondent No.1 authority is directed to proceed with the same from the stage from where it may have presently reached. Rule made absolute in each matter. - SPECIAL CIVIL APPLICATION NO. 4473 of 2016 TO SPECIAL CI .....

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as a lead matter. 2. The petition being SCA No.4473 of 2016 is filed for the purpose of challenging legality and validity of an order dated 6.1.2016 passed in exercise of powers under Section 127(2) of the Income-Tax Act,1961 as also notices dated 26.2.2016 and 4.3.2016 whereby, the case of the petitioner is transferred by the respondent authority from Ahmedabad to Surat and the object shown therein while passing the order is for the purpose of coordinated investigation and assessment. The case .....

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dated 6.1.2016 as also notice dated 4.3.2016 came to be challenged whereby, the case of the petitioner came to be transferred from Ward No.3(3)(4), Ahmedabad to DCIT, Central Circle-3, Surat. 3. The case of the petitioner in almost all the three matters is similar and since SCA No.4473 of 2016 is treated as a lead matter, facts of the said case are taken into consideration while passing this common judgment and order. 4. It is the case of the petitioner that she is an individual having been regu .....

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unity of being heard was provided to the petitioner in terms of Section127(2)(a) of the Income-Tax Act by keeping the date of hearing on 22.12.2015 at 11.00 a.m. It is the case of the petitioner that upon receipt of the notice, the petitioner contacted her counsel in order to prepare an appropriate reply and proper representation before respondent No.1 and for that purpose, a short adjournment of a day was sought from the authority as there was a pre-fixed professional commitment out of Ahmedaba .....

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for such proposed transfer. It was also submitted that even on the basis of coordinated investigation and assessment, the object of making such centralized investigation may not be achieved as the cases of one group are scattered at a different place before different assessing officer. While making such request, the petitioner has submitted that she has no connection of whatsoever nature or in any way related to said group, namely, M/s.HVK International Group, Surat rather she heard the name of .....

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red which would permit the authority to link the petitioner with M/s.HVK International Group, Surat. It was submitted that the search which was carried out was under mistaken identity of Shri Sanjay Dhanak, a builder who constructed Shyam Residency in Science City Road, Ahmedabad and the petitioner's husband happened to be the purchaser of this flat, so much so that even said Mr.Dhanak has sworn an affidavit on 7.12.2015 which was also enclosed and then, submitted that the petitioner, who is .....

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Tax Act. This was informed during the course of brief hearing which took place on 5.1.2016. But, thereafter since nothing was heard from respondent No.1, another combined letter dated 25.1.2016 was filed in the office of respondent No.1 with a request to recall the order of transfer made in case of Shri Lalabhai K. Bharwad and simultaneously, sought the copies of approval of DGIT (Inv.) and the order sheet. This copy of approval as well as order sheet has not been provided nor in view of such si .....

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ction 142(1) r/w Section 129 of the Income-Tax Act assuming the jurisdiction to the pending assessment proceedings of the petitioner for the assessment year 2013-14 and consequently, on 4.3.2016, the notices came to be issued under Section 153(2) of the Income-Tax Act calling upon the petitioner to furnish returns of income for the assessment year 2009-2010 to 2014-15. In view of this development took place abruptly, the petitioner finding it not proper that her case be transferred from Ahmedaba .....

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titioner with M/s.HVK International Group, Surat. It was brought to the notice of the Court that even after extensive search at the premises of the husband of the petitioner on 9.10.2014 as well as on the next day i.e. on 10.10.2014, no material is found which would link the petitioner with M/s.HVK International Group, Surat. Even the husband had also no linkage in any manner with M/s.HVK International Group, Surat. It was also contended that during the search proceedings, statement of the husba .....

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warrant the authority to transfer the case of the petitioner from Ahmedabad to Surat. It was also contended by learned counsel for the petitioner that even the petitioner has not been afforded any reasonable opportunity of hearing in the sense in which it has to been afforded and therefore, the order passed by the authority is grossly in violation of principles of natural justice. Even considering the reasons which are assigned in the order dated 6.1.2016 which is under challenge, there is no co .....

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er including the husband had any transaction either with said Shri Sanjay Dhanak or M/s.HVK International Group, Surat. It was specifically mentioned in the letter dated 21.12.2015 that the petitioner has no connection whatsoever nor has even purchased at any point of time any Diamond, Gem, Jewelery or any immovable property from the said group, namely, M/s.HVK International Group, Surat. There is no iota of evidence which would connect or create a linkage of the petitioner with M/s.HVK Internat .....

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absence of any material of any nature, to create a linkage, the authority cannot transfer the case of the petitioner under the guise of effective and coordinated investigation and assessment. Learned counsel has also submitted that this is nothing but a gross misuse of the powers at the behest of authority and requested the Court not to allow such irregular exercise of power to operate. It was also contended that even the order impugned in the petition dated 6.1.2016 reflects no reasons which w .....

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harassment or coercive process of assessment and therefore, requested the Court to set aside the impugned orders. 6. As against this, Mr.Varun K. Patel, learned counsel appearing on behalf of transferring authority has submitted that a detailed search was carried out at the premises and on the basis of material available, the authority has prima facie established the linkage of the petitioner with M/s.HVK International Group, Surat and resultantly, requested that the transfer has been made sole .....

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ed under Section 127 of the Act has been considered by the authority and keeping in view the sole object underlying the statutory provision, the order came to be passed. By filing affidavit-inreply, learned counsel has submitted that sufficient opportunity was given to the petitioner to represent the case and it has been submitted that only after considering the material produced and available on record and after considering the representation of the petitioner, the authority has exercised the p .....

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e said Shri Sanjay Dhanak had a business dealing in the real estate ventures with M/s.HVK International Group, Surat, there is a reasonable belief on the part of respondent authority that petitioner has close nexus with the said group and as such, the authority has justifiably passed an order keeping in view the object of Section 127 of the Act. 6.2 Learned counsel for the respondent No.1 authority has further submitted that the premises in question was utilized as a business premises of M/s.Bri .....

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power and therefore, same is not vitiated and ultimately, requested the Court not to interfere with the said order which is passed in exercise of statutory power. 7. Mr.Sudhir Mehta, learned counsel appearing on behalf of respondent No.2 authority has submitted that exercise of power is just and proper and ultimately if the said exercise is undertaken keeping in view the object of achieving effective and coordinated investigation and assessment and therefore, for the purpose of making such effec .....

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rt that the authority has not acted in a just and proper manner. Before adverting to the contentions raised by learned counsel for the respondents representing the authorities, we may refer to the statutory provisions in which the authority is entrusted with the power. Relevant Section 127 of the Act as such reproduced hereunder: Section 127. (1) The [Principal Director General or] Director General or [Principal Chief Commissioner or] Chief Commissioner or [Principal Commissioner or] Commissione .....

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transferred and the Assessing Officer or Assessing Officers to whom the case is to be transferred are not subordinate to the same [Principal Director General or] Director General or [Principal Chief Commissioner or] Chief Commissioner or [Principal Commissioner or] Commissioner,- (a) where the [Principal Directors General or] Directors General or [Principal Chief Commissioners or] Chief Commissioners or[Principal Commissioners or] Commissioners to whom such Assessing Officers are subordinate ar .....

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ssioners or] Chief Commissioners or [Principal Commissioners or] Commissioners aforesaid are not in agreement, the order transferring the case may, similarly, be passed by the Board or any such [Principal Director General or] Director General or [Principal Chief Commissioner or] Chief Commissioner or [Principal Commissioner or] Commissioner as the Board may, by notification in the Official Gazette, authorise in this behalf. (3) Nothing in sub-section (1) or sub-section (2) shall be deemed to req .....

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sue of any notice already issued by the Assessing Officer or Assessing Officers from whom the case is transferred. 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 .....

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sfaction on the issue, an appropriate order is required to be passed. Law requires that every administrative order must be in consonance with well recognized principles of natural justice and the natural justice compliance demands not only mere granting of reasonable opportunity but also to assign cogent reasons and assigning of reasons is nothing but a part and parcel of compliance of principles of natural justice and therefore, the authority under a legal obligation to exercise the power in a .....

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en the authorities which have been cited specifically have also not been dealt with and in addition thereto, most material aspect which was expected to be considered s that the petitioner has specifically contended that there is no life linkage at all with the said group, namely, M/s.HVK International Group, Surat and there is no iota of evidence which would connect even remotely to the said group. Now, when this specific case has been put-forth, it was expected on the part of respondent authori .....

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sufficient enough to link the petitioner even remotely with the said group, namely, M/s.HVK International Group, Surat. Even if we recall in a cognate petition being SCA No.4755 of 2016 in case of Lalabhai Kamabhai Bharwad arising out of the very same search operation, a detailed questionnaire was put by the authority in which also nothing incriminating found of any nature which would even prima facie establish the linkage of the petitioner with M/s.HVK International Group, Surat. On the contrar .....

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is emerging that the authority has no specific material on record or any independent material to link thep petitioner in any manner with M/s.HVK International Group, Surat. The authority appears to have drawn inferences and simply because Shri Sanjay Dhanak had some linkage with M/s.HVK International Group, Surat, the authority presumed that petitioner also must have remove connections and thereby, in casual exercise of power, the provision of Section 127 of the Act is resorted to and transferr .....

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nal Group, Surat. This Court found from the statements, material on record as well as from the affidavits filed in a cognate petitions that no connection is emerging except a bare transaction of purchase of flat at Science City Road, Ahmedabad by the husband of the petitioner. Except that solitary circumstance which is not sufficient enough to establish linkage, there is no other cogent material to arrive at a conclusion that even for coordinated investigation and assessment, the case deserves t .....

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se of Lalabhai Kamabhai Bharwad, as stated hereinabove, referring to SCA No.4755 of 2016 (a cognate matter arising out from the same proceeding), even a certificate came to be issued by said M/s.HVK International Group, Surat dated 3.12.2015 wherein, it has been categorically stated that there is no connection of any nature or any financial transaction with the petitioner. Said certificate is very much part of the record of said cognate petition and to deal with, we may refer the specific stand .....

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ai Bharwad and Shri Pintoo Lalabhai Bharwad in past or present. 13. Even a specific letter also in the form of an affidavit filed by Shri Sanjay Dhanak, from whom a flat has been purchased by the husband of the petitioner and said Shri Sanjay Dhanak has filed an affidavit on oath wherein also, he has clarified in no uncertain terms that the petitioner has not business connection nor having any financial or other business transactions with him and therefore, said affidavit is also worth to be tak .....

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