TMI Blog2017 (9) TMI 1040X X X X Extracts X X X X X X X X Extracts X X X X ..... with such reasons. The petitioner is a part of group companies which were subjected to common search action. The assessments of all 42 group companies are being centralised at one place. In view of the judgment of this Court in case of Shree Ram Vessel Scrap P. Ltd.(2013 (10) TMI 982 - GUJARAT HIGH COURT) we find no reason to interfere. - Special Civil Application No. 10328 of 2017 - - - Dated:- 13-9-2017 - MR. AKIL KURESHI AND MR. BIREN VAISHNAV, JJ. For The Petitioner : MR NARESH JAIN WITH MR SP MAJMUDAR, ADVOCATE For The Respondent : MRS MAUNA M BHATT, ADVOCATE ORAL JUDGMENT ( PER : HONOURABLE MR.JUSTICE AKIL KURESHI) 1. This petition is filed by the petitioner to challenge an order dated 23.11.2016 passed by the Principal Commissioner of Incometax, Ahmedabad, transferring the petitioner's case for assessment from DCIT, Circle2, Ahmedabad to ACIT, Central Circle, Moradabad. 2. The petition arises in the following background. The petitioner is a company registered under the Companies Act and is engaged in manufacture of electronic items. The principal place of business of the petitioner is situated at Gandhidham, Gujarat and Corporate offi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting any reasons, why the authority proposed to transfer the case, the Principal Commissioner merely called upon the petitioner to attend his office for hearing. This notice gives not the slightest idea to the petitioner why the assessment which is otherwise competent 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. 5. After this judgment was passed, the authority issued a notice to the petitioner on 5.8.2016 informing the petitioner that hearing was fixed to consider the transfer of case from Ahmedabad to Moradabad to facilitate coordinated investigation in search and seizure cases along with the case of other group companies. Subsequently, the authority issued another communication dated 3.11.2016 in which the reasons, why such transfer of case was proposed, were indicated. In the communication after referring to the said judgment dated 18.7.2016, it was stated that : 2. It is proposed to tran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d business associates. A list of key persons of the Genus Group who are having major share holding in M/s. Genus Electrotech Ltd. are as under: Sr.No Name of share holder No. of shares % of shares 1 Ishwar Chand Agrawal 879600 21.25 2 Vishnu Todi 696750 16.83 3 Narayan Prasad Todi (HUF) 325000 7.85 4 Ishwar Chand Agrawal (HUF) 303000 7.32 5 Banwari Lal Todi 297000 7.18 6 Phoos Raj Todi (HUF) 293000 7.08 7 Genus Power Transfer Ltd. 279500 6.75 8 Amrit Lal Todi (HUF) 226000 5.46 5. From the above, it is evident that business transactions of your company are in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learned counsel Shri Naresh Jain raised the following contentions : 1) The High Court having previously quashed the order of transfer of assessment, it was not open for the department to pass a fresh order. 2) The transfer of assessment at a place nearly 800 kms away from Ahmedabad would cause great prejudice to the petitioner. The authority without considering such hardship passed the impugned order. 3) There was no agreement between the Principal Commissioner of Ahmedabad and Moradabad, as required under subsection( 2) of section 127, before the transfer of assessment. 4) The authority did not apply mind to the various objections raised by the petitioner and proceeded in a mechanical manner. Mere recitation that for coordinated investigation and assessment, transfer of assessment was necessary, would not fulfill the requirement of fair hearing envisaged under section 127 of the Act. Learned counsel relied on judgments to which we would refer to at an appropriate stage. 8. On the other hand, learned counsel Ms. Bhatt for the department contended that the High Court had quashed the earlier order of transfer of assessment only on the ground of non hearing which did ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n administrative action is struck down on the ground of breach of principles of natural justice, action does not stand terminated and it is always open for the authority to proceed further from the stage where the defect has been detected. In any case, we do not see any warrant in the judgment of the High Court by which the department was precluded from initiating a fresh procedure for transfer of the petitioner's assessment case after following the requirements of law. 10. In the present case what the department did was to supply tentative reasons why the authority was considering to transfer the petitioner's case to Moradabad. The petitioner was allowed to make a representation. Such representation was considered and a final order was passed. Insofar as the requirement of hearing is concerned, therefore, we see no breach. 11. This brings us to the merits of the order and the requirement of the agreement between the two Principal Commissioners as envisaged under subsection( 2) of section 127 of the Act. In this context, we may refer to the statutory provisions. 12. Section 124 of the Act pertains to jurisdiction of Assessing Officer. Subsection( 1) of section 124 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ipal Chief Commissioners 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 subsection (1) or subsection (2) shall be deemed to require any such opportunity to be given where the transfer is from any Assessing Officer or Assessing Officers (whether with or without concurrent jurisdiction) to any other Assessing Officer or Assessing Officers (whether with or without concurrent jurisdiction) and the offices of all such officers are situated in the same city, locality or place. ( 4) The transfer of a case under subsection (1) or subsection (2) may be made at any stage of the proceedings, and shall not render necessary the reissue 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 cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... administration of assessments giving consistency, transparency and predictability on the question of which Assessing Officer would deal with which assessments. Nevertheless, an assessee cannot choose his Assessing Officer. At the same time, it is also recognised that transferring the assessment of an assessee at a far away place would lead to hardship and cause prejudice. It is in this context that the section requires giving of a reasonable opportunity of being heard to the assessee and to record reasons for transferring the assessment. The Courts have also recognised that transferring an assessment of an assessee at a far away distance would certainly cause inconvenience and prejudice. It is in this respect that under subsection( 3) of section 127, the requirement of hearing and recording of reasons for transferring an assessment is not made applicable when the assessment is being transferred from one Assessing Officer to another Assessing Officer, both being situated in the same city, locality or place. The third important element of section 127 is when an assessment is being transferred from one Assessing Officer to another Assessing Officer, both of whom are not subordinate t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l Director of Incometax, Dehradhun, had sent a proposal for centralisation of 42 cases of the group proposing to centralise them with the Assessing Officer, Central Circle, Moradabad. All the cases are covered under the warrant of authorisation under section 132(1) and 132A of the Act and books and documents were found and seized in such cases. These cases are directly connected to the said group and for proper and meaningful coordinated investigation, these cases were required to be centralised before one Assessing Officer. He was therefore, requested to consent for such centralisation of the cases. 17. On 14.9.2015, the Deputy Director of Incometax (Investigation) Moradabad, wrote to the Principal Director of Incometax (Investigation) Kanpur, sending a proposal for centralisation of all 42 assessment cases for the sake of better coordination and effective investigation of the group cases before the Assessing Officer, Central Circle, Moradabad. On 16.10.2015, the Principal Commissioner of Incometax, Central, Lucknow, wrote to the Principal Commissioner of Incometax, Ahmedabad, conveying his consent for centralisation of the cases of the petitioner before ACIT, Central Circle, M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee and, thereafter, passes a reasoned order transferring the assessment, his action would fail merely because in writing he did not record his agreement. Contrary to what was canvassed before us, decision of the Supreme Court in case of Noorul Islam Educational Trust v. Commissioner of Income tax and others reported in (2016) 388 ITR 489(SC) does not lay down any such proposition. It was a case where the affidavit filed on behalf of the Revenue did not disclose that there was any agreement as required under section 127(2)(a) of the Act. It was merely averred in the affidavit that there was no disagreement between the two Commissioners. In this background, the Supreme Court observed that absence of disagreement cannot tantamount to agreement as visualised under section 127(2)(a) of the Act which contemplates a positive state of mind of the two jurisdictional Commissioners of Income tax which is conspicuously absent in the said case. The Supreme Court has used the expression positive state of mind referring to the requirement of agreement contained in the said provision. 19. The decision of learned Single Judge of Madras High Court in case of Noorul Islam Education Trus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 27 provides that nothing contained in subsection( 1) or subsection( 2) shall be deemed to require giving of any such opportunity where the transfer is from any Assessing Officer to another and offices of all such officers are situated in the same city, locality or place. Subsection( 4) of Section 127 provides that the transfer of a case under subsection( 1) or subsection( 2) may be made at any stage of the proceedings and shall not render necessary the reissuance of any notice already issued by the Assessing Officer from whom the case is transferred. 21. Exercise of power under subsection( 1) and subsection( 2) of the Act comes with certain procedural requirements namely, of granting a reasonable opportunity of being heard in the matter wherever it is possible to do so, of recording of reasons for passing such order and as provided by the Supreme Court in Ajanta Industries (supra) communicating such reasons also to the assessee. Subject to fulfillment of such procedural requirements, the authority under section 127 enjoys considerable discretion while exercising the power contained in subsection( 1) or subsection( 2) thereof. Such discretion ofcourse has to be exercised for a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f one officer to another officer for better administration of the Act could be diverse and impossible to enumerate. It is for the above reason that Section 127 of the Act has not limited the exercise of jurisdiction by specifying any circumstances before the authority can exercise his powers to transfer the case. One more fact which cannot be lost sight of is that an assessee cannot choose his Assessing Officer and, therefore, if the transfer order does indicate some valid reasons to justify the transfer and such reasons are neither perverse or arbitrary or mala fide this Court would not interfere with the reasonable exercise of discretion. 23. The Delhi High Court in case of Vishal Kumar v. Commissioner of Income reported in (2014) 44 taxmmann.com 180 (Delhi), observed as under : 10. The assessee also has the opportunity to present his case and be subject to a regular assessment, in front of the Assessing Officer to whom jurisdiction has been transferred. No prejudice is caused by the mere fact of a Section 127 order, such that detailed reasons and specific grounds are required to be provided, as the petitioner today argues. Equally, the showcause notice dated 9.10.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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