TMI Blog2013 (11) TMI 1756X X X X Extracts X X X X X X X X Extracts X X X X ..... s issued on 20th May, 2013 under s. 127 of the IT Act for transferring the assessment cases of the petitioners from Ratlam to Indore and the reason mentioned in the notices was that for administrative convenience and for facilitating coordinated investigation in the group cases with reference to interlinked documents/transactions, the cases are required to be consolidated and transferred from Ratlam to Indore. Petitioner No. 1 again filed his objection on 27th May, 2013 and stated that his earlier reply filed on 6th May, 2013 should be treated as reply to the new show-cause notice. The petitioner also informed that the group cases were already centralised at Ratlam vide order dt. 16th May, 2012 and notices have been issued under s. 153A by the Dy. CIT, Ratlam. Other petitioners have also submitted their objections and they have adopted the reply filed by the petitioner No. 1. The petitioners further stated that finally an order was passed on 31st May, 2013 transferring the cases of the petitioners from Ratlam to Indore. The petitioners have raised various grounds while challenging the validity and legality of the order dt. 31st May, 2013. The contention of the petitioners is that p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not at all sufficient as the assessee should have been intimated about the reasons in a comprehensive manner in order to enable him to make an effective representation. Learned counsel for the petitioners has further relied upon a judgment delivered by the Delhi High Court in the case of Power Controls v. CIT [2000] 241 ITR 807 and again his contention is that non-disclosure of specific reasons for transfer will vitiate the order of transfer passed by the Competent Authority. Learned counsel for the petitioners has also placed reliance upon a judgment delivered in the case of General Exporters v. CIT [1998] 234 ITR 860 (Mad.) and his contention is that in the aforesaid case as the show-cause notice was silent and no reasons were disclosed, no opportunity of hearing was afforded to the assessee who had filed objections, the order passed under s. 127 was quashed and, therefore, in the present case also the order passed in similar circumstances deserves to be quashed. Learned counsel for the petitioners has also placed reliance upon a judgment delivered by the Calcutta High Court in the case of Lords Distillery Ltd. v. CIT [2007] 294 ITR 147 and his contention is that in the light of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd., Indore, Narayan Niryat India (P) Ltd., Indore, Avalanche Realty (P) Ltd., Indore and Narayan Ambika Infrastructure (P) Ltd., Indore are having their registered Office at Satyageeta Apartment, 90/47, Sneh Nagar, Main Road, Indore and except for Ambika Solves Ltd., all other cases were assessed at Indore. Respondents have further stated that the case of Suresh Chandra Garg had the address of Akola but was being assessed at Ratlam; cases of Ms. Rashmi Garg, Shri Kailash Chandra Garg and Shri Pawan Garg had the same address at Indore and the case of Ms. Rashmi Garg was assessed at Indore. The residence of Shri Kailash Chandra Garg, Shri Pawan Kumar Garg and Ms. Rashmi Garg is at 87, Samrat Ashok Nagar, Behind Sapna Sangeeta, Indore and, therefore, contention of the petitioners that their offices and residences were located within the territorial jurisdiction of Ratlam, is false. The respondents have further stated that the order has been passed by the Competent Authority i.e., the CIT, Ujjain and the CIT, Ujjain has acted well within his jurisdiction and passed an order for centralisation dt. 31st May, 2013 as per the provisions of the IT Act, 1961. It has also been stated in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ondents have also stated that the order passed by them is in consonance with the statutory provisions and they have placed heavy reliance upon a judgment delivered by the High Court of Chattisgarh in the case of CIT v. Union of India (Writ Appeal No. 27 of 2013, decided on 14th March, 2013). The respondents have prayed for dismissal of the writ petition. 4. Heard learned counsel for the parties at length and perused the record. 5. The petitioners before this Court are aggrieved by an order passed under s. 127(2) of the IT Act, 1961 transferring cases of the petitioners from Ratlam to Indore. A show-cause notice was issued on 30th April, 2013 for centralisation of the cases with Dy. CIT (Central), Indore Region, which reads as under : Government of India Ministry of Finance (Department of Income-tax) Office of the Commissioner of Income-tax Aayakar Bhawan, Bharatpuri, Ujjain Telephone (0734) 2527843, Fax- 2515611 F.No. CIT/UJN/CS./13-14/431 Dated : 30th April, 2013 To, Ambika Solves Ltd., Satyageeta Apartment, 90/47, Sneh Nagar, Main Road, Indore. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd your case was proposed to be centralized with Dy. CIT (Central), Indore. Vide this office letter dt. 30th April, 2013, you were asked to give your comments/reply on this issue by 6th May, 2013. On 6th May, 2013 you made the submission wherein you expressed your objection on the proposed centralization. In the light of typing error as mentioned above, you are once again given another opportunity to place your further comments, if any, on the subject-matter. You are requested to furnish your reply or appear personally/through Authorized Representatives by 10th May, 2013. (Vijyendra Kumar) Dy. CIT (H Qrs.) For CIT, Ujjain. 7. The petitioners did submit a reply to the show-cause notice and raised various grounds and the Competent Authority after considering the reply filed by the petitioners, the CIT, Ujjain again issued a letter on 20th May, 2013 granting one more opportunity to the petitioners either by appearing in person or through Authorised Representative or through written statement on 28th May, 2013 and the same reads as under : Government of India Ministry of Finance (Department of Revenue) Office of the Commi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us, for proper analysis and investigation into all the documents found, all of these case are centralized to a single officer. Further, on account of change in the administrative set-up for dealing with search and seizure cases, your case is proposed to be centralized with the newly created Central Circle, Indore [i.e. Dy. CIT (Central) Indore] which has been created for dealing with search and seizure cases involving number of interlinked group cases. Thus, your case is proposed to be centralized with Dy. CIT (Central), Indore. (Vijyendra Kumar) Dy. CIT (Hrs.) For CIT, Ujjain. 8. The petitioners did submit their reply to the aforesaid notices which was an exhaustive notice and finally an order has been passed on 31st May, 2013. The order passed by the CIT is, in fact, a very exhaustive order and it contains all minute details of the proceedings which have taken place and also the CIT has dealt with all the objections raised by the petitioners. The order passed under s. 127 of the IT Act, 1961 reads as under : Office of The Commissioner of Income-tax, Aayakar Bhawan, Bharatpuri, Ujjain Office (0734) 2527204/Fax : (251 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mar Garg, Mandsaur 11. Ramadevi Garg, Mandsaur 12. Shreyansh Garg, Mandsaur. In all the above cases common submissions have been made and the gist of the said contentions is that no incriminating documents have found and seized according to them and that there was no stipulation in the notification notifying the jurisdiction of CIT (Central), Bhopal that search and seizure cases are to be assessed by Central Circle. It was also contended that the accounts of the group as well as accountants/tax consultant are situated at Jaora, Mandsaur and Neemuch and due to company not doing well most employees from Indore are relieved and so there is lack of sufficient staff at Indore while staff of Jaora and Mandsaur would conveniently manage affairs at Ratlam so centralization at Indore will cause grave hardship. Out of the 12 cases, the cases at serial No. 1, 4, 5 and 6 had the same address at Indore and out of them only one case was previously assessed at Ratlam that of Ambika Solvex. The case at sl. No. 2 had address of Akola but was being assessed at Ratlam. Cases at serial No. 8, 9 and 10 have the same address at Indore but out of them only 1 case was a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ason and it cannot be said that nature of power is judicial. 4. It was not disputed that the search took place in the premises of Mahamaya group of companies, as well as residential and official premises of its direction and its employees, at different places, where incriminating documents were seized. 5. The documents were inter-connected and affected the assessment of the parties. It was necessary to see their overall effect on the assessments. It could only be done after analyzing and investigation into all the documents found at different places and not separately, for which a co-ordinated investigation was necessary. Thus, the words 'coordinated investigation' were not vague. 6. The notice had indicated the reason for transfer as 'centralization' for 'coordinated' investigation'. It was for this reason that order for transfer were made. There was no denial of reasonable opportunity to the assessee. Another objection which the assessee has raised is that the charge of CIT (Central), Bhopal is presently with an officer who was actively involved in planning and execution of search operation hence if cases are central ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to be transferred may, after giving the assessee a reasonable opportunity of being heard in the matter, wherever it is possible to do so, and after recording his reasons for doing so, pass the order; (b) where the Directors General or Chief CITs or CITs aforesaid are not in agreement, the order transferring the case may, similarly, be passed by the Board or any such Director General or Chief CIT or CIT as the Board may, by notification in the Official Gazette, authorise in this behalf. (3) Nothing in sub-s. (1) or sub-s. (2) shall be deemed to require any such opportunity to be given where the transfer is from any AO or AOs (whether with or without concurrent jurisdiction) to any other AO or AOs (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 sub-s. (1) or sub-s. (2) may be made at any stage of the proceedings, and shall not render necessary the reissue of any notice already issued by the AO or AOs from whom the case is transferred. Explanation.-In s. 120 and this section, the word case , in relation to any person whose nam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the present case, opportunity of hearing has been granted to the assessee. Again reasons have been assigned in the order passed under s. 127 of the IT Act and, therefore, again the judgment relied upon by the learned counsel for the petitioners is of no help. 14. Learned counsel for the petitioners has further relied upon a judgment delivered by the Calcutta High Court in the case of Naresh Kumar Agarwal (supra). In the aforesaid case, the Calcutta High Court was again dealing with the transfer of cases under s. 127 of the IT Act. The reason assigned in the proposed transfer was coordinated investigation and assessment . In the aforesaid case the written objections filed by the petitioner therein were not at all dealt with by the Competent Authority and, therefore, in those circumstances the order passed under s. 127 of the IT Act was set aside, whereas, in the present case, though the reason assigned is certainly coordinated investigation and assessment , the objection of the assessees have been dealt with by the Competent Authority and, therefore, taking into account the judgment delivered by the High Court of Gujarat in the case of Shree Ram Vessel Scrap (P) Ltd. v. C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been communicated to the assessee, the order passed under s. 127 is bad in law. This Court has carefully gone through the aforesaid judgment and in the aforesaid case the reason assigned in the show-cause notice was coordinated investigation and it was stated by the respondents that there are other reasons also recorded in the file but they were not communicated to the assessee, whereas, in the present case, it is not a case where there were other reasons recorded in the file and not communicated to the assessee. The reasons necessary for transfer were communicated to the assessees to which the assessees have filed detailed and exhaustive reply and while passing an order under s. 127 the reply filed by the assessees have been considered by the Competent Authority and, therefore, again the judgment relied upon by the learned counsel for the petitioners is of no help to the petitioners. 18. The respondent-IT Department, on the other hand, has placed reliance upon a judgment delivered by the Gauhati High Court in the case of Continental Milkose (India) Ltd. v. CIT [2013] 351 ITR 292. It was a case of assessment pursuant to search and seizure operation and the case of the pet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the Supreme Court in Ajanta Industries (supra) communicating such reasons also to the assessee. Subject to fulfilment of such procedural requirements, the authority under s. 127 enjoys considerable discretion while exercising the power contained in sub-s. (1) or sub-s. (2) thereof. Such discretion of course 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 AO 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 AO, nevertheless, the reasons for transfer must be weighty enough to offset against such personal inconvenience of an assessee. In exercise of power under s. 127 thus we are concerned with larger public interest on one hand and personal inconvenience on the other. However, as long as such powers are exercised bona fide, for public purpose and in the interest of Revenue, the role of the Court to dissect such reasons and to come to a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... undertake the Government duties and functions. The Court shall not ordinarily interfere with a policy decision of the State. Social and economic belief of a judge should not be invoked as a substitute for the judgment of the legislative bodies. [See Ira Munn v. State of Ellinois 1876 (94) US (Supreme Reports) 113]. 30. It is well-settled that while exercising the power of judicial review the Court is more concerned with the decision making process than the merit of the decision itself. In doing so, it is often argued by the defender of an impugned decision that the Court is not competent to exercise its power when there are serious disputed questions of facts; when the decision of the Tribunal or the decision of the fact finding body or the arbitrator is given finality by the statute which governs a given situation or which, by nature of the activity the decision maker's opinion on facts is final. But while examining and scrutinizing the decision making process it becomes inevitable to also appreciate the facts of a given case as otherwise the decision cannot be tested under the grounds of illegality, irrationality or procedural impropriety. How far the Court of judic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has not been authorized to do. It must act in good faith, must have regard to all relevant considerations and must not be influenced by irrelevant considerations, must not seek to promote purposes alien to the letter or to the spirit of the legislation that gives it power to act, and must not act arbitrarily or capriciously. These several principles can conveniently be grouped in two main categories : (i) failure to exercise a discretion, and (ii) excess or abuse of discretionary power. The two classes are not, however, mutually exclusive. Thus, discretion may be improperly fettered because irrelevant considerations have been taken into account, and where an authority hands over its discretion to another body it acts ultra vires. 16. The present trend of judicial opinion is to restrict the doctrine of immunity from judicial review to those classes of cases which relate to deployment of troupes, entering into international treaties, etc. The distinctive features of some of these recent cases signify the willingness of the Courts to assert their power to scrutinize the factual basis upon which discretionary powers have been exercised. One can conveniently classify under thr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on behalf of the public interest.' 17. Also see Padfield v. Minister of Agriculture, Fisheries Food LR (1968) AC 997. 18. The Court will be slow to interfere in such matters relating to administrative functions unless decision is tainted by any vulnerability enumerated above; like illegality, irrationality and procedural impropriety. Whether action falls within any of the categories has to be established. Mere assertion in that regard would not be sufficient.' 21. In the present case, we notice that that petitioners belonged to the same family or group. They were subjected to common search operation. Their assessments were therefore, under proposal for transfer. A show-cause notice was issued to all of them in which the CIT called upon them to explain why the cases should not be centralised at Ahmedabad for effective and coordinated investigation. After considering their objections and permitting the oral submissions by the Authorised Representative, the CIT 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such notices, it was clearly brought to the notice of the assessees the need for transfer of cases, no case for interference is made out. Learned counsel Shri Soparkar submitted that all the judgments taking contrary view pertain to cases which are transferred from one place to another where at least one assessee is being assessed. This to our mind is not the relevant factor. It may be a factual aspect common to all cases. None of the decisions is based on such fact. Neither s. 127 of the Act, nor any of the decision brought to our notice provides that assessment cases can be transferred from one place to another only as long as at least one of the case of the group is pending at such place. Sec. 127 of the Act does not recognise or provide any such limitation on exercise of the powers. Discretion is wide and may be required to be exercised in varieties of situations. We neither can, nor propose to foresee all of them. 24. Before closing we may touch upon one aspect which was placed before us by the counsel for the petitioners. At the outset, it was pointed out that the decision of the Division Bench of this Court in case of Arti Ship Breaking (supra) was in case of Millen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order has been passed in the matter and, therefore, this Court is of the considered opinion that the impugned order cannot be said to be a cryptic order or a vague order, as argued by the learned counsel for the petitioners. 21. Learned counsel for the respondent-Department has also placed reliance upon a judgment delivered by the Delhi High Court in the case of ATS Infrastructure Ltd. v. CIT [2009] 318 ITR 399. In the aforesaid case an order of transfer was passed in respect of centralisation of group cases for proper investigation and the cases were transferred to Meerut. The argument was that the ATS Group has no establishment and operations in Meerut and then also the order passed by the Competent Authority was upheld by the Delhi High Court as cases were transferred for coordinated investigation on account of the searches made in group cases in Delhi and several parts of the Uttar Pradesh. It was held by the Delhi High Court that the order is neither mala fide nor arbitrary. In the present case also there are no allegations of mala fide nor the order can be said to be an arbitrary order, hence, the question of interference by this Court in the peculiar facts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt has held that the Court cannot go into the sufficiency of the reasons and the Allahabad High Court has upheld the order passed by the IT authorities. In the present case also cogent and valid reason has been assigned and, therefore, as there is no manifest error apparent on the face of the record in the impugned order, the question of interference by this Court does not arise. 25. Lastly the respondents have placed reliance upon the judgment delivered by the Division Bench of the Patna High Court in the case of Shibu Soren v. CIT [1997] 225 ITR 298 (Pat.). In the aforesaid case, the matter was transferred to Delhi and the petitioner who was a Member of Parliament, was residing at Delhi and having several accounts at Delhi. It was held by the Patna High Court that no inconvenience have been caused to them. Similarly, in the present case, most of the petitioner-assessees-families-Group companies are either having their residence, offices, head offices of their companies at Indore. Show-cause notices issued to the assessees were containing reasons and detailed and exhaustive replies have been filed by the assessees/petitioners. It is true that earlier an order was passed c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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