TMI Blog2019 (10) TMI 158X X X X Extracts X X X X X X X X Extracts X X X X ..... ke the call and decide as to how and in what manner, the investigation has to be proceeded with. Of course, while making such transfer, the statutory requirement need to be followed and when such compliance is evident on the face of the proceedings, it is better that such transfer proceedings are not interfered with at the very stage of investigation itself. Considering the above stated facts and circumstances, find that the impugned order of transfer and the consequential impugned notice do not warrant any interference. - W.P.Nos.6334 and 6336 of 2019 And W.M.P.No.10771, 7170 and 7172 of 2019 - - - Dated:- 27-9-2019 - Mr. Justice K. Ravichandrabaabu For the Petitioner : Mr.Sandeep Bagmar For the Respondents : Mrs.Hema Muralikrishnan, Senior Standing Counsel (I.T.) COMMON ORDER W.P.No.6364 of 2019 is filed challenging the notification issued by the first respondent dated 13.02.2019, transferring the petitioner/assessee's case from ITO Corporate WD(4)(1), Chennai-2 DCIT Central Circle (1), Bangalore under Section 127 of Income Tax Act, 1961 for the purpose of a coordinated investigation. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2018, has specifically stated that the said Satish P Chandra, Kishore Kothapalli and M/s.GTPL did not play any part in the management of the petitioner ever since Worldline Singapore became 100% owner of the petitioner. It was specifically submitted that the petitioner had no connection with those persons. It was also stated that the petitioner's operations were in Chennai along with its registered officer and all its records are also in Chennai. Therefore, the petitioner requested that the assessments may be completed at the present jurisdictional office at Chennai, as it would cause immense hardship, if the case is to be transferred to Bangalore. The first respondent issued a notification dated 26.06.2018, without considering the merits of the petitioner's reply and without providing any reasons, transferring the petitioner's case from Chennai to Bangalore. Pursuant to the said transfer order, a notice dated 18.07.2018 was also issued by the second respondent. Aggrieved against those proceedings, the petitioner filed W.P.Nos.19415 and 19416 of 2018. This Court, by order dated 26.06.2018, quashed the order of transfer and remitted the matter back to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (2) of the Income Tax Act, 1961, the Principal Commissioner of Income Tax can transfer any case from one Assessing Officer to any other Assessing Officer, 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, by passing an order. In view of the above enabling provision, there is no necessity for the Principal Commissioner of Income Tax to provide the nature of investigation, as it is out of scope of the provision. Since the seized/impounded materials are also in the possession of the second respondent, the nature of investigation could not be provided. As long as centralization is done in accordance with the provisions of the Act and for coordinated investigation and assessment, the same is to be construed for the purpose of safeguarding the Revenue and in public interest. The inconvenience, if any to the petitioner cannot stand in the way of public interest as long as none of the rights of the petitioner like proper opportunity, right to carry on business etc., are affected. Therefore, both the impugned proceedings were passed well within law. 5. The petition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice. The impugned order assigns reasons on assumptions without material. Even according to the respondents, as spelt out in their counter, nexus will be known only after investigation. Therefore, it is evident that as on date, no material, no linkage for transferring the case. No material or transaction is brought down, which necessitates for coordinated investigation. While the show cause notice is totally silent anything about the past six years, the impugned order refers the same. Therefore, the impugned order is beyond the scope of show cause notice. In this aspect, the following case laws are relied on: i) 1976 (102) ITR 281 (SC); Ajantha Industries vs. CBDT; ii) 2004 (186) CTR 428 (P H); Rajesh Mahajan vs. CIT; iii) 2016 (387) ITR 223 (Mum); Zodiac Developers (P) Ltd. vs. Pr.CIT; iv) 2015 (234) Taxmann 468, RSG Foods (P) Ltd. vs. Commissioner of Income Tax. 7. Per contra, Mrs.Hema Muralikrishnan, learned Senior Standing Counsel appearing for the respondents submitted as follows: a) This is the second round of litigation on the very same issue of trans ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s aggrieved against the transfer of the case from Chennai to Bangalore. Earlier similar order of transfer under Section 127 of the Income Tax Act was passed transferring the petitioner's case from ITO, Corporate Ward 4(1), Chennai to DCIT, Central Circle 1 (1), Bangalore. The said order dated 26.06.2018 was put to challenge before this Court by the petitioner in W.P.No.19415 of 2018. The only objection raised therein against transfer was that the order impugned therein did not assign specific reasons for transfer except stating that the objections raised by the assessee cannot be the basis for non centralising the case and that the materials, which were seized and impounded, need to be further investigated. This Court, after hearing both sides, allowed the writ petition and set aside the said order dated 26.06.2018 and remitted the matter back to the first respondent to pass a fresh order on merits and in accordance with law with reasons within a period of two weeks. This Court passed the said order only on the ground that the first respondent has to record his reasons for transferring the case, as required under Section 127(1) of the Income Tax Act, by specifically observing t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hers (Mr.Satish Chandra, Mr.Kishore Kothapalli and M/s.Global Tech Park Ltd) on the date of survey is concerned the fact is that the assessee company became 100% owned company by Worldline Group only after purchasing the shares from Mr.Satish Chandra, Mr.Kishore Kothapalli and M/s.Global Tech Park Pvt Ltd. before the date of survey. The acquisition of the assessee company by Worldline Group happened in October 2017 by way of transfer of shares by Mr.Satish Chandra, Mr.Kishore Kothapalli and M/s.Global Tech Park Pvt Ltd. The purpose of centralization of cases is to investigate the transactions among the various related entities during the last six previous years prior to the previous year in which search and survey are conducted in addition to the previous year in which the search and survey operations are conducted and to assess income of all the persons concerned for the assessment years in question. Since, the transfer of shares happened in October 2017 which is well within 6 years prior to previous year in which survey was conducted, the transactions need to be investigated in order to have a clear picture before the final assessment of income is made in all the related cases. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he order of transfer of assessment file of an assessee to a far off place puts the assessee in a great inconvenience and ought not to be ordered unless necessary in public interest to safeguard revenue by centralisation of cases for co-ordinated investigation. Such an order cannot be passed arbitrarily and can be justified only if there are valid reasons. The principles of natural justice as well as the statutory provision require that the reasons must be recorded in writing in the order itself and disclosed to the assessee to enable the assessee to take its remedies against such an order. At the same time, the power conferred for transfer cannot be interfered with having regard to the object for which such power is conferred. 12. Perusal of the reasons stated at paragraph 9.2 of the impugned order undoubtedly indicate that the transfer is made not simply by stating that it was made for coordinated investigation and on the other hand, the above reasons speak for themselves justifying such intended coordinated investigation. As the reasons stated at paragraph 9.2 are in respect of factual aspects of the matter and that the investigation is yet t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In this case, it is evident that the impugned order was not made based on mere suspicion. On the other hand, such suspicion is based on the transactions entered between the parties, as is referable to the documents seized. No doubt, the correctness or otherwise of such suspicion is a matter for investigation and therefore, before concluding the investigation, it is better to refrain from expressing any view on such suspicion. Accordingly, I find that the above case law is also not applicable to the present case. 16. The decision of the Mumbai High Court reported in 2016 (387) ITR 223 (Zodiac Developers (P) Ltd. vs. Pr.CIT relied on is also factually distinguishable, since the facts of the said case would show that the notice and the consequential order of transfer are bereft of any particulars except to state that the transfer is required for the sake of coordinated investigation along with another connected case for administrative convenience. As discussed supra, in this case, the facts are different and therefore, the above decision is also not applicable to the present case. 17. Further contention of the petitioner that no material or transa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovision. However, this Court is not inclined to leave this issue at this stage and on the other hand, would like to deal with such issue and answer the same as discussed hereunder, since it is raised as a question of law. 21. Section 127 of the Income Tax Act, 1961 deals with Powers to transfer cases, which reads as follows: 127.Power to transfer cases: (1) The [Principal Director General or] Director General or [Principal Chief Commissioner or] Chief Commissioner or [Principal Commissioner or] Commissioner 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, transfer any case from one or more Assessing Officers subordinate to him (whether with or without concurrent jurisdiction) to any other Assessing Officer or Assessing Officers (whether with or without concurrent jurisdiction) also subordinate to him. (2) Where the Assessing Officer or Assessing Officers from whom the case is to be transferred and the Assessing Officer or Assessing Officers to whom the case is to be transferr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... direction or which may have been completed on or before such date, and includes also all proceedings under this Act which may be commenced after the date of such order or direction in respect of any year. 22. Perusal of the above provision of law would show that a case can be transferred from one Assessing Officer to the other Assessing Officer or Assessing Officers, after giving the assessee reasonable opportunity of being heard and after recording the reasons for transfer. However, if the Assessing Officer, from whom the case is to be transferred and the Assessing Officer, to whom the case is to be transferred, are not subordinate to the same Commissioner, the Commissioner from whose jurisdiction, the case is to be transferred, would pass order after giving the assessee, a reasonable opportunity of being heard and after recording his reasons, if the transferring Commissioner and the Commissioner, within whose jurisdiction the case is transferred, are in agreement for such transfer. A careful perusal of Section 127(2)(a) would show that only when those two Commissioners are in agreement, the transferring Commissioner would issue notice to the assessee and pass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion for the transferring Commissioner to issue show cause notice at all. Therefore, the word then assumes significance, only to indicate that the issuance of the show cause notice itself is enough to draw inference of such statutory compliance viz., existence of an agreement between the two Commissioners. Only when there is no disagreement between the two Commissioners, such disagreement must be reflected in writing, so as to invoke the power of the Board to transfer as contemplated under Section 127(2)(b). 25. Keeping the above statutory position in mind, if the facts and circumstances of the present case are looked into, it would show that the Chennai Commissioner has passed the impugned order of transfer, after issuing show cause notice to the assessee and after giving them an opportunity of being heard as well. Therefore, I find that the statutory requirement under Section 127(2)(a) is fully complied with in this case. In other words, the very conduct of the respective Commissioners would show that there is an agreement between them for transfer and therefore, it cannot be contended otherwise, merely because it is not so stated in the impugned order. Very i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the record. Had this been a case where the authority to whom the assessment was being transferred and whose agreement is not found on record, the issue would have to be seen in a different light. We cannot put the requirement of clause(a) to sub-section(2) to section 127 of the Act in such a straight-jacket formula that even when the competent authority grants a hearing to the 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. CIT [2016]388 ITR 489/243 Taxman 519/76 taxmann.com 144 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 posit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nferred based on the conduct of the concerned officials, since such inference is statutorily permitted as discussed supra. Therefore, I am of the view that the above decision of this Court would not help the petitioner in any manner. 30. No doubt, there may be some inconvenience for the assessee to attend the enquiry before the Assessing Officer, to whom the case is transferred. Mere inconvenience or facing certain practical difficulties themselves cannot be a ground to refuse the transfer of investigation. Certainly, the administrative exigencies of the Investigating Agency would outweigh the practical difficulties or inconvenience of the person to be investigated. It should be borne in mind that it is for the Investigating Agency to take the call and decide as to how and in what manner, the investigation has to be proceeded with. Of course, while making such transfer, the statutory requirement need to be followed and when such compliance is evident on the face of the proceedings, it is better that such transfer proceedings are not interfered with at the very stage of investigation itself. 31. Considering the above stated facts and circumstances, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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