9911796707
TMI Blog1982 (8) TMI 21X X X X Extracts X X X X X X X X Extracts X X X X ..... order dated May 10, 1982, passed by the Central Board of Direct Taxes, New Delhi, " the Board " for short, transferring the cases of the petitioners from the Income tax Officer at Gauhati to the Income-tax Officer, Company Circle in New Delhi, in exercise of the power conferred by s. 127 of the I.T. Act, 1961 for short " the Act It is claimed by the petitioners that they are residents of Gauhati, and the Income-tax Officer, for short " ITO ", at Gauhati had made assessments of their income for last several years. However, searches of the premises of their firm, residential premises of the partners/shareholders/offices, by the Department u/s. 132 of " the Act ", resulted in the seizure of books of account, documents, jewellery and allegedly " undisclosed funds ". The Commissioner of Income-tax, Shillong, promptly ordered transfer of all the cases of the petitioners to the ITO, A-Ward, Special Circle, Gauhati. Enquiries uncovered funds, assessments made to the prejudice of the petitioners who appealed. While the appeals were pending, they received notices on February 9. 1982, u/s. 127(1) of " the Act " calling upon them to show cause why their cases should not be transferred from th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order read as follows: " J. No. 137: In exercise of the powers conferred by sub-section (1) of section 127 of the I.T. Act, 1961, (43 of 1961), and of all other powers enabling it in this behalf, the Central Board of Direct Taxes hereby transfers the cases particulars of which are mentioned in column 3 of the Schedule hereto annexed, from the ITO mentioned in column 4 to the ITO mentioned in column 5 thereof. Search conducted in this group has revealed extensive business connection at Delhi. The transfer is effected to facilitate co-ordinated investigation in all connected search cases by one ITO at Delhi...... " The petitioners questioned the validity of the order of transfer in the original writ petition on the rounds: (1) that the order of transfer was passed without considering their objections ; (2) that there was no reason or justification for the transfer from Gauhati to New Delhi, as they had no business connection at Delhi; (3) that no " reasonable opportunity of being heard " was granted to them, as the notices were served on them on February 9, 1982, fixing the date of hearing on February 10, 1982 ; (4) that the proposed reasons in the notice issued u/s. 127 of the Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t till February 25, 1982. This was precisely the prayer made by the petitioners in their telegrams. So, the Board granted the prayers made by the petitioners in the telegrams and through their authorised representatives, Mr. A. K. Sud and Shri K. K. Chawla. On February 25, 1982, the representatives of the petitioners again prayed for further time, the Board allowed time till March 9, 1982, stating clearly that no further adjournments would be allowed. Notwithstanding the peremptory order, the said representatives again prayed for time. Their prayer for hearing at Gauhati was rejected and the Board proceeded to consider the merits of the applications filed by the petitioners. Upon a consideration of all the points raised by the petitioners, which are almost similar to those taken up by the petitioners in the writ applications, the Board was satisfied that the cases of the petitioners should be transferred to Delhi. We have examined the records and permitted the counsel for the petitioners to examine the same. It reveals clearly that on February 10, 1982, Mr. A. K. Sud, chartered accountant, attended on behalf of the petitioners and requested for 15 days' time to take instructions f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere fully aware of the searches in their group of cases and there was no shortfall which caused prejudice to the petitioners. All the cases at Delhi were inter-connected with the cases of the petitioners and there was need to have them centralised at Delhi. The formalities of law had been complied with and the principles of natural justice duly observed. All the objections raised by the petitioners were considered. On perusal of the report the Board approved the actions and transferred the cases to Delhi. A formal draft order, in terms of the order of the Board, was directed to be put up and the same was placed before the Board, which approved the final order, copy of which is annex. IV to the petitions. The names of the 11 assessees at Gauhati are in the schedule. We find from the records the names of the Delhi firms directly connected with the petitioners 7 in number, located at Delhi. The first thing that strikes us is that the petitioners tried to suppress material facts. They never said that their representatives attended the proceedings held at Delhi and what prevented their representatives to place the points raised by them in their written objections. However, they refrain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssion is very thin and faintly argued as it had no strength, force or vitality. It has been urged that once the Commissioner bad exercised his jurisdiction u/s. 127(1) "of the Act", it estopped " the Board " to transfer the cases from Gauhati to Delhi. The contention overlooks that the Commissioner has jurisdiction to transfer cases within his jurisdiction whereas the power of the Board is wide and large. It can transfer cases from the jurisdiction of one Commissioner to another. The exercise of power of the Commissioner does not exhaust the power of transfer by the Board. The Board has independent power to transfer cases u/s. 127. In the result, the contention fails. The next contention is that the notice calling upon the petitioners to show cause why the cases should not be transferred contained vague statements as it stated that the searches had been conducted " in their group ", the searches revealed their activities in Delhi and to facilitate investigation the cases should be transferred and assessed in Delhi. The Delhi connection of the petitioners is writ large from the records placed at our disposal. Barring a bare denial that the petitioners had no connection with the Del ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r is different. The petitioners could have obtained all the necessary and so-called obscured facts or materials if they were up and about. The transfers have been effected to facilitate co-ordinated investigation of all the connected cases. The search conducted in " the group " revealed extensive business connection of the petitioners in Delhi. The petitioners could have asked for the documents or information which revealed their extensive business connection in Delhi, which they did not. We do not find that the show cause notice is in any meaningful way different from the final order or that the petitioners were deprived of the opportunity to show cause. The reason for the proposed transfer was that the searches had been conducted in the petitioners' group which revealed their activities in Delhi and to facilitate investigation of all the cases it was desired that these cases should be investigated and assessed in Delhi. Substantially the grounds are same with certain phraseological changes here and there, which did not affect the petitioners prejudicially. In the show cause, it was, clearly stated that the Board proposed to transfer the cases to Delhi for the reasons that the sea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... BDT [1972] 83 ITR 130 (MP), where the Board issued show-cause notice u/s. 127 of the Act as to why cases pending at Indore should not be transferred to Bombay and the reason set forth read " facility for investigation ". The order of transfer did not ascribe any reason at all. The Board also could not produce any record that there existed any reason for the transfer independently of the reason contained in the show-cause notice. The High Court held that " facility of investigation " could not be " a sufficient reason for transfer " of a case u/s. 127. However, in the instant case the order is not a bald one. The reasons for transfer are substantial, strong and potent the Delhi connection of the petitioner-and in Delhi similar cases of the group were being investigated ; so, co-ordinated investigation was necessary. In Sagarmal's case [1972] 83 ITR 130 (MP), the High Court held the ground to be vague; so the transfer was not in compliance with the requirements of s. 127. However, we extract a pertinent observation of the High Court (p. 135) : " In the present case the reason is made clear in the return filed in this court, wherein it has been stated that it is suspected that the pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Act were not complied with but it was dismissed by the High Court. The Supreme Court directed the Department to produce the records to show that the ITO had complied with the provisions of ss. 148 and 151(2) of the Act. Only the report submitted by the officer to the Commissioner and the latter's order thereon were produced. In his report the officer referred to certain communication received by him from which it appeared that " the creditors were name-lenders " and the transactions were bogus, therefore, proper investigation regarding the loans taken by the assessee was necessary. It may be noted here that their Lordships observed that in the report the ITO did not mention about the existence of any material he had before him or that it was a fit case for issuing notice u/s. 148. Therefore, even the report of the ITO did not contain any material or reason that it was a fit case for issuing notice u/s. 148. On this vague report, on which no reasonable person instructed in law could have reached the conclusion that it was a fit case for issuance of notice u/s. 148, the Commissioner merely wrote " yes ". Therefore, the question arose whether the Commissioner was " satisfied " t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ] 102 ITR 281 (SC). Therein, the Supreme Court held that the requirements of S. 127 of the Act are : (1) giving the assessee a reasonable opportunity of being heard, wherever it is possible to do so ; (2) the recording of reasons for the order of transfer ; and (3) the communication thereof to the assessee. We have already held that, in the instant case, the Board granted enough opportunity to the petitioners. It was the petitioners who did not avail of the opportunities. We have also held that the order or decision was made or taken by the Board and was duly authenticated by the Under-Secretary of the Board as required under r. 5 of the Central Board of Direct Taxes (Regulation of Transaction of Business) Rules, 1964. We have held that the grounds set forth in the order of transfer are just and sufficient grounds. The learned counsel for the petitioners relied on Ajantha [1976] 102 ITR 281 (SC), and claimed that in the instant cases as well, the principles of natural justice were violated. To appreciate the contention let us scan the decision relied by the learned counsel. The Board therein had issued notice to the appellants uls. 127 of the Act proposing to transfer their cases " ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith which we are concerned, the reasons in writing have been communicated to the assessees and they could have challenged the grounds as mala fide or arbitrary or urged that they were based on irrelevant or extraneous considerations. In the instant cases, the reasons contained in the order are full, fair, adequate and are just and appropriate grounds for transfer. As such, the act of communication of the reasons in the order passed u/s. 127 was duly and faithfully complied with by the Board. In Ajantha [1976] 102 ITR 281 (SC), the final order of transfer did not contain any reasons and the appellant was communicated only the fact that the case had been transferred. However, in the instant cases, the final orders contain reasons. The orders of transfer containing the reasons were duly communicated to the petitioners. Therefore, we hold that the infirmities found in Ajantha are conspicuously absent in these cases. In the present cases, the orders passed u/s. 127(1) are in writing, they were duly communicated and received by the petitioners. We are fully satisfied that this was the precise order which was rendered and approved by " the Board ". Therefore, this contention also fails. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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