TMI Blog2006 (2) TMI 161X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Commissioner of Income-tax-II, Kanpur under section 127(2) of the Act transferring the cases mentioned in the order from the Assessing Officers at Kanpur to the Assessing Officers at Mumbai by filing Writ Petition No. 1120 of 2004 which was allowed by the judgment and order dated April 7, 2005 ( Bansal Sharevests Services Ltd. v. CIT [2006] 283 ITR 332 (All)), but it was left open to the Commissioner to pass a fresh order in accordance with law. The relevant portion of the order is quoted below (page 336, 337): "On a perusal of the aforementioned order we find that no reasons whatever has been mentioned in the order transferring the cases. This court in the case of Vinay Kumar Jaiswal v. CIT [1996] 221 ITR 568 while dealing with the matter relating to the transfer of the case under section 127 of the Act has held as follows: 'It is obvious that when certain factual allegations are made in the objections of the assessee, they have to be dealt with, otherwise the very purpose of hearing would be frustrated. In their objections, the petitioner had specifically mentioned that all the concerns of the family barring a few which were recently established are being asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the present petition suffers from the same defect inasmuch as the objections dated August 26, 2005, filed by the petitioners, a copy of which has been annexed as annexure 7 to the writ petition, have not been considered at all and only a bald statement has been made in the impugned order that the objections were not tenable. It may be pointed out that in their objections the petitioner had raised a number of grounds including the grounds that the statement contained in the notice regarding most of the cases of the group being assessed at Mumbai was factually incorrect and the main cases of Pradeep Kumar Bansal (petitioner No. 3) and M/s. Bansal Sharevest Services Ltd. (petitioner No. 1) were being assessed at Kanpur since more than last ten years and that the tax consultant of the chartered accountant of the assessees were at Kanpur. It was further objected that if at all the group cases were to be assessed at one place for co-ordinated investigation, then they should be centralized at Kanpur. These objections have not been considered in the impugned order and a vague statement has been made that since other cases of this group had been centralized at Mumbai, it is necessary to ce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the stock exchanges. Seized papers also show that the assessees have been indulging in accommodation entries for financing share applications/gifts. Cash has been deposited in a number of bank branches and cheques have been issued immediately afterwards for share applications/gifts. There are several gift deeds in favour of persons who have no business activities in Mumbai and prima facie it was found that these are accommodation entries and not bona fide gifts as claimed by the assessees. There are huge transactions in the names of various parties who have no business in Mumbai. At Mumbai, the SEBI team perused the sauda sheets at the Masjid Bunder Office of Mr. Rajeev Bansal, another case of this group, and found certain transactions which are not matching with NSE trade details. This indicates that transactions have been carried out outside the systems of exchange and also outside the regular books of account. The statements of accounts obtained from the banks during the course of investigation reveal deposits of huge cash in bank accounts of various assessees of this group. Looking to these facts I find that these are fit cases to be centralised at Mumbai. 6. In view of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt under article 226 of the Constitution of India. 11. We have carefully considered the submissions advanced by learned counsel for the parties and also perused the records including the order dated December 20, 2005. 12. The Commissioner of Income-tax has, as is clear from the order itself (quoted above) dealt with the main objection raised by the petitioners that inconvenience will be caused to the assessees if the cases are transferred and centralized at Mumbai and has rejected the same on the ground that Sri Pradeep Kumar Bansal, the director and the key person of the group, has not only residence-cum-business premises at 1502/1503 and 1506, Safalya Tara Baug, Love Lane, Byculla, Mumbai but has business places also at Kolkata, Bhuj, Raj Kot, Bangalore, Mathura, New Delhi and Haridwar. It has also been observed that in the search conducted on July 26, 2003, material was found indicating large scale transactions in shares out side the stock exchanges and seized papers also indicated that the assessees had been indulging in accommodation entries for financing share applications/gifts. In fact, cash had been deposited in a number of bank branches and cheques were issued im ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te the whole catena of decisions of this court commencing from Barium Chemicals Ltd. v. Company Law Board [1966] 36 Comp Cas 639 (SC); [1966] Supp SCR 311; AIR 1967 SC 295, case on the point. Indisputably, it is a settled position that if the action or decision is perverse or is such that no reasonable body of persons, properly informed, could come to, or has been arrived at by the authority misdirecting itself by adopting a wrong approach, or has been influenced by irrelevant or extraneous matters the court would be justified in interfering with the same. This court in one of its later decisions in Smt. Shalini Soni v. Union of India [1981] 1 SCR 962; AIR 1981 SC 431, has observed thus : 'It is an unwritten rule of the law, constitutional and administrative, that whenever a decision-making function is entrusted to the subjective satisfaction of a statutory functionary, there is an implicit obligation to apply his mind to pertinent and proximate matters only, eschewing the irrelevant and the remote'. Suffice it to say that the following passage appearing at pages 285-86 in Prof. de Smith's treatise 'Judicial Review of Administrative Action' (4th Edn.) succinctly summarises the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iscretions often use the word 'unreasonable' in a rather comprehensive sense. It has frequently been used and is frequently used as a general description of the things that must not be done. For instance, a person entrusted with a discretion must, so to speak, direct himself properly in law. He must call his own attention to the matters, which he is bound to consider. He must exclude from his consideration matters, which are irrelevant to what he has to consider. If he does not obey those rules, he may truly be said, and often is said, to be acting 'unreasonably'. Similarly, there may be something so absurd that no sensible person could ever dream that it lay within the powers of the authority . . . In another sense, it is taking into consideration extraneous matters. It is so unreasonable that it might almost be described as being done in bad faith; and in fact, all these things run into one another." 19. The grounds for judicial review of administrative action were further summarized in 1985 by Lord Diplock in Council of Civil Service Unions v. Minister for the Civil Service [1984] 3 All ER 935; [1985] 1 AC 374, 410 (HL), (commonly known as CCSU case) as illegality proced ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at is reasonable." 22. In Indian Railway Construction Co. Ltd. v. Ajay Kumar, AIR 2003 SC 1843, the Supreme Court observed (1848, 1849 of AIR 2003): "It is trite law that exercise of power, whether legislative or administrative, will be set aside if there is manifest error in the exercise of such power or the exercise of the power is manifestly arbitrary. 14. . . . If a power (whether legislative or administrative) is exercised on the basis of facts which do not exist and which are patently erroneous, such exercise of power will stand vitiated." 23. In People's Union for Civil Liberties v. Union of India, AIR 2004 SC 1442, while dealing with the same issue, the Supreme court observed as under (page 1456 of AIR 2004): "The jurisdiction of this court in such matter is very limited. The court will not normally exercise its power of judicial review in such matters unless it is found that formation of belief by the statutory authority suffers from mala fide, dishonesty or corrupt practice. The order can be set aside if it is held to be beyond the limits for which the power has been conferred upon the authorities by the Legislature or is based on the grounds extrane ..... X X X X Extracts X X X X X X X X Extracts X X X X
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