TMI Blog2023 (1) TMI 328X X X X Extracts X X X X X X X X Extracts X X X X ..... carried out. The statement of certain persons also indicates that there was transfer of cash to the tune of almost Rs. 20 crores from the residence of the petitioner at Delhi. This money trail raises suspicion. Even though the said cash has been shown in the books of the All India Congress Committee, the source of the funds from the Madhya Pradesh Congress Committee is required to be looked into by the tax authorities. The recording in the books of the All India Congress committee was done subsequent to the raids conducted by the tax authorities. Unaccounted cash transactions have been clearly found in the Whatsapp chats and accompanying documents obtained from several persons wherein the term KN has been referred to. These persons were either known to the petitioner or were associates of persons who seem to be extremely close to the petitioner. It is clear that the present transfer is based on cogent material that requires further investigation by the tax authorities. The argument of the petitioner that they are willing to cooperate in the investigation, thereby negating the requirement of the transfer, is of no relevance as the officer conducting the coordinated search ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Senior Advocate Mr. Varun Chopra Mr. Saurabh Bagaria Mr. Amit Agarwalla Mr. Aniruddha Agarwalla For the Respondents : Mr. Tushar Mehta, Ld. Solicitor General Mr. Balbir Singh, Ld. ASG Mr. Zoheb Hossain Mr. Dhiraj Trivedi Mr. Tilak Mitra Mr. Soumen Bhattacharjee JUDGMENT SHEKHAR B. SARAF, J.: 1. The petitioner is a citizen of India and is duly assessed to tax under provisions of the Income Tax Act, 1961 (hereinafter referred to as the said Act ). 2. The respondents are Union of India and its various representatives working for gain at the Income Tax Department [hereinafter referred to as tax authorities ]. 3. The instant petition [being W.P.A. 3868 of 2022] has been filed against the order dated February 23, 2022 [hereinafter referred to as the Impugned Order ] passed by the Principal Commissioner of Income Tax, Kolkata 9 [hereinafter referred to as PCIT Kolkata/respondent no. 1 ] vide which the petitioner s income tax assessment was transferred from Kolkata to New Delhi under Section 127 of the Act. Relevant Facts 4. A search operation under Section 132(1) of the Act and survey under Section 133A of the Act was conducted on Praveen Ka ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elow as it is necessary in determining the outcome of the present petition: a) Relation with Petitioner Praveen Kakkar was Officer in Special Duty to the Chief Minister when the Petitioner was the Chief Minister of Madhya Pradesh. Rajendra Miglani was advisor to the Chief Minister. Prateek Joshi worked for the IT Cell of Madhya Pradesh Congress Committee and was in touch with Praveen Kakkar and Lalit Chhallani as per the evidence found in his phone. Himanshu Sharma was in touch with Praveen Kakkar, Rajendra Miglani and Lalit Chhallani as per evidence found in his phone. b) Documents/Evidence found: i. Praveen Kakkar s house had documents which indicated payments made to MLAs and collections to be made by companies. ii. Lalit Chhallani s laptop had a file which indicated cash collections and payments. iii. Prateek Joshi s diary indicates cash payments made and collected. It is contended to be a subset of Lalit Chhallani s file. iv. Himanshu Sharma s laptop and chats had a file which contained details of cash payments made and collected. It is stated to be a subset of Lalit Chhallani s file. It is further mentioned in the second notice that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t find mention in the accounts of the All India Congress Committee. iv) A file found in Lalit Chhallani s laptop showed receipts from Government departments, etc. and payments to Lok Sabha candidates. The tax authorities also mention one specific payment (of Rs. 15 crores) made to another entity (RKM in Chhindwara), which is recorded in the file. Rival Submissions 10. After appreciating the facts, at this juncture it would be pertinent to mention the submissions put forth by counsels of both sides. 11. The petitioner put forth the following arguments: a. There is no live link of the petitioner with the involved persons and he did not even know three of them. While the petitioner knew two of the involved persons, their relationship was devoid of any financial nexus. Reliance has been placed upon R.K. Agarwal v. CIT (2006 SCC OnLine All 1386), Dilip Kumar Agarwal v. Income Tax (2009 SCC OnLine Cal 702), P.S. Housing Finance Ltd. v. Union of India (2006 SCC OnLine Cal 830), Anil Kumar Kothari v. Union of India ([2010] 232 CTR 104 [Gau]) and Global Energy v. Commissioner of Income Tax (2013 SCC OnLine Bom 296) to substantiate the contention that financial nex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been passed by taking into consideration irrelevant and extraneous materials and is wholly arbitrary. h. Furthermore, the assessments of the involved persons were completed on September 30, 2021. Hence, the direction for concerted or coordinated investigation seems uncalled for and misplaced. i. The tax authorities have inadvertently mistaken the initials KN in many chats/documents seized from the involved persons and their mobiles phones, to be referring to the petitioner. j. The respondents, in their compilations, have gone beyond their written pleadings, second notice and Impugned Order vide their affidavit-in-opposition: A. expanding the nexus from the involved persons to thirty-four persons; B. contending that the petitioner s assessment should be transferred since he has no earnings or bank account in Kolkata; C. introducing new correspondence and evidence in relation to the Rs. 20 crores transferred to the All India Congress Committee. 12. The tax authorities submitted the following arguments: a. The transfer order under Section 127 of the Act is more in the nature of an administrative order rather than a quasi-judicial order. The Imp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rary or uncontrolled. It is to be guided by the purpose of the Act viz. the charge of income tax, assessment and collection thereof, and is to be exercised for more convenient and efficient collection of tax. The Court further underlines that there is no absolute right to be assessed in a particular area or locality. While inconvenience may be caused, it is subject to the exigencies of tax collection. The Court held that reasons, even if briefly recorded, will suffice as long as the assessee is given an opportunity to present their views. However, it is pertinent to note that the right to represent one's opinions/views is subject to permissible limitations and is not absolute. Hence, the said right can be curtailed on occasions where its exercise would frustrate the core object of the Act. 14. The Apex Court in Ajantha Industries distinguished Pannalal (supra) as Section 127 had been introduced. The relevant paragraphs are extracted below: 9. This judgment was rendered by this Court on 21-12-1956, and we find that in the 1961 Act Section 127 replaced Section 5(7-A) where the legislature has introduced, inter alia, the requirement of recording reasons in making the o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ), a division bench of the Delhi High Court has explicated on the level of reasoning required for a transfer order under Section 127 for it to be sacrosanct from judicial scrutiny. Relevant paragraph is extracted below: 11. As far as the rationale to transfer, i.e., conduct of coordinated post search investigation and meaningful assessment goes, we are of the opinion that like in the case of first contention, the assessees have failed here as well. The kind of reasoning required by an order under Section 127 cannot be compared or likened to a quasi judicial order that has adverse consequences. One can understand if additions are made on sketchy or bare minimum reasons, they cannot be upheld . However, what is proposed by an order under Section 127 is the transfer of one or several assessments from one circle to another, to that extent inconvenience undoubtedly ensue; however, to say that this leads to grave prejudice if detailed reasoning were not given is something that the Court cannot countenance. The consequence would only be that the assessees' contentions would have to be taken into account by another Assessing Officer who would also have before him or her all ot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order passed under Section 127 of the Act is more in the nature of an administrative order rather than a quasi-judicial order and the assessee cannot have any right to choose his Assessing Authority, as no prejudice can be said to have been caused to the assessee depending upon which authority of the department passes the Assessment Order . The assessee can only be concerned with getting an opportunity of hearing before the concerned Assessing Authority and adduce his evidence and make his submissions before the concerned Assessing Authority. The Income Tax department has recently introduced a scheme of Faceless Assessments with a view to avoid personal hearing and physical interaction of the assessee and the Assessing Authority altogether. The assessee need not even know the name of the Assessing Authority who will deal with his case. * * * 26. Having regard to the position of law as discussed above and also the other materials on record, we are of the view that we should not interfere with the impugned order of transfer passed by the respondent in exercise of powers under Section 127(2) of the Act. The power of transfer of cases may have to be exercised in proper ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s passed without jurisdiction or actuated by mala fide. The only factor that is further required to sanctify a transfer order is the presence of a financial nexus of the assessee s assessment which is being transferred in the reasons for transfer given in the order under Section 127. 20. The judgements cited by the petitioners are correct in their understanding of the law. However, they have been applied to different facts and circumstances and are distinguishable. In Anil Kumar Kothari (supra), the transfer order was set aside for non-issuance of notice to the assessee and non-furnishing of reasons. In P.S. Housing Finance (supra), the evidence suggested that petitioner had no relation with the entities from whom incriminating materials were found in addition to the fact that nothing was unearthed from the assessee itself. In Dilip Kumar Agarwal (supra), while the tax authorities transferred the assessment for the purposes of co-ordinated and effective investigation, the notice did not mention such reasons. Furthermore, no evidence existed to establish a business connection of the assesses to their father. The onus was put upon the assessees to prove their lack of connection. O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vant/ arbitrary, iii) whether the order is passed without jurisdiction or actuated by mala fide, and iv) whether there is any nexus of the assessee, whose assessment is being transferred, with the incriminating material and/or persons on whom incriminating material has been found. Conclusion 24. This Court had quashed the first order for violation of the principles of natural justice. Post the said quashing, the petitioner has been given adequate opportunity to make his case before the tax authorities. So far, this Court finds no infirmity in the decision making process. Requirements under section 127(2) are fulfilled as proper opportunity has been granted to the petitioner to represent their case and a reasoned order has been communicated. 25. Upon perusal of the records before me, I find that the respondent no.1 has clearly delineated the reasons of the transfer under Section 127 of the Act in the Impugned Order for a detailed and coordinated investigation of the petitioner. It is to be noted that the files of several other persons have also been transferred under Section 127 of the Act. The petitioner is the only one whose file is still not being trans ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xtraneous circumstances. The judgements cited above clarify this point to the hilt. In my view, the administrative/quasi-administrative order passed under Section 127 of the Act does not need to give a detailed explanation and a concrete financial nexus, but is required to bring out certain facts that could indicate that the case warrants further investigation to be carried out by the tax authorities. 30. Moreover, the petitioner is a highly influential person with significant presence in Delhi including an official residence and bank accounts. While his inconvenience would have anyway been overshadowed by the revenue interest in the facts of this case, it would be pertinent to mention the lack of any inconvenience whatsoever. 31. Furthermore, though the assessments of some of the involved persons are complete, that cannot itself be a bar for a transfer order under Section 127 of the petitioner s assessment. Nor can the fact that he has not been subjected to any search or seizure be a bar to transfer. There is enough material garnered from other persons to establish a nexus, concrete enough to seize the judicial hands of this court from entering into the realm of reasonable e ..... X X X X Extracts X X X X X X X X Extracts X X X X
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