TMI Blog2024 (5) TMI 456X X X X Extracts X X X X X X X X Extracts X X X X ..... ous or mala fide and such order shall not run contrary to the bona fide objectives of the Act. As it is evident from an ex facie reading of the impugned order that an opportunity of hearing was given to the assessee and the Revenue has considered the objections raised by the assessee before passing the impugned order, and moreover, the case of the assessee was centralized on the grounds of coordinated enquiries, investigations and administrative convenience , therefore, the contention of the assessee that the impugned order reflects no application of mind and the Revenue had not considered the objections raised by the assessee holds no merit. Also the notice points out that due to the search conducted in the cases of Mr. Anil Chaudhary, Mr. Jitender Singh (alias Rakesh), Mr. Bharti Sehgal and Mr. Dheeraj Bakshi on 11 April 2023, the assessee was called upon to furnish the details - contention of the assessee that he was nowhere related to the abovementioned individuals and thus there was no need to centralize the cases of the assessee is not justified in that contention as the details furnished by the assessee in response to the notice dated 26 April 2023 would indicate that certai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the investments made and details of the unsecured loan transactions etc. were provided to the Revenue. 5. Subsequently, on 2 February 2024, a show cause notice was issued to the assessee, whereby, for the purpose of an administrative, convenience, coordinated investigation and assessment , the case of the assessee was sought to be centralized at DCIT, Central Circle, Karnal, Haryana and the assessee was called upon to furnish objections, if any, against the proposed transfer. 6. Consequently, on 3 February 2024, the assessee furnished his reply against the abovenoted show cause notice stating inter alia that the proposed transfer was not bona fide and there was no link between the assessee and the searched party. 7. After considering the reply filed by the assessee, on 11 March 2024, the Revenue passed an order under Section 127 of the Act, whereby, the case of the assessee was centralized and transferred from the Income Tax Officer [ ITO ] Ward-51(1) Delhi to DCIT, Central Circle, Karnal, Haryana. It is this order which stands impugned before us in this writ petition. 8. Assailing the impugned order, Mr. N.P. Shahi, learned counsel appearing on behalf of the assessee submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Going on further, Section 124 of the Act deals with the jurisdiction of the AOs, whereby, he has been vested with the jurisdiction over any person carrying on business or profession over any prescribed territorial limit or where the principal place of business of persons is within such area and any person residing within such prescribed territorial limits. 14. Section 127 of the Act delineates the ambit of transfer of cases from one AO to another AO. For the sake of clarity, Section 127 of the Act is reproduced herein:- 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y year. 15. Section 127 of the Act empowers the Principal Director General or Director General or Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner to transfer any case from subordinate AOs after providing a reasonable opportunity of hearing to the assessee and recording reasons for the case of transfer. This power of transfer under Section 127(1) of the Act is hedged by two elementary requirements namely; i) such an order can be passed only after giving the assessee a reasonable opportunity of being heard, ii) recording reasons for doing so, wherever possible. Furthermore, as per subSection (3) of Section 127 of the Act, the opportunity of hearing would not be necessary where the transfer of a case is from an AO to another AO and, wherein, such officers are situated in the same city, locality or place. Under clause (a) of Section 127(2) of the Act, where the AO or the officers from whom the case is sought to be transferred and the AO or the officers to whom the case is to be transferred are not subordinate to the same Principal Directors General, Director General, Principal Chief Commissioners, Chief Commissioners or Principal Commissione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... principle in such cases neither can the notice be said to be necessary, nor would it be necessary to record any reasons for the transfer. The provisions contained in Section 124(3) of the Act deal with the same topic which was the subject-matter of Section 64(1) and (2) of the earlier Income Tax Act, 1922 (11 of 1922). There is, however this difference between these two provisions that whereas Section 124 fixes jurisdiction, territorial or otherwise, of the Income Tax Officers, Section 64 fixed the place where an assessee was to be assessed. 7. In this connection, it is also necessary to take into account the background of the provision contained in Section 127. In Pannalal Binjraj v. Union of India [(1957) SCR 233] the validity of Section 5(7-A) of the earlier Act of 1922 was challenged before this Court. The said Section had provided that the Commissioner of Income Tax may transfer any case from one Income Tax Officer subordinate to him to another, and the Central Board of Revenue may transfer any case from any one Income Tax Officer to another. Such transfer may be made at any stage of the proceedings, and shall not render necessary the reissue of any notice already issued by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mind, it would also seem reasonable to hold that in regard to cases falling under the proviso, an opportunity need not be given to the assessee, and the consequential need to record reasons for the transfer is also unnecessary, and this view is plainly consistent with the scheme of the provision and the true intent of its requirements. We would according hold that the impugned orders cannot be challenged on the ground that the Board has not recorded reasons in directing the transfer of the cases pending against the assessee from one Income Tax Officer to another in the same locality. 17. The order of transfer passed under Section 127 of the Act, inter alia, rests on the premise of public interest. The powers under Section 127 of the Act shall be exercised for public purpose and in order to fulfil the bona fide objectives of the Act. Section 127 of the Act is a machinery provision and it must be construed in a manner to finally effectuate a charging section and for the purpose of effective collection of tax. The Supreme Court in the case of K.P. Mohammed Salim v. CIT, (2008) 11 SCC 573 wherein, the transfer of block assessment was concerned, laid impetus on the machinery nature of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cle-VI, New Delhi. Their Lordships observed thus (pages 580 and 587) : Prima facie it would appear that an assessee is entitled under those provisions to be assessed by the Income-tax Officer of the particular area where he resides or carries on business. Even where a question arises as to the place of assessment such question is under section 64(3) to be determined by the Commissioner or the Commissioners concerned if the question is between places in more States than one or by the Central Board of Revenue if the latter are not in agreement and the assessee is given an opportunity of representing his views before any such question is determined. This provision also goes to show that the convenience of the assessee is the main consideration in determining the place of assessment. Even so the exigencies of tax collection have got to be considered and the primary object of the Act, viz., the assessment of Income-tax, has got to be achieved. The hierarchy of Income-tax authorities which is set up under Chapter II of the Act has been so set up with a view to assess the proper Income-tax payable by the assessee and whether the one or the other of the authorities will proceed to assess a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an assessee to be assessed at a particular place. Under section 124, the assessment must be carried out at the principal place of business but when powers under section 127 are invoked, territorial nexus becomes irrelevant. Secondly, the determination of the venue of the assessment would be governed by the greatest exigencies for the collection of taxes. Thirdly, the decision to transfer cases cannot be capricious or mala fide. If the venue is changed from year to year, or periodically for no apparent reason, it would not manifest an instance of the exercise of power which is not available, but an example of an abuse of power in the manner in which it is exercised. Fourthly, whilst the convenience of the assessee should be kept in mind, it would always be subservient to the interests of adjudication and collection of taxes. 19. It is also relevant to point out that the Division Bench of this Court in the case of Sanjay Gandhi Memorial Trust v. CIT, 2023 SCC OnLine Del 3161 while giving imprimatur to the centralization order passed under Section 127 of the Act, has also interpreted the legislative mandate of Section 127 of the Act in light of the new faceless e-assessment scheme pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... low: Explanation. In Section 120 and this Section, the word case , in relation to any person whose name is specified in any order or direction issued thereunder, means all proceedings under this Act in respect of any year which may be pending on the date of such order or 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. 67. Also, as stated hereinabove, neither the e-assessment nor the faceless assessment scheme in any manner modifies the power to transfer cases from one assessing officer under a Principal Commissioner of Income Tax to another assessing officer under another Principal Commissioner of Income Tax who are holding non-concurrent charges. The aforesaid schemes only authorise transfer back of the case to the jurisdictional assessing officer holding original jurisdiction which he never loses as only the function of assessment is carried out by the faceless assessing officer holding concurrent jurisdiction. But, when a case is transferred under Section 127 of the Act, all proceedings under this Act gets transferred. The p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tances before the authority can exercise his powers to transfer the case. One more fact which cannot be lost sight of is that an assessee cannot choose his Assessing Officer and, therefore, if the transfer order does indicate some valid reasons to justify the transfer and such reasons are neither perverse or arbitrary or mala fide this court would not interfere with the reasonable exercise of his discretion. 21. After considering the legislative mandate and ambit of Section 127 of the Act, we now proceed to examine whether the coordinated enquiries, investigations or administrative convenience is an adequate rationale to pass an order of transfer and exercise powers under Section 127 of the Act. 22. As it is evident from the discussion above, the powers under Section 127 of the Act can be exercised keeping in mind the elementary significance of public interest. It is pertinent to point out the observations made by the Division Bench of this Court in the case of Sameer Leasing Co. Ltd. v. Chairman, CBDT, 1990 SCC OnLine Del 440 whereby, the transfer of assessment proceeding from Delhi to Meerut on the ground of coordinated investigation was in question. This Court while upholding th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r reference:- 7. We are not inclined to interfere with the impugned order of trans-fer. As held by this court in Peacock Chemicals (P) Ltd. v. CIT, [1990] 182 ITR 98, proper and co-ordinated investigation is a good ground for transfer under section 127. Since the Bhatia family has several businesses in various names and statuses, it is only proper that there should be co-ordination in investigation in the affairs of the groups which may have a bearing on the income-tax proceedings. The word co-ordinate indicates that there is a need for interlinking various aspects of a group for proper income-tax assessment. Hence, this expression is not vague. In fact, in the income-tax cases of connected business groups or families, it is often convenient to centralise their cases because often these have a bearing on one another. There is, therefore, nothing unreasonable in the impugned order. 24. It is also pertinent to point out the observations made by the Division Bench of the Patna High Court, wherein, while dealing with the scope of Section 127 of the Act and the ground of coordinated investigation in the decision in Jharkhand Mukti Morcha v. Commissioner of Income-Tax, Ranchi, 1997 SCC O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aimed at larger public interest. On the touchstone of public interest, the powers under Section 127 of the Act can be exercised. Furthermore, the legislative mandate advises that the order of transfer under Section 127 of the Act ought to be passed after providing a reasonable opportunity of hearing to the assessee. 26. In addition to that, the order passed under Section 127 of the Act should duly reflect the application of mind while disposing of the objections filed by the assessee. Moreover, the convenience of parties shall be considered by the Revenue while exercising the powers under Section 127 of the Act, however, in view of the administrative nature of such an order, the administrative convenience of the Revenue and the need for coordinated investigation would take precedence over the logistical difficulties faced by the assessee. It is also fundamental to point out that despite being a machinery provision, the reasons recorded in the order of transfer should not be capricious or mala fide and such order shall not run contrary to the bona fide objectives of the Act. 27. In the conspectus of the judicial decisions and principles emerging from those decisions, we now proceed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nating registers documents were seized from the premise bearing Villa no. 3004, Riviera Hermitage, Double Tree by Hilton, Arpora, Goa (owner Bharti Sehgal) and annexurised as A-1 to A-33. Details of expenses made by Sh. Dollar Gulati(PAN:- AEQPG8830G) are maintained in Annexures:- A-7, A-9, A-23, A-24, A- 26, A-29, A-32. On perusal of the above, it is found that the assessee Sh. Dollar Gulati has invested Rs. 4,25,42,951/-(unaccounted expenditure) to construct/develop properties in Goa during FY 2018-19 to FY 2022-23 and therefore, the PAN:- AEQPG8830G of the assessee Sh. Dollar Gulati was proposed to be centralized by the Pr.CIT (Central), Gurugram for the purpose of co-ordinated investigation and meaningful assessment. 2. Since, the case was proposed to be centralised out of Delhi, therefore, notice u/s 127 of the Income Tax Act 1961 dated 02.02.2024 was issued to assessee for furnishing comments. The assessee vide reply submitted objection on the proposed centralization. The objections of assessee were forwarded to the Pr.CIT (Central), Gurugram to dispose off the objections filed by the assessee which was further forwarded to the Investigation Wing, Chandigarh. 3. The comments ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lated to the abovementioned individuals and thus there was no need to centralize the cases of the assessee. We find no justification in that contention as the details furnished by the assessee in response to the notice dated 26 April 2023 would indicate that certain transactions pertaining to the unsecured loans exist between the assessee and the searched persons. For the sake of convenience, the details of the unsecured loan transactions as reflected in the record are reproduced herein for reference:- 34. Thus, it is discernible from the facts of the case, that the Revenue has duly considered the objections raised by the assesee and for the purpose of coordinated enquiries, investigations and administrative convenience passed the impugned order. 35. Similarly, in W.P.C. 4086/2024, the impugned order dated 20 February 2024 was in question, the relevant extracts of which are reproduced herein for reference:- The above assessee, above mentioned assessees, had filed their objections to the proposed transfer of jurisidiction vide their email dated 07.11.2023. The assessee s reply were sent to O/o the Pr.CIT(Central), Gurugram for review and comments. Vide letter no. 925 and 930 dated 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me Tax, Central Circle, Karnal. Therefore, for further co-ordinated investigation and enquiries with respect to Sh. Mark Gulati (PAN AZAPG9859N) and Sh. Navdeep Chhabra (PAN ABDPC9877B) for their transactions with Zee lab Group others, it is necessary that both the assessees are Centralized with DCIT, Central Circle, Karnal. Considering the aforesaid facts, the assessee s objection has not been found acceptable. Keeping in view the Board s guidelines, the cases need to be centralized in the interest of the revenue. In exercise of powers conferred by Sub Section (2) of Section 127 of the I. T. Act and all other powers enabling me in this behalf, I, the Pr. Commissioner of Income Tax-12, New Delhi, hereby transfer the below mentioned cases particulars of which are mentioned here-under in Column Nos. 2 3 from the Assessing Officer mentioned in Column No.4 to the Assessing officer mentioned in Column No.5. This transfer is affected for the purpose of administrative convenience, post search investigation and meaningful assessment. 36. As it is ostensibly clear that the Revenue before passing the impugned order dated 20 February 2024 has provided the opportunity of hearing to the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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