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TMI Blog2024 (8) TMI 1304X X X X Extracts X X X X X X X X Extracts X X X X ..... i" has filed the present proceedings under Article 226 of the Constitution of India. The substantive prayers as made in the petition are required to be noted which read thus:- "a) Issue the writ in the nature of certiorari thereby quashing the show cause notice dated 19.03.2021 issued by CIT (IT), Mumbai - 4 under Section 127 of the Income Tax Act, 1961; b) Issue the writ in the nature of certiorari thereby quashing the order dated 14.06.2021 passed by CIT (IT), Mumbai - 4 u/s. 127 of the Income Tax Act, 1961 thereby transferring and centralizing the case of the petitioner with Central Circle - 20 under Range - 5 of Pr. Commissioner of Income Tax (Central) - 2, New Delhi; c) Issue the writ in the nature of certiorari thereby quashing all the consequential proceedings initiated by the office of ACIT, Central Circle - 20 under Range - 5 of Pr. Commissioner of Income Tax (Central) - 2, Delhi." 2. The relevant facts are : The petitioner is a Non-Resident Indian (NRI), who is stated to be living in Dubai since 1992. The petitioner is also an Indian assessee having a Permanent Account Number (PAN) and is assessed to income-tax with the jurisdictional income tax officials at Mumba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... response either personally or through authorized representative in writing within 14 days of receipt of such notice, failing which, it was to be presumed that the petitioner had nothing to say. It is the case of the petitioner that the said show cause notice was received by the petitioner through speed post. 5. The petitioner contends that by his letter dated 01 April 2021, which was uploaded on income tax web portal, reply to the show cause notice was submitted by him in the stipulated time. The same is annexed to the petition. In his reply to the show cause notice, the petitioner has made a grievance on the search and seizure operations to be illegal. He also complained that the petitioner was illegally brought to India on 30 January, 2019. The petitioner stated that he had deep roots in Mumbai, and was filing his income tax returns as NRI from Mumbai, hence transferring his case was an attempt to cause unnecessary trouble and mental pressure, so as to implicate the petitioner in false investigation. He made a grievance that the show cause notice was contrary to law and without any basis. The petitioner also recorded that the show cause notice merely stated that the case needs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tioner. Thereafter on 04 July 2021, a corrigendum to the order under Section 127 was uploaded on the portal and shared by e-mail. All these notices were issued by the Delhi authorities. It also appears that on 13 March 2022, a show cause notice was issued to the petitioner calling upon the petitioner to explain as to why the case of the petitioner from AY 2010-11 to AY 2020-21 should not be referred to special audit. Thereafter on 19 March 2022, Central Circle 20- Delhi issued a notice under Section 142 (1) of the Act to the petitioner directing the petitioner to furnish accounts and documents for the assessment year 2020-21 before 24 March 2022. A reminder titled "Show Cause Notice referring the matter for a special audit u/s. 142 (2A) of the Act", was also issued to the petitioner. 8. Significantly, on 24 March 2022, the petitioner filed his objections to the notice dated 19 March 2022. On 25 March 2022, Central Circle 20-Delhi rejected the petitioner's objections and the case of the petitioner was referred to the Principal Commissioner, Income Tax, New Delhi for seeking approval, for referral of the petitioner's case for special audit. The petitioner has not disputed these fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ral Circle 20, Delhi, directing the petitioner to get the accounts audited under Section 142 (2A) of the Act. Such notice dated 31 March 2022 is annexed to the petition. 12. The petitioner has contended that although the petitioner was not served with the order passed under Section 127 of the Act, transferring the petitioner's case from Mumbai IT Authority to the Delhi Authority, the petitioner on receiving knowledge (as to when such knowledge is received, is not pleaded in the petition), the petitioner approached the respondent calling upon him to serve a copy of such order. The petitioner has contended that the petitioner's mail was replied by the respondents enclosing a copy of the order dated 14 June 2021 being forwarded to the petitioner by e-mail. 13. It is in these circumstances, the petitioner has filed the present petition on 05 July, 2022 inter alia assailing the order dated 14 June 2021 passed under Section 127 of the Act, transferring the petitioner's case from the jurisdiction of Mumbai to Delhi. 14. A reply affidavit is filed on behalf of respondents inter alia contending that the petitioner is a non-resident Indian staying in UAE. A search and seizure operation un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the jurisdiction of the petitioner from CIT (IT)-4 Mumbai to PCIT (C)-2 New Delhi. It is stated that as there was typographical error in the said order, which was corrected by issuance of a corrigendum dated 14 June 2021. The corrigendum was also served on the e- mail id of the petitioner as also the e-mail id on which the earlier correspondence was sent and the same was received by the petitioner. It is stated that the corrigendum order was also sent on another e-mail id, which was furnished in the latest income tax return (ITR) filed by the petitioner for Assessment Year 2020-21, which was delivered to the petitioner on 14 June 2021. It is thus stated that the impugned order dated 14 June 2021 centralizing the case of the petitioner with the DCIT Central Circle-20, New Delhi was passed after giving an adequate opportunity to the petitioner. The affidavit categorically states that both the notices dated 19 March 2021 as also corrigendum of the even date were sent through e-mail which was shared on the e-proceedings portal of the petitioner and hence, the petitioner's contention that he received the former but not the latter, ought not to be accepted. It is hence contended that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Mr. Pardiwalla is that the impugned order to transfer the proceedings from the Mumbai authority to the Delhi authority/jurisdiction is arbitrary, illegal and in breach of principles of natural justice and the mandate of Section 127 of the Act. 19. In support of his contentions, Mr. Pardiwalla placed reliance on the decisions in (i) Darshan Jitendra Jhaveri vs. Commissioner of Income Tax and others 2021 SCC OnLine Bom 3081, (ii) Shikshana Prasaraka Mandali, Sharda Sabhagruha, S.P. Collect Campus Vs. Commissioner of Income Tax (Central) & Others 2013 SCC OnLine Bom 379 and (iii) Pegasus Assets Reconstruction Private Limited vs. Principal Commissioner of Income Tax, Mumbai-3 & Ors. Writ Petition No. 1067 of 2022, dated 05.02.2024. 20. Mr. Pardiwala would hence submit that this is the case where the proceedings are required to be remanded to the authorities for an opportunity of a hearing to be granted to the petitioner and appropriate order to be passed in accordance with law on the proceedings under Section 127 of the Act. Submissions on behalf of the Respondents 21. On the other hand, Mr. Panda, learned counsel for the respondents has opposed the submission as made on behalf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion which falls for our consideration in the present proceedings is as to whether there is any illegality in respondent no. 1 passing the impugned order dated 14 June 2021 under Section 127 of the Act, transferring the petitioner's assessment from the Assessing Authority at Mumbai to the Delhi Authority. As the power to transfer cases is conferred under Section 127 of the Act, as also the contentions of the parties revolve around the exercise of such powers by the respondents. At the outset, we may note the provisions of Section 127 of the Act, which read thus:- "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 Asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich 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." 25. On a plain reading of Section 127, it is clear that sub-section (1) ordains that a decision under the said provision is required to be taken after giving the assessee a reasonable opportunity of being heard in the matter, wherever it is possible to do so, and after recording of reasons for doing so, the case of the assessee can be transferred from one Assessing Officer to another Assessing Officer as prescribed in sub-section (1). 26. In the facts of the present case, it cannot be said that there was no material which would lay down a foundation for the respondents to exercise powers under Section 127 of the Act. Moreover, substantive material justifying the transfer was disclosed to the petitioner in the show cause notice dated 19 March 2021 issued to the petitioner. The receipt of such show cause notice is not denied by the petitioner. The contents of show cause notice are required to be noted which read thus:- "Sub:- Cen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l interests in India and abroad. Such material also revealed the petitioner's involvement in evasion of taxes, abetment and facilitation of the evasion of taxes by various other individuals and companies and that the petitioner had many transactions with persons whose names are set out in the show cause notice. The cases of such related parties/persons were covered separately under Section 132 and their cases were also centralized in Central Circle, Delhi and it is for such reason, the petitioner's case was proposed to be centralized with Delhi charge for coordinated investigation. It is in such context and reasons the petitioner was called upon to reply to the show cause notice. As noted above, the petitioner responded to the show cause notice by his letter dated 01 April 2021, however, except for a vague denial and some health ground, the petitioner appears to have not made out any case against transfer of the said proceedings. 28. It is most significant that on such show cause notice and even assuming that the reply of the petitioner was to be taken into consideration, an order on the show cause notice transferring the petitioner's case to Delhi Circle was passed on 14 June 202 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hi authorities directing to get his accounts audited by M/s. KRA & Co. on the backdrop that an order under Section 142 (2A) of the Act was issued with the prior approval of the Principal Commissioner of Income Tax, Central-II, New Delhi. 31. Throughout the flow of all these events after the transfer of jurisdiction under Section 127, the petitioner did not think it necessary to challenge the order dated 14 June 2021. These events being accepted by the petitioner gives an impression of the petitioner having acquiesced with the order of transfer, as the petitioner, after a period of more than one year after the impugned order being passed has moved this petition on 05 June 2022. On 25 July 2022, a co-ordinate Bench of this Court while adjourning the proceedings passed an ad-interim order in terms of prayer clause (e) which reads thus:- "(e) that pending the hearing and final disposal of this petition the Respondents, their successors in office, subordinates, servants and agents be restrained by an order and injunction of this Hon'ble Court be pleased to stay the execution, operation and implementation and from taking any steps pursuant to order dated 14.06.2021 passed by CIT(IT), ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itioner had transactions with certain individuals whose names we have referred hereinabove and that search and seizure operations were undertaken against such persons and the assessment of such persons were also transferred with the Central authority at Delhi. The petitioner has not denied that he had transactions with such persons, as his only contention is that such transactions had not taken place in India. In our opinion, if this be the position, then certainly there was not only a substantial but an imminent reason and cause available with the respondents to exercise powers under Section 127 of the Act to deal with such cases, so as to centralize the assessment at one place. If such is the foundation in the facts of the case, then it cannot be said that there was any absence of reasons and/or no basis for the respondents to initiate proceedings against the petitioner under Section 127 of the Act. 36. Having noted the basis for the respondents to initiate an action to transfer the petitioner's case from Mumbai to Delhi exercising powers under section 127 of the Act, we now examine the question as posed by the petitioner whether the impugned order is in breach of the principles ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f a party. The provision further contemplates that the hearing would be required to be given wherever it is possible to do so and further reasons are to be recorded for passing of an order to transfer the case. 38. In our opinion, the impugned transfer order cannot be faulted on the ground that it is in breach of the principles of natural justice for several reasons. In such context the petitioner's contention that the impugned order furnishes no reasons or has insufficient reasons, or it furnishes incorrect reasons, in a decision being taken by the respondents to transfer the proceedings from Mumbai to the Delhi jurisdiction cannot be accepted on the face of the impugned order. This more pertinently when the petitioner has admitted that the petitioner had transactions with the persons whose cases are already centralized with the Delhi Authority. For such reason the respondents found it necessary, appropriate and in the eminent interest of the revenue that the petitioner's case is considered by the Central authorities at Delhi, who were seisin of the investigation, materials from the search and seizure operations, carried out not only in respect of the petitioner's premises, but a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uthority, as a remand necessarily has to serve the effective purpose, and when the fact itself shown that there would not be any requirement of remand. The Supreme Court in coming to the conclusion referred to the decision in Escorts Farms Ltd. v. Commissioner (2004) 4 SCC 281 made the following observations: "45. Keeping in view the aforesaid principles in mind, even when we find that there is an infraction of principles of natural justice, we have to address a further question as to whether any purpose would be served in remitting the case to the authority to make fresh demand of amount recoverable, only after issuing notice to show cause to the appellant. In the facts of the present case, we find that such an exercise would be totally futile having regard to the law laid down by this Court in R.C. Tobacco (supra). 46. To recapitulate the events, the appellant was accorded certain benefits under Notification dated July 08, 1999. This Notification stands nullified by Section 154 of the Act of 2003, which has been given retrospective effect. The legal consequence of the aforesaid statutory provision is that the amount with which the appellant was benefitted under the aforesaid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respondents to canvass the proposition that the petitioner has not disputed that he had transactions with the related parties whose assessments were centralized with the Delhi authorities. In such context, the Supreme Court made the following observations:- 42. An analysis of the aforesaid judgments thus reveals: "42.1 Natural justice is a flexible tool in the hands of the judiciary to reach out in fit cases to remedy injustice. The breach of the audi alteram partem rule cannot by itself, without more, lead to the conclusion that prejudice is thereby caused. "42.2 Where procedural and/or substantive provisions of law embody the principles of natural justice, their infraction per se does not lead to invalidity of the orders passed. Here again, prejudice must be caused to the litigant, except in the case of a mandatory provision of law which is conceived not only in individual interest, but also in public interest. 42.3 No prejudice is caused to the person complaining of the breach of natural justice where such person does not dispute the case against him or it. This can happen by reason of estoppel, acquiescence, waiver and by way of non-challenge or non-denial or admission ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appellants or the applicants, as the case may be. The Court held that when principles of natural justice require an opportunity to be heard before an adverse order is passed on any appeal or application, it does not in all circumstances mean a personal hearing. The Court further held that any order passed after taking into consideration the points raised in the appeal or the application shall not be held to be invalid merely on the ground that no personal hearing was afforded and this was held to be more important in the context of taxation and revenue matters. The observations of the Court are required to be noted which read thus:- "5. The High Court has primarily considered the question as to whether denying an opportunity to the appellant to be heard before his prayer to dispense with the deposit of the penalty is rejected, violates and contravenes the principles of natural justice. In that connection, several judgments of this Court have been referred. It need not be pointed out that under different situations and conditions the requirement of the compliance of the principle of natural justice vary. The courts cannot insist that under all circumstances and under different ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of transfer being made by the Commissioner was not given to the assessee. However, such are not the facts in the present case, and consequently, this decision does not advance the case of the petitioner. 44. In Shikshana Prasaraka Mandali, Sharda Sabhagruha, S.P. College Campus (supra) the Court dealing with the facts of the case, opined that there was breach of principles of natural justice. It was the case wherein the authorities called upon the petitioner to show cause on the proposed transfer, however, none of the reasons found in support of the impugned order was mentioned in the show cause notice. Such are not the facts in the present case. On the ground of inadequacy of the show cause notice, the Court in the facts of such case allowed the petition. 45. Also the reliance on the order passed by this Court on Pegasus Assets Reconstruction Private Limited (supra) would not assist the petitioner as in such case the assessment was completed and for such reason the Court was of the opinion that the transfer in question itself had become redundant and it is in these circumstances, the order of transfer was quashed. 46. It cannot be overlooked that the petitioner is not a perman ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l Binraj vs. Union of India (supra), held that the mere fact that the opportunity was not given shall not vitiate the order of transfer. 48. In this context, we may also refer to the decision of Allahabad High Court in Rohtas Project Ltd. v. Principal Commissioner of Income Tax (Central) [2018] 100 taxmann.com 383. Interpreting the provisions of Section 127 of the Act, the Division Bench of the Allahabad High Court made the following observations: "21. However, in this particular case, looking into the facts, we have to examine, whether respondents are justified in contending that non issue of notice and giving reasonable opportunity to Assessee would not vitiate order of transfer in view of the fact that requirement of notice is qualified with the phrase "wherever it is possible to do so" and, therefore, in every case law does not require that opportunity is must and also "whether this defence is available in this case". 22. Phrase "wherever it is possible to do so" as such could not be shown to have been used in any other statute and came up for consideration before Court, but a similar phrase "as far as possible" has been used in several statutes and considered by Courts, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... visions but there is no such vested right in an Assessee to be assessed by a particular Assessing Officer. In given case, Competent Authority may transfer a matter from one Assessing Officer to another, may be having effect of change of place also but that will not affect any substantial right of Assessee. 25. On this aspect, we find support from judgment in Panna Lal Binjraj Vs. Union of India, AIR 1957 (SC) 397, wherein Court held that infringement of right to be assessed by Assessing Officer having jurisdiction in a particular area by transferring case to another cannot be said to be an infringement, material in nature. It is only a deviation of a minor character from general standard and does not necessarily involve a denial of equal rights for simple reason that even after such transfer, case is dealt with under the normal procedure which is prescribed in the Act, 1961. Production and investigation of books of account, enquiries to be made by Income Tax Officer are same in a transferred case as in others which remain with Assessing officer of area in which other Assessee resides or carries on business. There is thus no differential treatment and no scope for argument that pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er contains any reason and whether mandatory requirement of recording of reason is satisfied or not". The reason mentioned in the order is "decentralization of cases". Requirement of reason under Section 127 has a basic condition that before causing some inconvenience or prejudice to Assessee, Competent Authority passing order of transfer must show, from order of transfer, a conscious application of mind on its part that transfer order is not a mechanical exercise. Requirement of reasons does not mean that order must contain a detailed discussion on several grounds for justifying order of transfer, but requirement of statute stands satisfied if from a bare reading of order, any person of ordinary prudence may come to know as to what is the reason which has prevailed in the mind of Competent Authority to exercise power of transfer and such reason or ground is not flimsy, imaginary, whimsical. It must disclose that patently, logic and prudence has been applied before passing it. 29. Looking to the entire facts and circumstances and the impugned order, we find it difficult to read substantial compliance of Section 127(A) that any reason has been given in the impugned order. Hence we ..... X X X X Extracts X X X X X X X X Extracts X X X X
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