$~18-22 & 7
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% DECIDED ON: 02.11.2016
+ W.P. (C) 3837/2016, CM APPL.16315/2016
CHAUDHARY SKIN TRADING COMPANY ..... Petitioner
versus
PR. COMMISSIONER OF INCOME TAX-21 ..... Respondent
W.P. (C) 3839/2016, CM APPL.16318/2016
NASIRA BEGUM ..... Petitioner
versus
PR. COMMISSIONER OF INCOME TAX-21 ..... Respondent
W.P. (C) 3841/2016, CM APPL.16320/2016
ARSHIA AHMED QURESHI ..... Petitioner
versus
PR. COMMISSIONER OF INCOME TAX-21 ..... Respondent
W.P. (C) 3842/2016, CM APPL.16322/2016
M.K. LEATHER TRADING COMPANY ..... Petitioner
versus
PR. COMMISSIONER OF INCOME TAX-21 ..... Respondent
W.P. (C) 3843/2016, CM APPL.16324/2016
MOHD. KAMIL ..... Petitioner
versus
PR. COMMISSIONER OF INCOME TAX-21 ..... Respondent
W.P.(C) 9935/2016, CM APPL.39493-39495/2016
M. K. OVERSEAS PVT. LTD. .... Petitioner
versus
PRINCIPAL COMMISSIONER OF INCOME TAX - 06 ..... Respondent
Appearance: Mr. Jayant K. Mehta with Mr. Saurabh Dev Karan Singh and
Mr. Shaurya Kuthiala, Advocates for petitioners in all matters.
Mr. Ashok K. Manchanda, Sr. Standing Counsel for revenue in item
nos.18-22.
Mr. Rahul Chaudhary, Sr. Standing Counsel for revenue in item no.7.
W.P.(C)3837, 3839, 3841, 3842, 3843 & 9935/2016 Page 1
CORAM:
HON'BLE MR. JUSTICE S. RAVINDRA BHAT
HON'BLE MS. JUSTICE DEEPA SHARMA
S.RAVINDRA BHAT, J.(ORAL)
1. In this batch of writ petitions, the orders made by the revenue, i.e.,
Principal Commissioner of Income Tax under Section 127 have been
challenged.
2. The assessee, one of the petitioners, M.K. Overseas Pvt. Ltd.,
Director and other associates/concerns related to it was subjected to search
and seizure proceedings. Some others - who are also before this Court as
the petitioners were on the very same day, i.e., 28.04.2015, subjected to
survey proceedings under Section 133A.
3. The revenue proposed to centralize the cases. These cases were
before the Central Circle, Ghaziabad and notice was issued to each of the
assessees under Section 127 (1) of the Income Tax Act. The rationale to
justify the transfer was a common one - "search and seizure operation"
under Section 132 of the Income Tax Act in the cases of M/s M.K.
Overseas group of companies, Ghaziabad was carried out on 28.04.2015.
As per communication received from Principal Commissioner of Income
Tax, (Central) Kanpur, cases were required to be centralized for
coordinated post search investigation and meaningful assessment. In the
case of M.K. Overseas Pvt. Ltd., the petitioner in W.P.(C)9935/2016, the
following reasons were given: -
"A Search & Seizure operation u/s 132 of the Income Tax, 1961 was
carried out on 28.04.2014 in the M.K. Overseas Group of cases,
Ghaziabad. Your case is proposed to be centralized with
DCIT/ACIT, Central Circle, Ghaziabad under the administrative
control of Pr. Commissioner of Income Tax (Central), Kanpur."
All the assessees resisted notices contending that this process would cause
W.P.(C)3837, 3839, 3841, 3842, 3843 & 9935/2016 Page 2
great hardship as their headquarters and principal place of business was not
located in Ghaziabad and that its personnel would have to travel a long
distance to attend the proceedings.
4. It was also stated inter alia by M.K. Overseas that it is an approved
meat processing plant and that it was assessed to income tax regularly and
that the entire management of the company was in Delhi.
5. The CIT after considering the responses rejected the submissions
and directed the transfer of the proceedings in exercise of powers under
Section 127. In the case of M.K. Overseas, the order - dated 13.07.2016
cited the following reasons: -
"4. The objections raised by the assessee company have been
considered and rejected being not tenable. A Search & Seizure
operation u/s 132 of the Income Tax Act, 1961 was carried out on
28.04.2015 by Meerut Unit of Director of Income Tax
(Investigation), Kanpur in M.K. Overseas Group of cases. M/s
M.K. Overseas Pvt. Ltd., is one of the group companies and was
covered in the search and seizure proceedings. Authorisation u/s
133A of the Act was also issued in the name of Assessee Company.
During survey proceedings various incriminating documents/loose
papers and hard disk etc. Were found and impounded from the
premises of M/s M.K. Overseas Pvt. Ltd., B-63-64, Site-IV,
Sahibabad Industrial Area, District Ghaziabad, UP, for which
coordinated investigation is required.
5. The assessee has raised objection that entire management of
the assessee is in Delhi and centralizing its case to Delhi will help in
saving the precious time which would be wasted in travelling to and
from to Ghaziabad, which is almost thirty five Km. from assessee's
office. In this regard, it is pertinent to mention here that the entire
set up of the factory/meat processing plant of the assessee company
is located in Ghaziabad which is almost thirty five Km. from Delhi.
When the assessee company can operate its factory/plant from
Ghaziabad then why it is inconvenient for the assessee company to
attend the income tax proceedings at Ghaziabad. Moreover, except
administrative inconvenience, the assessee has not offered any
explanation/justification for not centralizing its case to Central
W.P.(C)3837, 3839, 3841, 3842, 3843 & 9935/2016 Page 3
Circle, Ghaziabad. Therefore, assessee's request for not
centralizing its case to Central Circle, Ghaziabad, cannot be
acceded to.
6. For the foregoing reasons, objections of the assessee
company are hereby rejected. The transfer of jurisdiction over the
case to the charge of Pr. Commissioner of Income Tax (Central),
Kanpur, will facilitate co-ordinated post search and meaningful
assessments."
In the case of other five assessees, common order was made on 2.2.2016
which inter alia stated as follows: -
"2. Thus, in exercise of the power conferred under section 127 of
the Income Tax Act, 1961 and all other enabling powers in this
behalf. I, Pr. Commissioner of Income Tax, Delhi-21, New Delhi,
hereby transfer the case, the particulars of which are mentioned in
Column No.2 from the Assessing Officer mentioned in Column No.4
to the Assessing Officer mentioned in Column No.5 and direct that
the powers of the Assessing Officer mentioned in Column No.4 in
respect of this case shall be exercised by the Assessing officer
mentioned in Column No.5 functioning under PCIT mentioned in
Column No.l6. This transfer is effected for the purpose of
conducting coordinated post search investigation and meaningful
assessments and also keeping in view the Board's instructions that
the search cases should be centralized with Central Charge."
6. The petitioners urge that the failure to mention any reason in the
notice under Section 127 vitiates the entire transfer and rely upon the
authority of the Supreme Court in Ajantha Industries v. CBDT (1976) 102
ITR 281 (SC) and the judgment of the Calcutta High Court in Chotanagpur
Industrial Gases Pvt. Ltd. v. CIT 233 ITR 377. It is submitted that the mere
mention of the search and seizure proceedings and the conclusion, i.e.,
proposal to centralize all pending proceedings in the Ghaziabad office
cannot be considered as a reason. It does not provide any clue as to why
the revenue wishes to transfer the assessments and collect them at one
W.P.(C)3837, 3839, 3841, 3842, 3843 & 9935/2016 Page 4
place. It was urged next by learned counsel, Mr. Jayant K. Mehta that
even on the merits, the mere mention of "coordinated post investigation and
meaningful assessments" as a common feature or reason to transfer juxta
posed with the grounds opposing the transfer were insufficient and did not
justify the order under Section 127. In this regard, learned counsel relied
upon the judgment in Global Energy Pvt. Ltd. v. Commissioner of Income
Tax, (2013) 356 ITR 502 (Bom) where it was held that the mere reference
to administrative convenience as a ground for transfer did not justify the
exercise of power.
7. Counsel for the revenue submitted that the writ proceedings are
without merit. It was stated that the mention of the fact, i.e., search and
seizure operation and the proposal to centralize it were reasons enough for
which a valid notice could be given. Furthermore, the assessees did not
express prejudice or substantial prejudice at the stage when they had
responded to the notice. On the merits, it was urged that the rationale, i.e.,
of coordinating the post investigation efforts and meaningful assessments
were sufficient compliance with law. It was highlighted that the search
has yielded incriminating documents and in this context coordination in
regard to the block assessment with respect to post search investigation was
relevant and could be efficaciously carried out at one place. It is evident
from the above discussion that the petitioners' grievance as articulated is
twofold, firstly whether the notice was vitiated and secondly if not whether
the reasons given in the transfer order are of the nature that can stand
scrutiny under Section 127.
8. The narrative would disclose that none of the assessees voiced any
prejudice at the stage when they were issued notices. The record shows
that all of them responded to the notice and gave their own justification
why the final order under Section 127 should not be made. The assesse
W.P.(C)3837, 3839, 3841, 3842, 3843 & 9935/2016 Page 5
has no doubt relied upon the authority to say that this omission does not
stop it from contending that the notices were void at the same time; the
Court is not unmindful of the fact that two stages are separate. The
substantiality of prejudice for lack of reasons or otherwise has to be
independently considered given the fact of each cases. In the present case
it is not as if the notice did not contain the reasons at all. The assess ees'
contentions that the notice did not contain reasons is fallacious, the
reference to search and seizure operations and the proposal to centralize the
cases in Ghaziabad cannot be considered no reasons. If these had been
omitted, the assessees would have been within their rights that the notices
did not contain reasons. The assessees were fully aware of the search and
seizure operations and the fact that its premises in Ghaziabad too were
subject to such proceedings. Having regard to all these facts, the Court
hereby rejects the first contention that the ingredients of the notice did not
exist when the proposal to transfer was first notified to these assessees.
9. 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
W.P.(C)3837, 3839, 3841, 3842, 3843 & 9935/2016 Page 6
Officer who would also have before him or her all other related
assessments. In these circumstances, the Court is unprepared to hold that
the brief reasons relied upon by the revenue does not amount to reasons at
all or that they are vague. In such exercise in every case where an order
under Section 127 is challenged, there are two interests - those of the
assessees who invariably plead inconvenience and hardship and that of the
revenue which would inevitably cite public interest. The Court's task is to
unravel whether in fact the revenue's contentions are correct and if so reject
the assessees' contentions. On the other hand, if there is no real public
interest and if there are no reasons even the briefest one, the order cannot
be sustained. Conversely, if there is reasoning and the public interest is
discernable, as in this case, the only result can be rejection of the assessees'
contentions.
10. In view of the forgoing analysis, we are of the opinion that these
petitions have no merit; they are accordingly dismissed along with pending
applications.
S. RAVINDRA BHAT
(JUDGE)
DEEPA SHARMA
(JUDGE)
NOVEMBER 02, 2016
/vikas/
W.P.(C)3837, 3839, 3841, 3842, 3843 & 9935/2016 Page 7
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