$~20
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Decided on : 19.10.2016
+ W.P.(C) 3898/2013
RAVNEET TAKHAR ..... Petitioner
Through: Mr.Salil Kapoor, Mr.Sanat Kapoor,
Mr.Sumit Lalchandani and
Ms.Ananya Kapoor, Advocates
versus
COMMISSIONER OF INCOME TAX IX AND ORS.
..... Respondents
Through: Mr.Dileep Shivpuri, Sr.Standing
Counsel, Mr.Sanjay Kumar,
Jr.Standing counsel and Mr.Vikrant
A.Maheshwari, Adv.
CORAM:
HON'BLE MR. JUSTICE S. RAVINDRA BHAT
HON'BLE MS. JUSTICE DEEPA SHARMA
MR. JUSTICE S. RAVINDRA BHAT (OPEN COURT)
1. In this writ petition, the assessee impugns notice dated
24.04.2012 under Section 127 (1) of the Income tax Act as well as the
order made subsequently on 11.09.2012. It is contended that the
impugned notice and order are contrary to law inasmuch as they do
not contain any reasons.
2. The assessee was subjected to search and seizure proceedings
under Section 132 pursuant to warrant issued in that regard. The
warrant was not only in respect of the assessee but also in respect of
other entities most of whom were Jalandhar based. The impugned
W.P.(C) 3898/2013 Page 1
notice was issued by the Additional Commissioner of Income Tax
proposing to centralise the assessee's case by way of transfer to the
concerned Deputy Commissioner of Income Tax/Additional
Commissioner of Income Tax at Jalandhar. The assessee by reply
dated 03.05.2012 objected to the proposed transfer contending that
the notice contained vague reasons i.e. in its reference to search
operations with respect to M/s Prominent Players of Land Deals. The
assessee claimed that it was unaware of that rule and further stated
that it was handicapped and could not object to the transfer. Therefore
it sought "precise" reasons and cited a decision of the Andhra Pradesh
High Court in Saptagiri Enterprises vs. CIT & Others (1991) 189
ITR 705 (AP). Subsequently, the assessee received notices from the
office of the Assistant Commissioner of Income Tax, Jalandhar on
24.01.2013. Upon its protest that an order under Section 167 was
furnished to it, the assessee was provided with the impugned order
dated 11.09.2012. The said impugned order reads as follows:
A request was received from the Commissioner of Income
Tax (Central) Ludhiana vide letter F. No.
CIT(C)/JB/Cent./32/12-13/33 dated 09/04/2012 for
centralization of below mentioned case of Mis Prominent
Players of Land Deals Group of cases, Ludhiana from ACIT
CIT 32(1) & ITO Ward 33(1) New Delhi of this charge to
Central Circle-I. Jalandhar under the charge of the CIT
(Central), Ludhiana. As this case was to be transferred out
of Delhi u/s 127(2) of the income Tax Act, 1961, an
opportunity, was given to the assessees to file his objections
in this regard.
The reply of Shri Ravneet Takhar S/o Sh. Ravinder Singh,
has been received on 09/05/2012 giving objection for
W.P.(C) 3898/2013 Page 2
centralization of their case with the ACIT, Central Girded,
Jalandhar. Accordingly, a letter was written to the CIT
(Central), Ludhiana vide this office letter No. CIT-
XI/Centralizationl/2012-13/402 dated 30th May, 2012. In
response to the letter a reply has been received from the
Director of income Tax (Inv.) Ludhiana through the CIT
(Central) Ludhiana vide letter NO.DIT/Inv/Ldh/2012-
13/Cent/138 dated 27-07-2012 stating their that the
objection of the assessee Shri. Ravneet Takhar are not
maintainable. Hence, it is requested that the matter be taken
up with the respective commissioner of Income Tax having
present jurisdiction over his case for centralization of this
case with ACIT Central Circle, Jalandhar. In the case of
Shri. Yogendra Kumar Agrahari neither any reply nor any
objection has been received till date.
Otherwise also, section 127 provides for giving the assessee
a reasonable opportunity of being heard in the matter of
Transferring only "Wherever it is possible to do so". Thus
the section, does not even make giving opportunity of being
heard to the assessee legally mandatory The centralization
order u/s 127(2) of the I.T. Act, 1961 is being passed in the
public interest which has been consensually interpreted as
including 'coordinated investigation in the interest of
revenue and administrative convenience.
Therefore, in exercise of the powers, conferred by Sub
Section(2) of the Section 127 of the Income Tax Act, 1961
and all other powers enabling me on this behalf, I, the
Commissioner of Income Tax, Delhi-XI, New Delhi hereby
transfer the case, the particulars of which is mentioned in
Column from the Assessing Officers mentioned in Column-4
to the Assessing Officer mentioned in column-5 of the
Annexure below after receiving the [Not Eligible in the copy
received from the Respondent]
W.P.(C) 3898/2013 Page 3
3. It is argued that the impugned order as well as the notice which
preceded it are unsustainable. Learned counsel relies upon the
Supreme Court's judgment in Ajantha Industries vs. Central Board
of Direct Tax (1976) 102 ITR 281 (SC) and ruling of this court in
Melco India (P) Ltd. & Ors. vs. CIT (2003) 260 ITR 450 (Del). It is
submitted that the reasons indicated in the impugned notice are
untenable because they are not specific. Counsel relied upon Melco
India (P) Ltd.'s case (supra). In that regard it was further submitted
that lack of specific reasons in the notice and the reasons furnished in
the order are of such a nature as to render the transfer order illegal and
unenforceable.
4. The revenue contends in its counter affidavit that besides the
search and seizure operations carried out in the assessee's premises
warrants were executed in respect of a large number of other entities,
including M/s Prominent Players of Land Deals and M/s Punjab Iron
and Steel Co. Pvt. Ltd. It was decided to transfer the case and
centralise it for the sake of convenience to Jalandhar. The
respondents rely upon the judgment of this court in Surya
Pharmaceuticals Ltd. vs. ITO (2007) 295 ITR 427 (Delhi) which
ruled that administrative convenience is a sufficient ground to transfer
or centralise cases under Section 127.
5. The assessee's mainstay is Ajantha Industries's case (supra).
On the juxtaposition of the previous law embodied in Section 34 of
the Income Tax Act, 1922 with the present provision under Section
W.P.(C) 3898/2013 Page 4
127(1), the Court concluded that recording reasons and their
communication in an order under Section 127 (1) is necessary:
Mr. Sharma also drew our attention to a decision of this
court in S. Narayanappa v. Commissioner of Income-tax
(1967) 63 ITR 219 (SC), where this court was dealing with
section 34 of the old Act. It is clear that there is no
requirement in any of the provisions of the Act or any
section laying down as a condition for the initiation of the
proceedings that the reasons which induced the
Commissioner to accord sanction to proceed under section
34 must also be communicated to the assessee. The Income-
tax Officer need not communicate to the assessee the
reasons which led him to initiate the proceedings under
section 34. The case under section 34 is clearly
distinguishable from that of a transfer order under section
127(1) of the Act.
When an order under section 34 is made the aggrieved
assessee can agitate the matter in appeal against the
assessment order, but an assessee against whom an order of
transfer is made has no such remedy under the Act to
question the order of transfer. Besides, the aggrieved
assessee on receipt of the notice under section 34 may even
satisfy the Income-tax Officer that there were no reasons for
reopening the assessment. Such an opportunity is not
available to an assessee under section 127(1) of the Act. The
above decision is, therefore, clearly distinguishable.
6. In Melco India (P) Ltd.'s case (supra) the logic of Ajantha
Industries's case (supra) appears to have been extended further to say
that reasons should not only be forthcoming in the order under
Section 127 (1) but in the notice issued to the assessee as well:
W.P.(C) 3898/2013 Page 5
6. In Ajantha Industries v. CBDT [1976] 102 ITR 281(SC),
while dealing with the provisions of Section 127 of the Act,
their Lordships of the Supreme Court observed that before
making an order of transfer the Legislature has imposed the
requirement of a show cause notice and also recording of
reasons.
Elucidating the principle enunciated in Ajantha Industries
case (supra) a Division Bench of the Andhra Pradesh High
Court in Vijayasanthi Investments Pvt. Ltd. v. Chief CIT &
Ors. [1991] 197 ITR 405(AP), observed as under (page
411) :
"... in the matter of the transfer of a case under Section
127 of the Act, it is necessary that the authority which
proposes to transfer the case must, wherever it is possible to
do so, give the assessee a reasonable opportunity of being
heard with a view to enable him to effectively show cause
against the proposed transfer. The notice must also propose
to give a personal hearing. It is also necessary to mention in
the notice the reasons for the proposed transfer so that the
assessee could make an effective representation with
reference to the reasons set out. It is not sufficient merely to
say in the notice that the transfer is proposed "to facilitate
detailed and co-ordinated investigation". The reasons
cannot be vague and too general in nature but must be
specific and based on material facts. It is again not merely
sufficient to record the reasons in the file but it is also
necessary to communicate the same to the affected party."
7. The assessee's contention, broadly, is that the notice issued on
24.04.2012 does not contain "precise" reasons [read as "specific"
having regard to decision in Melco India P. Ltd's case (supra)].
8. Now, the very first sentence in the notice of 24.04.2012
specifically alludes to the search and seizure proceedings carried out.
That the assessee responded to the notice is not in dispute.
W.P.(C) 3898/2013 Page 6
Admittedly, the assessee's contention at this stage is that the reasons
were vague. However, the materials on record do indicate that the
assessee was subjected to search; statements of the individuals were
recorded during the course of search proceedings which appear to
have been the subject matter of consideration by the Income Tax
authorities when they finally gave an order under Section 127 (1).
The assessee's argument is that even the order under Section 127 was
not furnished to it in the first instance but rather upon its asking after
it was intimated about the transfer by the Jalandhar Officer. There is
undoubtedly, some substance in this argument. However, to constitute
a fatal infirmity the reasons indicated in the order under Section 127
(1) dated 11.09.2012 should be of a nature which can be said to be no
reasons at all. The order to the extent it is relevant has been extracted
above; it clearly indicates that the decision to transfer assessee's case
is based upon the convenience of the income tax authorities who had
conducted search in respect of the other entities and individuals in
Jalandhar. The materials on record filed along with the counter
affidavit support this conclusion. The judgment in Surya
Pharmaceuticals's case (supra), we notice, was rendered after Melco
India P. Ltd.'s case (supra). In Surya Pharmaceuticals's case
(supra), the court held that administrative convenience could be a
valid ground for transfer of the assessee's case. In the circumstances
of this case, the court is of the opinion that the opinion formation
cannot be faulted there is no gainsaying to the fact that but for the
centralisation there could be different approaches leading to differing
block assessment orders.
W.P.(C) 3898/2013 Page 7
9. For the above reasons, the writ petition is devoid of merit and is
accordingly dismissed.
S. RAVINDRA BHAT
(JUDGE)
DEEPA SHARMA
(JUDGE)
OCTOBER 19, 2016
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