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Ravneet Takhar Vs. Commissioner Of Income Tax Ix And Ors.
December, 06th 2016
$~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
        rb




W.P.(C) 3898/2013                                                          Page 8

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