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March, 13th 2014
                                                 Decided on: 18.02.2014

+      W.P.(C) 1147/2014, C.M. APPL. 2393/2014 & 2394/2014

       VISHAL KUMAR                                 .....Appellant
                 Through: Sh. Ajay Vohra, Ms. Kavita Jha and Sh.
                 Vaibhav Kulkarni, Advocates.


                    Through: Ms. Suruchii Aggarwal, Sr. Standing



1.     This writ petition impugns an order under Section 127 of the
Income Tax Act, 1961 ("the Act") passed by the CIT (XVI), New
Delhi, as a result of which jurisdiction over the writ petitioner (i.e. the
assessee) has been transferred from the DCIT, Circle 48(1), New
Delhi to the ACIT, Central Circle, Noida.
2.     On 9.10.2013, the CIT, New Delhi issued a show-cause notice
to the petitioner under Section 127 of the Act proposing the transfer,
in the following terms:

W.P.(C)1147/2014                                                     Page 1
     "It is proposed to transfer your case from Delhi to
     Faridabad. Therefore, before transferring your case u/s
     127(2) of the IT Act, 1961 an opportunity of being heard in
     person or through your authorized representative or a
     written reply, is being given to you before CIT, Delhi-XVI,
     New Delhi.
     If you have any objection for the proposed transfer you are
     requested to bring all evidences before CIT, Delhi-XVI, New
     Delhi, in support of your claim on 18th Oct. 2013 at 12.30
     P.M. in Room No.313 D-Block, Pratyakshkar Bhawan, Dr.
     S.P. Mukherjee Civic Centre, Minto Road, New Delhi.
     In case your reply/submission is not received in this office
     by 17-10-2013, it will be presumed that you have no
     objection if your case is centralized with the Commissioner
     of Income tax (Central Circle), Faridabad."

3.     At this stage, it is important to note the background in which
this show-cause notice was issued. The show cause notice pertains to
the centralization of the petitioner's case with the CIT, Faridabad,
along with the group of cases concerning the Eldeco Group of
Companies. The petitioner is the Managing Director of Xander
Advisors Pvt. Ltd. ("XAPL"), a company incorporated in India, with
its registered offices in Delhi. XAPL are engaged as advisors by
Xander Investment Management, Mauritius, which in turn renders
advisory services to Xander Investment Holding Limited III ("XIH
III") and Xander Investment Holding Limited IV ("XIH IV"), both
incorporated in Mauritius. XIH III and XIH IV are foreign
shareholders of Indian incorporated companies belonging to the
Eldeco Group, including importantly Eldeco Jalandhar Properties
Private Limited and Eldeco City Private Limited, which carry-out
construction activities in Punjab and Lucknow respectively. The

W.P.(C)1147/2014                                                    Page 2
petitioner states categorically that these two companies "are ... special
purpose vehicle companies promoted by Eldeco group." It is in this
context of the inquiry into the income of the Eldeco Group of
Companies, and the search and seizure operations conducted under
Section 132 of the Act at the premises of Xanders Advisors and
Xander Finance Private Limited, that the show-cause notice were
4.     Pursuant to the show-cause notice, while the petitioner did not
make any oral representation on the assigned date, written objections
were furnished raising the following grounds:
      "The assessee is the Managing Director of Xander Advisors
     India Pvt. Ltd., which has its Registered as well as
     Corporate office in Delhi. Xander Group has invested in the
     projects of Eldeco Group and formed SPVs for the purpose.
     The assessee acts only in the capacity of the nominee
     Director, of the Xander Group and draws no remuneration
     from Eldeco Group of Companies. Other than this, the
     assessee has no business relationship with Eldeco Group.
     We are enclosing the copies of the income tax returns along
     with the acknowledgment of the assessee for the past 5 years
     from where it may be verified that he is in receipt of salary
     from Xander Advisory India Private Limited and has been
     regularly paying his taxes and filing the returns of income
     accordingly. In view of the above, we request that the
     centralization of the assessee's case with Eldeco group, is
     neither justified nor will it serve any useful purpose and he
     be continued to be assessed by the existing A.O."

5.     These objections were disposed off by the impugned order of
the CIT dated 31.10.2013, passed under Section 127(2) of the Act,
whereby the transfer was effected. The order states as follows:

W.P.(C)1147/2014                                                     Page 3
     "A proposal for centralization of search cases of M/s.
     Eldeco Group with DCIT/ ACIT Central Circle Noida (D.
     O. S. 28/03/2012) was received vide letter no. 1870 dated
     4/9/2013 from the office of Commissioner of Income Tax
     (Central) Kanpur. The letter also intimated that in
     continuation to earlier proposal for centralization of Eldeco
     Group of Cases issued vide letter no. 1101 dated
     27/06/2013, wherein five cases from the CIT XVI Charge
     were proposed to be centralized, it was found that some
     more cases of the family members of the Directors or their
     HUFs should also be centralized as they lead to some
     relevant information of the assessment in the main entity.

     XXXXXX              XXXXXX              XXXXXX

     2.       As per the requirements of section 127 of the
     Income Tax Act, 1961, an opportunity of being heard was
     provided to Sh. Rohan Sikri and Sh. Vishal Kumar to file
     their reply if they had any objection to the proposed
     transfer. No reply was received from Sh. Rohan Sikri. In the
     absence of any reply from Sh. Rohan Sikri, it is construed
     that he has no objection to his case getting centralized with
     DCIT/ACIT Central Circle Noida.

              Sh. Vishal Kumar filed a reply dated 17/10/2013.
     The main contentions made by Vishal Kumar against the
     proposed transfer were that he was MD in M/s. Xander
     Advisors India Pvt. Ltd. which had registered office in
     Delhi; he drew no salary from Eldeco Group of Companies;
     and he was a regular assessee paying his taxes in time.

               Reply of Sh. Vishal Kumar has been considered
     and is found to have no force in light of the reasons for
     which proposal for centralization of the cases is sought by
     the CIT (Central) Kanpur. Assessee has himself stated in his
     reply that M/s. Xander Group has invested in the projects of
     Eldeco Group and formed SPVs for the purpose. There is
     sufficient reason to transfer the case to DCIT/ACIT Central

W.P.(C)1147/2014                                                     Page 4
     Circle Noida for effecting meaningful investigation in a
     coordinated manner with one officer.

     3.       In exercise of powers conferred by sub-section (2) of
     section 127 of the I.T. Act, 1961 and all powers enabling me
     in this behalf, I, the Commissioner of Income Tax Delhi XVI
     New Delhi hereby transfer the cases, particulars of which
     are mentioned in Column No. 2 of the Schedule hereunder,
     from the Assessing Officer mentioned in Column No. 4 to
     the Assessing Officer mentioned in Column No. 5 below,
     after receiving the concurrence from the Commissioner of
     Income Tax (Central) Kanpur vide letter no. 1870 dated
     4/9/2013. This order is being passed for conducting
     coordinated investigation:"

6.     Impugning this order, the petitioner argues that it does not carry
any cogent reasons for transfer, as required by Section 127. It is
argued that there was no warrant to transfer the cases, as no material
was presented on the basis of which the transfer could be made.
Rather, such a transfer ­ it is argued ­ was made on a mere suspicion,
especially since no raid was conducted at the petitioner's residence.
Further, learned counsel argues no justifiable and cogent reasons have
been brought on record; consequently the Court should use its powers
under Article 226. The petitioner in his response to the show-cause
notice, specifically stated that he has no business or financial
connection with the Eldeco group, apart from holding one position as
a nominee Director. It is argued that despite this categorical assertion,
which was not displaced by the Revenue, no reasons have been
provided except for a vague reference to the need for "conducting a
coordinated investigation". In the absence of any incriminating
material suggesting any possible undisclosed income in the hands of

W.P.(C)1147/2014                                                      Page 5
the petitioner, and the absence of any link between the Eldeco Group
of Companies and the petitioner, it is argued that the rationale of
`coordinated investigation' cannot sustain the order of transfer under
Section 127. Furthermore, it is argued that since the proceedings have
not only been transferred from one Assessing Officer to another, but
also from one State to another, the considerations must be stricter in
judging whether the powers under Section 127 have been properly
7.     Learned counsel urges that a mechanical order has been passed
in this case, which betrays a non-application of mind. Reliance has
been placed on various decisions, including Y.K. Agarwal v. CIT, 283
ITR 532 (All), PS Housing Finance (P) Limited v. UOI, 290 ITR 316,
Rajesh Mahajan v. CIT,2002 ( 257) ITR 577, Saptagiri Enterprises v.
CIT and Ors., (1991) 189 ITR 705 (AP), and Global Energy Pvt. Ltd.
v. CIT, 365 ITR 502, for the proposition that merely mentioning that
the transfer is required for the purpose of co-ordinated investigation or
administrative convenience is insufficient to justify an order under
Section 127. Furthermore, learned counsel argues that the impugned
order is totally silent on the nature of the proposed investigation
sought to be conducted, since the petitioner is only a salaried
employee, who does not have any links with the Eldeco Group.
Furthermore, learned counsel argues that the impugned order proceeds
on a factually incorrect premise that some of the "family members of
the Director or their HUFs" remain to be centralized, which includes
the case of the petitioner. This ­ it is argued ­ is factually incorrect as
the petitioner is not the family member of any of the Directors of any

W.P.(C)1147/2014                                                     Page 6
Eldeco Group, nor is the petitioner a member of any of the HUF's
related to the Eldeco Group. Finally, learned counsel argued that a
reasonable opportunity of being heard is mandatory under Section
127. It is argued that in this case no specific reasons for the proposed
transfer were recorded, nor was any material or information
communicated to the petitioner, such that an effective representation
could be made. Finally, it is argued that the impugned order is
contrary to the show-cause notice. While the latter purported to
transfer the case to the CIT (Central Circle), Faridabad, the case was
ultimately centralized in Noida.
8.     The impugned order and the preceding show-cause notice in
this case arise from previous investigations of the Revenue into the
Eldeco Group of Companies. It is not in dispute today that the
petitioner holds a crucial position of Managing Director of XAPL,
which in turn, provides advisory services ­ through a chain of
companies ­ to XIH III and IV, which are part of the Eldeco Group of
Companies. The petitioner also admits that the entities lying further
downstream are Special Purpose Vehicles, which are dependent upon
and controlled by the Eldeco Group, and are engaged in construction
activities. The officers of XAPL were subject to search and seizure
under Section 132 of the Act. The petitioner is also a nominee
Director appointed by the Eldeco group, and thus, represents the
interests of the Eldeco group in that capacity, though ­ if the
petitioner's assertions are believed ­ receives no monetary or financial
gain in that capacity. Nonetheless, through these facts, which present
themselves from a reading of the show-cause notice, the impugned

W.P.(C)1147/2014                                                  Page 7
order and the facts that are admitted between the parties, it is clear that
the petitioner is linked, in some business capacity, with the Eldeco
Group of Companies. It is not in dispute that the Eldeco Group of
Companies are receiving attention from the Revenue. In such case, the
assessment of the assets and liability of the Eldeco Group of
Companies, and the assessment of those associated with the
functioning of the group in Delhi, by the same Assessing Officer
becomes important. Indeed, it is not in the Court's domain to second-
guess the Revenue's reasoning, or sit in appeal. Rather, the conspectus
of facts in this case clearly points towards some nexus between the
Eldeco Group and the petitioner, which satisfied the scrutiny of this
Court in its limited writ jurisdiction under Article 226.
9.     The Court also takes notice of the fact that an "order of transfer
is passed for the purpose of assessment of income. It serves a larger
purpose. Such an order has to be passed in public interest." (see, KP
Mohammed Salim v. CIT, (2008) 11 SCC 573). The purpose of a
Section 127 transfer is not to subject the petitioner to any tax liability,
or even undergo any other obligation (onerous or otherwise), but
rather, only to direct that the regular assessment (as is carried out in
the usual course of events) will be conducted by an AO other than the
jurisdictional AO in order to ensure coordinated investigation.
Importantly, in this case, the Revenue does not rely on the mere plea
or assertion of coordinated investigation. Rather, the facts, as
discussed above, provide a context of the need for such a coordinate
investigation, given the various limbs and branches of the entities
involved in the Eldeco Group and their varying business connections.

W.P.(C)1147/2014                                                     Page 8
Indeed, the very purpose of the Section 127 order in this case is to
ensure than an orderly and coordinated investigation takes place while
conducting the assessment of the various (and possibly related)
entities involved. Indeed, the Supreme Court has also recognized that
a Section 127 order does not ­ by itself ­ cause any prejudice to the
assesee, and given that due deference must be granted to the Revenue
in such matters, the limits of review of such orders is narrow. In
Kashiram Agarwala v. Union of India, [1965] 56 ITR 15 (SC), the
Supreme Court held:
     "6. But on the other hand, the provision that nothing in sub-
     section (1) shall be deemed to require any opportunity to be
     given, is worded in an emphatic form; and that fact has to
     be borne in mind in considering the effect of the proviso.
     Besides, it would not be unreasonable to assume that the
     recording of reasons prescribed by s. 127(1) would be
     appropriate where a transfer is being made otherwise than
     in the manner prescribed by the proviso. In such a case,
     normally, the assessee has to be given a reasonable
     opportunity to be heard; and the natural corollary of this
     requirement is that his objections to transfer should be
     considered and reasons given why the transfer is made
     despite the objection of the assessee. In other words, the
     requirement as to the recording of reasons flow as a natural
     consequence and corollary of the requirement that a
     reasonable opportunity should be given to the assessee. If,
     however, a reasonable opportunity is not given to the
     assessee on the ground that it is not possible to do so,
     s.127(1) requires that the transfer being of a category where
     a reasonable opportunity should be given to the assessee,
     the authority should record it reasons for making transfer,
     even though no opportunity was in fact given to the
     assessee. If that be the true position, it is not easy to
     understand why the proviso should be so construed as to
     require reasons to be given for the transfer, even though no

W.P.(C)1147/2014                                                     Page 9
      opportunity to the assessee is required to be given. That is
      one aspect of the matter which has to be borne in mind in
      determining the true scope and effect of the proviso.

      XXXXXX               XXXXXX                    XXXXXX

      8.       ...This provision clearly indicates that where
      a transfer is made under the proviso to s. 127 (1) from one
      Income-tax Officer to another in the same locality, it merely
      means that instead of one Income-tax Officer who is
      competent to deal with the case, another Income-tax Officer
      has been asked to deal with it. Such an order is purely in the
      nature of an administrative order passed for considerations
      of convenience of the department and no possible prejudice
      can be involved in such a transfer. Where, as in the present
      proceedings, assessment cases pending against the
      appellant before an officer in one ward are transferred to
      an officer in another ward in the same place, there is hardly
      any occasion for mentioning any reasons as such, because
      such transfer are invariably made on grounds of
      administrative convenience, and that shows that on
      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............................"

10.    The assessee also has the opportunity to present his case, and be
subject to a regular assessment, in front of the AO to whom
jurisdiction has been transferred. No prejudice is caused by the mere
fact of a Section 127 order, such that detailed reasons and specific
grounds are required to be provided, as the petitioner today argues.
Equally, the show-cause notice dated 9.10.2013 granted the petitioner
in this case an opportunity of being heard. No oral representation was
made by the petitioner on that date, nor was any request for another
date made to the Commissioner. Written objections, however, were

W.P.(C)1147/2014                                                   Page 10
preferred, which were considered and disposed off by the impugned
notice in this case. The argument, thus, that no chance to effectively
represent the case was provided has no merit.
11.    For the above reasons, this writ petition, being meritless, is
dismissed along with pending applications.

                                                  S. RAVINDRA BHAT

                                                        R.V. EASWAR
FEBRUARY 18, 2014

W.P.(C)1147/2014                                                Page 11
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