AMBIKA SOLVEX Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) The present Writ Petition has been filed challenging the legality and validity of the order dated 31/5/2013, passed by the Commissioner of Income Tax, Ujjain, under Section 127 of the Income Tax Act, 1961 by which the Commissioner of Income Tax has directed transfer of the assessment cases of the petitioners pending before respondent No.4 at Ratlam to respondent No.3 Dy. Commissioner of Income Tax, Central Circle, Indore.

(2.) The contention of the petitioners is that on 30/4/2013 and 6/5/2013, the Commissioner of Income Tax I, Ujjain issued notices to the petitioners for centralisation of their cases from Ratlam to Indore. The petitioner No.1 filed a reply to the Show Cause Notice on 6/5/13 and stated that no reason has been assigned in the Show Cause Notice and the returns have been filed at Ratlam and, therefore, the cases should not be transferred and consolidated. A similar reply was filed by the other petitioners to the notices. Thereafter another notice was issued on 20/5/2013 u/S. 127 of the Income Tax Act for transferring the assessment cases of the petitioners from Ratlam to Indore and the reason mentioned in the notices was that for administrative convenience and for facilitating coordinated investigation in the group cases with reference to interlinked documents / transactions, the cases are required to be consolidated and transferred from Ratlam to Indore. Petitioner No.1 again filed his objection on 27/5/13 and stated that his earlier reply filed on 6/5/13 should be treated as reply to the new Show Cause Notice. The petitioner also informed that the group cases were already centralised at Ratlam vide order dated 16/5/12 and notices have been issued u/S. 153-A by the Dy. Commissioner of Income Tax, Ratlam. Other petitioners have also submitted their objections and they have adopted the reply filed by the petitioner No.1. The petitioners further stated that finally an order was passed on 31/5/13 transferring the cases of the petitioners from Ratlam to Indore. The petitioners have raised various grounds while challenging the validity and legality of the order dated 31/5/13. The contention of the petitioners is that proper reasons have not been recorded for such a transfer and cryptic reasons have been assigned in the Show Cause Notice dated 30/4/13 and 20/5/13 and, therefore, the order passed by the respondents dt. 30/5/13 deserves to be set aside. It has also been stated that earlier by the order of the Chief Commissioner dt. 16/4/12, the cases were centralised under respondent No.4 The Dy. Commissioner of Income Tax, Ratlam and, therefore, the impugned order which has been passed in supersession of the earlier order deserves to be set aside. Petitioners have also raised a ground before this Court stating that they have not earlier objected to the transfer of their cases to Ratlam and they were cooperating with the assessment proceedings and as their Offices and residence were falling within the territorial jurisdiction of Ratlam and as the entire record and the documents were at Ratlam, the order of transferring the cases from Ujjain to Indore is bad in law. A ground has also been raised stating therein that the order passed by the Commissioner of Income Tax, Ujjain is in complete violation of the judicial precedence established by Hon'ble the Supreme Court of India and followed by the M.P. High Court and relied upon by the Andhra Pradesh High Court as well as Delhi High Court and Madras High Court. It has also been argued that while transferring the cases, proper opportunity of hearing and proper reasons should have been assigned by the transferring authority. Learned counsel has also argued before this Court that reasons for transfer of a case should be properly communicated to the assessee and in the present case, frivolous reasons have been assigned by the respondents and, therefore, the impugned order is bad in law in the light of the judgment delivered by the apex Court in the case of Ajanta Industries and others Vs. Central Board of Direct Taxes and others, 1976 102 ITR 281). The petitioners have placed reliance upon a judgment delivered in the case of Dr. Ashok Sharma and another Vs. Commissioner of Income Tax and another,2010 190 Taxman 19 ) and the contention of the petitioners is that the order passed by the respondents is invalid as it is a cryptic and non speaking order. Learned counsel for the petitioners has also placed reliance upon a judgment delivered by the Calcutta High Court in the case of Naresh Kumar Agrawal Vs. Union of India and others, 2010 320 ITR 361 and his contention is that merely stating that transfer is for coordinated investigation and assessment, is not at all sufficient as the assessee should have been intimated about the reasons in a comprehensive manner in order to enable him to make an effective representation. Learned counsel for the petitioners has further relied upon a judgment delivered by the Delhi High Court in the case of Power Controls and others Vs. Commissioner of Income Tax and others, 2000 241 ITR 807 (Del.) and again his contention is that non disclosure of specific reasons for transfer will vitiate the order of transfer passed by the Competent Authority. Learned counsel for the petitioners has also placed reliance upon a judgment delivered in the case of General Exporters Vs. Commissioner of Income Tax and another, 1998 234 ITR 860 (Mad) and his contention is that in the aforesaid case as the Show Cause Notice was silent and no reasons were disclosed, no opportunity of hearing was afforded to the assessee who had filed objections, the order passed u/S. 127 was quashed and, therefore, in the present case also the order passed in similar circumstances deserves to be quashed. Learned counsel for the petitioners has also placed reliance upon a judgment delivered by the Calcutta High Court in the case of Lords Distillery Ltd., and another Vs. Commissioner of Income Tax and others, 2007 294 ITR 147 (Cal.) and his contention is that in the light of the aforesaid judgment, as the requirement of Sec. 127 has not been fulfilled, the impugned notice and the impugned order of transfer deserves to be set aside. A ground has also been raised stating therein that the transferring authority has not applied its mind independently and in fact, the transferring authority has acted pursuant to the instructions received from the higher authority (Commissioner of Income Tax, (Central), Bhopal) and, therefore, as the transferring authority while discharging the judicial or quasi judicial functions has acted at the behest of the higher authority, the impugned order deserves to be set aside. It has also been argued that the impugned order is violative of the principles of natural justice and fair play as the principles of natural justice requires impartial and fair hearing and the respondents have denied the impartial and fair hearing to the petitioners. Lastly, the reliance has been placed upon a judgment delivered in the case of Commissioner of Income Tax Vs.Greenworld Corporation,2009 23 DTR 185 and the contention of the learned counsel is that a higher authority cannot interfere with the independence of a lower authority and in the present case the transfer has been done at the behest of Commissioner of Income Tax, Bhopal and, therefore, the same deserves to be set aside. The petitioner has prayed for quashment of the order dated 31/5/13 passed by the Commissioner of Income Tax, Ujjain.

(3.) A reply has been filed and the contention of the respondents is that a proper Show Cause Notice was issued u/S.127 of the Income Tax Act and even if Section 127 was not mentioned in the Show Cause Notice, the order passed u/S.127 cannot be said to be an illegal order and without jurisdiction. It has been stated that the petitioners in response to the Show Cause Notice dt. 30/4/13, 6/5/13 and 20/5/13 submitted detailed and exhaustive reply and the order was passed after granting an opportunity of hearing to the petitioners and, therefore, by no stretch of imagination, it can be said that the order has been passed in violation of principles of natural justice or in violation of the statutory provisions as contained u/S. 127 of the Income Tax Act. The respondents have further stated that the order passed by them, which is under challenge, has been passed with due concurrence of the Chief Commissioner of Income Tax, Indore and by the impugned order 12 cases have been consolidated. It has been stated that Ambika Solves Ltd., Indore, Narayan Niryat India Pvt. Ltd., Indore, Avalanche Realty Pvt. Ltd., Indore and Narayan Ambika Infrastructure Pvt. Ltd., Indore are having their registered Office at Satyageeta Apartment, 90/47, Sneh Nagar, Main Road, Indore and except for Ambika Solvex Ltd., all other cases were assessed at Indore. Respondents have further stated that the case of Suresh Chandra Garg had the address of Akola but was being assessed at Ratlam; cases of Ms. Rashmi Garg, Shri Kailash Chandra Garg and Shri Pawan Garg had the same address at Indore and the case of Ms. Rashmi Garg was assessed at Indore. The residence of Shri Kailash Chandra Garg, Shri Pawan Kumar Garg and Ms. Rashmi Garg is at 87, Samrat Ashok Nagar, Behind Sapna Sangeeta, Indore and, therefore, contention of the petitioners that their Offices and residences were located within the territorial jurisdiction of Ratlam, is false. The respondents have further stated that the order has been passed by the Competent Authority ie., the Commissioner of Income Tax, Ujjain and the Commissioner of Income Tax, Ujjain has acted well within his jurisdiction and passed an order for centralisation dated 31/5/2013 as per the provisions of the Income Tax Act, 1961. It has also been stated in the return that notices were issued on 30/4/13 and 6/5/13 and even though Sec. 127 was not expressly mentioned in the said notices, however, the intent and purpose of the notices was evident from the content of the said notices which the petitioners also understood as they have filed their detailed objection to the proposed centralisation ie., transfer of cases to one Assessing Officer ie., the Dy. Commissioner of Income Tax, (Central), Indore. It was also mentioned in the notice that the centralisation was necessitated due to the newly set up wing called Central Charge, which as per the administrative guidelines is meant for dealing with specifically the search and seizure cases and accordingly these cases were to be assigned to the Central Charge u/S. 127. This fact was also communicated to the petitioners in the notices. In reply to the petitioners' apprehension that independent appreciation of the seized documents would not be possible, the respondents have stated that the administrative set up of Commissioner of Income Tax, (Central), Bhopal functions in the same manner as that of any other administrative Commissioner of Income Tax. The cases are to be dealt with by the Dy. Commissioner of Income Tax, (Central) who is under the supervisory control of the Addl. Commissioner of Income Tax, (Central), Bhopal who functions below the Commissioner of Income Tax, (Central), Bhopal. It has also been stated that the seized documents are to be examined by the Dy. Commissioner of Income Tax (Central) and not by the Commissioner of Income Tax (Central). The Commissioner of Income Tax (Central) has no powers to issue any directions to the Assessing Officer, to do an Assessment in a particular manner. It has been stated that the Income Tax Act provides adequate administrative controls to prevent individual biases influencing assessment proceedings. Respondents have also denied that they have passed a cryptic order. It has been stated that they have assigned reasons in the Show Cause Notice as well as in the final order for transferring the cases and the centralisation is for the purpose of coordinated investigation in the light of several interlinked incriminating documents seized from different premises during the course of search and seizure. Respondents have also stated that the judgments relied upon by the learned counsel for the petitioners are distinguishable on facts. Respondents have further stated that the Commissioner of Income Tax (Central), Indore has no statutory role in the framing of assessment and reasons have been communicated vide order dated 31/5/13 while ordering transfer of cases. Respondents have also stated that the order passed by them is in consonance with the statutory provisions and they have placed heavy reliance upon a judgment delivered by the High Court of Chattisgarh in the case of The Commissioner of Income Tax, Raipur Vs. Union of India and others (W.A.No. 27 / 2013, decided on 14/3/2013). The respondents have prayed for dismissal of the Writ Petition.