2024 (9) TMI 966 - HC - Income Tax

Tax assessment case transfer upheld based on evidence location despite registered office being elsewhere

The HC upheld the transfer of petitioner's tax assessment case from Coimbatore to Central Circle, Kolkata. Despite petitioner's registered office being in ... Transfer the case case to the Central Circle at Kolkata from Coimbatore - Whether the respondents have sufficient material for transfer of the case from Coimbatore to Central Circle, Kolkata? - Number of incriminating documents and materials came to be seized, which were directly connecting with the involvement of the petitioner in the business operation of Lottery in the state of West Bengal in different capacities such as Sub-distributors, Stockist, Printing press, etc. Therefore, for the sake of coordinated and meaningful assessment of entire block, it was proposed by the respondents that assessment of all such related individuals/concerns be conducted together - Whether the respondents have provided an opportunity for filing a reply and personal hearing before passing the impugned Notification? HELD THAT:- Since all the materials have been collected in Kolkata Central Circle, the 1st respondents, taking into consideration of the reply filed by the petitioner, decided to transfer the petitioner's case to the Central Circle, Kolkata. No substance in the contentions raised by the learned counsel for the petitioner that the respondents failed either to provide an opportunity or lack of sufficient materials to transfer the case from DCIT, Central Circle, Chennai to DCIT, Central Circle-4(4), Kolkata. Accordingly, the Issue Nos. 1 and 2 are answered. Thus, this Court is of the considered opinion that although the registered office of the petitioner is situated at Chennai and they had not carried out any business activities at Kolkata, it will be appropriate to make the assessment through the Circle, where the incriminating materials have been seized based on the place of business of the Assessee, irrespective of situation of the registered office. This is what had taken place in the present case. If the contentions raised by the petitioner are accepted and allowed, the Chennai jurisdictional Assessing Officer has to finalize the assessment of the petitioner and in such event, certainly, it will be difficult for him to complete the assessment in the absence of material documents, which were seized upon search by the Income Tax (Investigation) authorities of Kolkata Central Circle. Hence, it would be appropriate to transfer the petitioner's case to DCIT, Central Circle, Koltaka since the Income Tax authorities have traced out and seized number of incriminating documents which reveal the involvement of the petitioner in conducting the business operations of lottery and deciding the issue of evasion of taxes is within their jurisdiction. Therefore, the 1st respondent has rightly transferred the cases from Chennai jurisdiction to Kolkatta jurisdiction. Issues Involved:1. Whether the respondents have sufficient material for the transfer of the case from Coimbatore to Central Circle, KolkataRs.2. Whether the respondents have provided an opportunity for filing a reply and personal hearing before passing the impugned NotificationRs.Issue-wise Detailed Analysis:1. Sufficiency of Material for Transfer:The petitioner contended that their registered office is in Chennai and they have not conducted any lottery business operations in Tamil Nadu. However, the respondents conducted a search and seizure under Section 132 of the Income Tax Act, 1961, on 12.10.2023, which resulted in the seizure of numerous incriminating documents. These documents were inter-connected and would directly affect the assessment of the petitioner. The respondents argued that centralizing the case in Kolkata was necessary for a coordinated investigation, as the documents were seized from different places. The show cause notice dated 14.12.2023 highlighted that the documents were inter-connected and affected the petitioner's assessment, necessitating their analysis and investigation together for a just assessment. The court found that the respondents had sufficient material to justify the transfer of the case to Kolkata for coordinated and meaningful assessment.2. Opportunity for Filing a Reply and Personal Hearing:The petitioner argued that no opportunity for a personal hearing was provided before the impugned Notification was issued, violating the principles of natural justice and Section 127(1) of the Income Tax Act. The respondents countered that a show cause notice was issued on 14.12.2023, giving the petitioner 15 days to file their reply/objections. The petitioner filed their reply on 21.12.2023, expressing inconvenience due to their registered office being in Chennai and the associated costs of travel and litigation. The court noted that the respondents had considered the petitioner's reply before issuing the Notification on 08.02.2024. The court concluded that the respondents had provided sufficient opportunity for the petitioner to file their objections, and there was no violation of principles of natural justice.Conclusion:The court held that the transfer of the petitioner's case to the Central Circle, Kolkata, was justified due to the seizure of incriminating documents in Kolkata, which were crucial for a coordinated investigation. The court also found that the respondents had provided sufficient opportunity for the petitioner to file their objections, and there was no violation of principles of natural justice. The court dismissed the Writ Petition as devoid of merits, stating that the transfer was necessary for public interest and coordinated investigation. The court also emphasized that the transfer did not cause any prejudice to the petitioner, as no final adverse assessment order was passed. The case laws cited by the petitioner were not persuasive enough to alter the court's decision. Consequently, the Writ Petition was dismissed, and the connected Miscellaneous Petitions were closed.