TaxTMI 
TaxTMI 
2016 (5) TMI 491
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....titioners therein are transferred from Nagpur (Maharashtra) to Jodhpur (Rajasthan). In Writ Petition No. 2423/2003 by interim order dated 24/6/2003 and in Writ Petition No. 1455/2004 by interim order dated 26/3/2004, the parties were directed to maintain status quo. 3) Following facts would be necessary to reveal the controversy involved in the petitions : Facts in Writ Petition No. 2423/2003 are that petitioner no.1 is the Managing Partner of the firm M/s. Jagdishprasad Ramswaroop (petitioner no.2). The petitioner no.1 controls overall financial and other affairs of the firm as well as of the Mundra family and all the connected family business concerns. The place of residence of petitioner no.1 as well as the place of business of petitioner nos.1 and 2 is at Sindi (Railway), Tahsil Seloo, District Wardha (Maharashtra). The petitioner no.2 firm consists of 3 partners, namely, petitioner no.1 Mr. Ramswaroop Mundra, Smt. Vidya w/o Nandkishore Mundra and Smt. Asha w/o Sudhir Mundra and is engaged in the business of cotton ginning. The factory of this firm is situated at village Sindi (Railway), Tahsil Seloo, District Wardha. This is the main and oldest business of the Mundra ....
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.... the overall financial and other affairs of the family and resides at Sindi (Railway), it would be highly inconvenient and difficult to attend assessment proceedings at Jodhpur, which is at a distance of 1100 kms. from Wardha and transfer of cases to Jodhpur was not necessary for the alleged coordinated investigation. 7) On 28/5/2003 a copy of the order dated 10.4.2003 passed by the respondent is served upon the petitioners. By that order passed under Section 127 of the Act, the respondent has ordered transfer of Income Tax cases of the petitioners from Wardha to Jodhpur. According to respondent, transfer of these cases from Wardha to Jodhpur is necessitated to centralise all the cases of Mundra group for facilitating coordinated, systematic and centralised investigation/enquiry. The petitioners are aggrieved by this order and seek to challenge the same by the instant petition. 8) Insofar as Writ Petition No. 1455/2004 is concerned, facts are that petitioner no.1 is the Karta of petitioner no.2 Hindu Undivided Family and the Managing Partner of the firm (petitioner no.3), which is registered with the Registrar of Firms, Nagpur vide Registration No. NGP-516/1989-90. The place ....
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....of this firm are maintained at Pipar City because manufacturing activity is carried on at Pipar City. The petitioner no.2 is doing the business of `Petro Coke', which is manufactured by `Reliance Industries, Gujarat' in the name and style of M/s. Sumedha Enterprises'. The petitioner no.2 gets his commission from manufacturer in respect of sales effected by him to various purchasers. Entire transactions are done on telephone. The income from these transactions accrues in the States of Rajasthan, Gujarat, Uttar Pradesh and Haryana. The petitioner no.2 is also doing business of mining of lime stone under name and style of Uttam Chuna Patthar Udyog at Gotan. The lime stone obtained after mining is supplied to M/s. Aditya Chemicals mainly. This business is on the verge of closure due to exhaustion of the mines. 10) The Income Tax Department carried out search and seizure operation under Section 132 of the Act at the business as well as the residential premises of the petitioners/Mundra family at Jodhpur and Sindi (Railway) on 20/21.12.2002. 11) Thereafter, the Income Tax Department served communications dated 9/4/2003 on the petitioners proposing to transfer the cases ....
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....eproduced hereunder : "Section 127(1) - The Director General or Chief Commissioner or Commissioner may, after giving the assessee a reasonable opportunity of being heard in the matter, wherever it is possible to do so and after recording his reasons for doing so, transfer any case from one or more Assessing Officers subordinate to him (whether with or without concurrent jurisdiction) to any other Assessing Officer or Assessing Officers (whether with or without concurrent jurisdiction) also subordinate to him. Section 127(2) - Where the Assessing Officer or Assessing Officers from whom the case is to be transferred and the Assessing Officer or Assessing Officers to whom the case is to be transferred are not subordinate to the same Director General or Chief Commissioner or Commissioner - (a) where the Directors General or Chief Commissioners or Commissioners to whom such Assessing Officers are subordinate are in agreement, then the Director General or Chief Commissioner or Commissioner from whose jurisdiction the case is to be transferred may, after giving the assessee a reasonable opportunity of being heard in the matter, wherever it is possible to do so a....
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.... to Writ Petition No. 2423/2003, main contention of learned Senior Counsel Shri Bhangde is that petitioners having been regularly assessed to income tax since beginning at Wardha and petitioner no.1 having overall control on financial and other affairs of the family having their residence at Sindi (Railway) in Wardha District, it would be highly inconvenient and difficult to attend assessment proceedings at Jodhpur, which is more than 1000 kms. away from Wardha. It is thus the case of petitioners that there is absolutely no necessity for transfer of cases for the alleged coordinated investigation, which aspect has not been considered before passing the impugned orders. In support of his submissions, learned Senior Counsel Shri Bhangde has placed reliance on the judgments in Vijayasanthi Investments (P) Ltd. vs. Chief Commissioner of Income Tax and others {(1991) 187 ITR 405(AP)}, Saptagiri Enterprises vs. Commissioner of Income Tax and others {(1991) 189 ITR 705 (AP), Melco India (P) Ltd. and others vs. Commissioner of Income Tax and others {(2003) 260 ITR 450 (Delhi), Global Energy (P) Ltd. vs. Commissioner of Income Tax {(2013) 31 taxmann.com 183 (Bombay), Sunisha Impex Pvt. Ltd.....
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....ned Counsel for the respondents has further contended that petitioner no.3 is son of petitioner no.1 and on the own showing of the petitioners, petitioner no.3 resides at Jodhpur. On information received from the Deputy Director of Income Tax, Jodhpur, it is found that children of petitioner no.3 are studying at Jodhpur. The petitioner no.3 in his capacity as Karta of petitioner no.4 carried out business in the name of M/s. Shivam Chemicals. M/s. Shivam Chemicals is a manufacturer of Hydrated Lime and its factory is situated at Pipar city. All the marketing operations are carried out from this factorycum- office premises. All books of accounts relating to M/s. Shivam Chemicals were found either at the factory or at the residence of the petitioner no.3 at 37-A, Ajit Colony, Jodhpur. M/s. Shivam Chemicals also pays its central sales tax at Jodhpur. The petitioner no.3 also pays his Public Provident Fund contribution at Jodhpur and also submits his self-assessment challans from time to time at Jodhpur. The petitioner no.3 is also the Chairman of a Company Shri Chakra Housing Finance Pvt. Ltd., Jodhpur whose registered and corporate Office is shown as 37-A, Ajit Colony, Jodhpur. All th....
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.... is doing business of supply of petro coke under the name of M/s. Sumedha Enterprises. The office of M/s. Sumedha Enterprises is also located at the residence of petitioner no.1 in Pipar city. The petitioner no.1 in his individual capacity is also doing business of mining of limestone under the name of Uttam Chunna Pathar Udyog of Borunda in Rajasthan. The petitioner no.3 also has its entire work at Pipar city/Jodhpur. 24) Thus, it is the case of respondent Department that petitioners are members of the same family having involved in common business to a large extent, of which most of the business is situated in Pipar city in Jodhpur District and as such, proposal of Authorities of Income Tax to have centralized investigation into the cases of petitioners and also for action under Section 158BC for block assessment and action under Section 158BD in case undisclosed income of other person is found cannot be effected unless all the cases of family members of the petitioners are examined and investigated together. 25) With reference to show cause notice involved, it is the case of respondent Department that the show cause notice is issued on behalf of Commissioner of Income Tax ....
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....ecific reasons mentioned in the impugned orders for effecting transfer of cases nor there appears to be any material fact mentioned even in show cause notices requiring transfer, which otherwise could have given an opportunity to petitioners/assessees to put forth the grounds, if any, in a meaningful manner. In the absence of any such reasons in the show cause notices, the petitioners appear to be deprived of their right to have hearing. According to relevant requirement of law, the show cause notices must reveal why coordinated investigation and assessment cannot be carried out either at Nagpur or Wardha, more particularly when petitioners since beginning are being assessed at these places. It is further noted that petitioners in Writ Petition No.2423/2003 are residents of Sindi (Railway), District Wardha. Their place of business is at the same place and books of accounts of petitioner nos.1 and 2 were found at Sindi (Railway). Source of income of petitioner no.1 is within the jurisdiction of Commissioner of Income Tax, Nagpur while petitioner no.2 is a resident of Sindi (Railway) as well as of Jodhpur and has source of income from petitioner no.4. Moreover, in the impugned order ....
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...., as already stated above, the show cause notices, in fact, should have contained specific reasons based on material facts, which should be clear so that petitioners in that case could exercise their right to have hearing on substantial questions in a meaningful manner. The show cause notices having been vague do not convey for what reason cases came to be transferred nor there is any reason as to why assessment cannot be done at Wardha where petitioners are being assessed since beginning, moreover, when all the income tax cases of the petitioners are being assessed at Nagpur and none of their cases is dealt with at Jodhpur. 29) In para 12 of the judgment in the case of Jharkhand Mukti Morcha (supra) relied by respondents, it is observed that for transfer of cases from jurisdiction of one Commissioner to other, the requirement is that there should be agreement between two Commissioners. Similarly, in the case of Aamby Valley Ltd. (supra), objection was raised that there was no evidence of any agreement between Commissioner of Income Tax, New Delhi and Commissioner of Income Tax, Mumbai that petitioners' cases should be transferred from Mumbai to New Delhi and on considering ....