TaxTMI 
TaxTMI 
2019 (12) TMI 321
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....length and upon consideration of the facts of the cases, had adjourned the cases to 19.08.2019 on the prayer made on behalf of the petitioners observing that the Court was not inclined to adjourn the cases. On 19.08.2019, the cases were adjourned till 23.08.2019 on the same ground. Accordingly, the writ petitions are taken up for disposal as agreed to by the learned counsel appearing on behalf of the necessary parties and as the exchange of pleadings between the necessary parties have already been completed. The affidavits-in-opposition have been filed in all the writ petitions by the respondent Income Tax Department and the petitioners have also filed their affidavits-in-reply to the said affidavits-in-opposition. 3. The petitioner in W.P.(C) No. 34(K)/2019 is a son of the petitioner in W.P.(C) No. 33 (K)/2019. The petitioner in W.P.(C) No. 35(K)/2019 is also a son of the petitioner in W.P.(C) No. 33(K)/2019. The petitioner in W.P.(C) No. 36(K)/2019 and the petitioner in W.P.(C) No. 39(K)/2019 are the wife and the daughter respectively of the petitioner in W.P.(C) No. 33(K)/2019. The petitioner in W.P.(C) No. 37(K)/2019 is a partnership firm, which is represented by one ....
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....fter, the respondent no. 1 i.e. the Principal Commissioner of Income Tax, Jorhat passed orders, all dated 27.02.2018, transferring the cases of the petitioners to the ACIT, Central Circle - Kollam, Kerala. 6. Assailing the said orders dated 27.02.2018, the petitioners had preferred 7 (seven) nos. of writ petitions, W.P.(C) No. 42(K)/2018, W.P.(C) No. 43(K)/2018, W.P.(C) No. 44(K)/2018, W.P.(C) No. 45(K)/2018, W.P.(C) No. 46(K)/2018, W.P.(C) No. 47(K)/2018 & W.P.(C) No. 48(K)/2018, on the grounds that the respondents did not give an opportunity, by not assigning any reason in the show cause notices, to the petitioners to give effective responses with regard to the proposal for centralization of their cases. For ready reference, the contents of the notice dated 07.12.2017 (Annexure-1 to the writ petition), sent to the petitioner in W.P.(C) No. 33(K)/2019, are extracted herein:- "GOVERNMENT OF INDIA MINISTRY OF FINANCE : DEPARTMENT OF REVENUE OFFICE OF THE PR. COMMISSIONER OF INCOME TAXES :: JORHAT 785001/AAYAKAR BHAWAN, THANA ROAD, JORHAT-785001 No. T-11/Search & Seizure/Pr.CIT/JRT/2017-18/3151-52 To, Shri MKK Rajendra Pillai, Addl. ....
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....ders, all dated 18.07.2018, passed by the respondent no. 1 i.e. the Principal Commissioner of Income Tax, Jorhat, whereby, the cases of the petitioners have once again been transferred from the ACIT, Circle - Dimapur or the ITO, Ward - 1, Dimapur, as the case may be, in the State of Nagaland to the ACIT, Central Circle - Kollam in the State of Kerala in exercise of the powers conferred under sub-section (2) of Section 127 of the Act. 9. Ms. Gope, learned counsel for the petitioners, has submitted that one of the grounds of challenge is that the respondent authorities by the impugned orders dated 18.07.2018 have once again transferred the cases of the petitioners without serving a notice to show cause on them and, as such, the impugned orders are liable to be set aside on this ground alone. It is further contended that in the impugned orders, mention was made of two show cause notices, dated 23.05.2018 and dated 26.06.2018 respectively, which were stated to have been served on the petitioners but the second notice dated 26.06.2018 had never been served on the petitioners. It is further contended that the first notice dated 23.05.2018 had also not been served at the registered add....
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....t in the instant cases, the notices dated 23.05.2018 did not meet the requirements and as such, the entire proceeding which is quasi judicial in nature, is vitiated having fallen short of the principles of natural justice. The ground of transfer which must have nexus with administrative convenience and co-ordinated investigation is apparently missing in the instant cases. With the intention not to provide reasonable opportunity to the petitioners to file their replies in the matter of transfer, the respondent authorities had arbitrarily and illegally served the notices on the petitioners-assessees at wrong addresses instead of serving the same at their registered addresses. The entire proceeding followed by the respondent authorities, subsequent to the common judgment and order dated 03.04.2018 of this Court, are in violation of the direction contained in the said order and in view of the same, the impugned orders, all dated 18.17.2018 and passed ex-parte, are liable to be set aside. It is contended by the learned counsel that just because some of the offices of the petitioners are in Kerala, the same does not give license to the officers of the respondent authorities in Kerala to ....
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....etitioners knowingly did not accept the second notice dated 26.06.2018 after having received the first notice sent to them at the same addresses. There was no endorsement of the postal authority to the effect that the address was wrong. Merely because the notices were not served at the registered addresses of the petitioners, it is not open for the petitioners to contend that they were not served with the notices. Refuting the submission that the notice dated 23.05.2018 did not contain the reason as to why the cases of the petitioners were proposed to be transferred, Mr. Sarma has referred to the contents of the notices dated 23.05.2018. It is further submitted by him that since no objections were forthcoming from the petitioners despite service of the first notice dated 23.05.2018 on them and when more than a month had elapsed since the issuance of the first notice, another opportunity was provided by the respondent No. 1 inviting the petitioners once again to submit their objections, if any, by the second notice by asking them to file their replies by 16.07.2018. Having noticed the fact of non mentioning the time period in the notices dated 23.05.2018 within which the replies ....
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....sioner or Chief Commissioner or Principal 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. 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 Principal Director General or Director General or Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner:- (a) where the Principal Directors General or Directors General or Principal Chief Commissioners or Chief Commissioners or Principal Commissioners or Commissioners to whom such Assessing Officers are subordinate are in agreement, then the Principal Director General or Director General or Principal Chief Commissioner or Chief Commissioner....
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....m Group and his wife, two sons and a daughter who are the petitioners in the other writ petitions, mentioned hereinabove, are also connected with the affairs of various business entities of M/s Sreevalsam Group. 16. A perusal of Section 127 of the Act shows that the same pertains to power to transfer a case from one jurisdictional Assessing Authority to another jurisdictional Assessing Authority. Where the Assessing Officer (AO) from whom the case is to be transferred and the Assessing Officer (AO) to whom the case is to be transferred are not subordinate to the same Principal Directors General of Income Tax or Director General of Income Tax or Principal Chief Commissioner of Income Tax or Chief Commissioner of Income Tax or Principal Commissioner of Income Tax or Commissioner of Income Tax, then the provision of Section 127(1) is not attracted and in such cases, the provision of Section 127(2) of the Act becomes applicable. Such a case, in terms of sub-clause (a) of Section 127(2) of the Act, can be transferred from one jurisdiction to another jurisdiction provided there is an agreement between the competent authorities of two jurisdictions before such transfer. As per provisio....
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....ferring the cases of the petitioners from Dimapur, Nagaland to Kollam, Kerala. 17. In the order dated 18.07.2018 (Annexure-VI to the writ petition), it has been recorded that the DDIT (Inv), Kollam, Kerala had suggested for centralisation of 21 Group cases with the ACIT, Central Circle - Kollam, Kerala. Out of the 21 cases, 5 cases were assessed with the ACIT, Circle - Dimapur and 3 cases were assessed with ITO, Ward - I, Dimapur. The cases of the Group which were assessed at Dimapur, are as under: Sl. No. Name of assessee PAN Present AD 1 Shri MKK Rajendran Pillai AGJPR7612L ACIT, Circle-Dimapur 2. Smti. Valsala Raj Pillai ACAPR8941B ACIT, Circle-Dimapur 3. Shri Varun Raj Pillai ACAPR8839E ACIT, Circle-Dimapur 4. Shri Arun Raj Pillai AHCPR2712F ITO, Ward-I, Dimapur 5. Kumari Puja Raj BOEPP9295M ITO, Ward-I, Dimapur 6. Sreevalsam Jewellers, Pandalam, Adoor ABGFS9013C ACIT, Circle-Dimapur 7. Smti. Radhamony APWPR9956D ITO, Ward-I, Dimapur 8. Vrindavan Builders Pvt. Ltd. AABCV8155F ITO, Ward-I, Dimapur. Except the assessee at Serial no. 7 in the above table, the other 7 (....
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....of M/s Allebasi Builders & Developers Private Ltd. is at Attingal, Trivandrum, Kerala. In the notice dated 23.05.2018, sent to the petitioner in W.P.(C) No. 39(K)/2019, it is recorded that she is a partner of M/s Sreevalsam Health Care, whose principal office is at Pandalam, District - Pathanamthitta, Kerala. In the notice sent to the Managing Partner, M/s Sreevalsam Jewelers i.e. the petitioner in W.P.(C) No. 37(K)/2019, it is recorded that its head office is at Kulanada and the branches are located at Haribbat and Pandalam in Kerala and its entire business interests are found to be in Kerala. In the notice dated 23.05.2018 sent to the Principal Officer of M/s Vrindavan Builders Private Ltd. i.e. the petitioner in W.P.(C) No. 38(K)/2019, it is recorded that the sole activity of the company is found to be running of a hotel at Gurubayuar, Kerala and all its business interests are found to be in Kerala. 19. From the above conspectus of facts, it, thus, transpires that it is not a case that all the cases of the petitioners were only assessed with the ACIT, Circle - Dimapur and the ITO, Ward - I, Dimapur with no financial interests and presence in the State of Kerala. It is not a c....
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....re your family members are the stakeholders. Smt. Valsala Raj, Shri. Varun Raj and Shri. Arun Raj are partners in various firms and Directors in various companies of the Sreevalsam group, which are all based in Kerala, particularly in Pathanamthitta District. The various business entities of the Sreevalsam group are listed below with their addresses as furnished to the Income Tax Department. - Sreevalsam Jewellers, Sreevalsam Building, MC Road, Pandalam, Pathanamthitta District, Kerala (partners are Valsala Raj and Varun Raj), - Nenco Gas Service, Mannancherry PO, Alappuzha, Alappuzha District, Kerala (partners are Arun Raj and Rajendra Babu) etc. - Sreevalsam Gold and Diamond Pvt. Ltd, MC Road, Pandalam, Pathanamthitta District, Kerala (Valsala Raj, Arun Raj and Varun Raj are Directors), - Smart Residency Hotels India Pvt Ltd, MC 488/31, Suncity, Koorkenchery, Thrissur, Kerala (Directors are Arun Raj and Varun Raj), - Rajavalsam Motors Pvt Ltd, Rajavalsam, Panangadu PO, Kulanada, Pathanamthitta District, Kerala (Varun Raj and Arun Raj are Directors), - Sreevalsam Hotels and Resorts Pvt Ltd, Rajavalsam, Panangadu PO, Ku....
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....ala, and the undisclosed investments now admitted by you are also in Kerala. Therefore, it is proposed to transfer the jurisdiction over your case under the Income Tax ACIT, Central Circle, Kollam so as to facilitate assessment of your taxable income." 21. Having perused the contents of the notices dated 23.05.2018, stated to have been sent by the respondent no. 1 to the petitioners and annexed in this batch of writ petitions, for the purpose of transferring the 7 (seven) cases of the petitioners from the ACIT, Circle - Dimapur and the ITO, Ward - 1, Dimapur in the State of Nagaland to the ACIT, Central Circle - Kollam in the State of Kerala, it is found that adequate reasons were assigned by the respondent no. 1 in the notices for the purpose of enabling the assessee to submit their objections. There appears to be sufficient grounds for the respondent authorities to club the 21 (twenty one) nos. of cases for the purpose of assessment in the State of Kerala as a substantial part of the petitioners' finances and economic interests are based in, controlled and managed from Kerala, and the same are being carried out through various entities. The petitioners in this batch of cases h....
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....pies of the first notice were served at such 'wrong' addresses, the notice escaped the attention of the petitioners. From the above, it is, however, established that the petitioners had received the copies of the first notice but, according to them, the same were served at addresses which are 'wrong'. The petitioners have not disclosed as to when the copies of the first notice were served and received by them. The impugned order dated 18.07.2018 has recorded, by referring to one such notice, that the notice dated 23.05.2018, sent by speed post vide no. ES810641062IN, was served on the addressee-petitioners on 07.06.2018 at the Kerala address, asking the petitioner therein to submit objection against the proposal to transfer the case. In the affidavitsin- opposition filed on behalf of the respondent nos. 1 and 3 in the writ petitions, it has been similarly averred that the copies of the first notice were served on the petitioners at their addresses in Kerala on 07.06.2018. The said averments regarding service of the first notice on them have not been denied by the petitioners. But a plea has been raised by the petitioners that the first notice escaped their attention which resulted ....
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....d 07.12.2017, annexed to the writ petitions and out of which the contents of one are extracted above, it is noticed that those notices were sent to two addresses of the petitioners, one in Nagaland and the other in Kerala. The contents of the notice dated 23.05.2018, reproduced above, are indicative of the situation for which the respondent no. 1 despatched the earlier notices to the petitioners to the addresses in Kerala and in Nagaland. In this batch of writ petitions, the petitioners have averred to the effect that they were served with a show cause notice dated 23.05.2018, but not at their registered addresses wherein the show cause notices were 'issued' in the earlier round of litigation, but at one place in Kerala for reasons best known. In the earlier round of litigation, no such plea, as could be gathered from the common judgment and order dated 03.04.2018, that their addresses in Kerala, at which the notices dated 07.12.2017 were issued, were wrong. In the above fact situation obtaining in the present case, as has been discussed above, this Court is of the considered opinion that the plea of improper service of notice is not tenable as the address to which the notice dated....
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....ceive the second notice dated 26.06.2018 wherein the period by which they were asked to submit the replies was mentioned, more so, when they were well aware of the fact that liberty was granted to the respondent authorities by this Court in the common judgment and order dated 03.04.2018 to proceed from the stage of notice by assigning reason and they had received the first notice dated 23.05.2018. The words "wherever it is possible to do so" appearing in Section 127(2)(a) of the Act cannot be said to be of no significance as it gives an option to the concerned authority mentioned therein i.e. the Principal Director General or Director General or Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner from whose jurisdiction the case is to be transferred to serve a notice containing a proposal to transfer in order to provide an assessee the reasonable opportunity of being heard before passing an order of transfer, at an address where the assessee is, in all possibility, likely to be served upon. As has been found above from the contents of the first notice dated 23.05.2018, the respondent no. 1 had, in the instant cases, despatched the notices....
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.... to transfer the case. It has been held an assessee cannot choose his Assessing Officer and, therefore, if the transfer order indicates some valid reasons to justify the transfer and such reasons are neither perverse or arbitrary or mala fide a High Court, exercising jurisdiction under Article 226 of the Constitution, would not interfere with the reasonable exercise of such discretion. 26. In Continental Milkose (India) Ltd. (supra), the writ petition was filed seeking quashing of an order dated 20.12.2012 passed by the Commissioner of Income Tax, Dibrugarh under Section 127(2)(a) of the Act transferring the case of assessment of the petitioner from Dibrugarh to New Delhi for effective co-ordinated investigation and administrative convenience. The impugned order reflected that a search and seizure operation was carried out against the petitioner group on 09.03.2012 at New Delhi and, thereafter, show cause notice dated 30.08.2012 was issued by the Commissioner of Income Tax, Dibrugarh requiring the Managing Director of the petitioner company to respond, thus, providing an opportunity to show cause against the proposed transfer of assessment cases to New Delhi. The petitioner comp....
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....e petitioner therein submitted their objections without any reservation and did not ask for any further material. In view of the same, the challenge to the transfer order on the ground of absence of reason in the show cause notice was negated by this Court. In the present batch of cases, the notice dated 23.05.2018 did not suffer from absence of reason. 28. The subject-matter in Mul Chand Malu (supra) was transfer of the cases of the assessee from Guwahati to the jurisdictional ITO in New Delhi by the Income Tax Authorities invoking Section 127(2) of the Act. After surveying a number of decisions and also interpreting the provisions of Section 127(2) of the Act, a Division Bench of this Court had observed that a show cause notice must convey the reasons for the proposed transfer of the case so that the assessee could make effective representation with reference to the reasons set out in the notice. A notice, issued under Section 127 of the Act, must prima facie show due application of mind and reasons must also be disclosed so that an effective opportunity is provided to the affected party to respond to the notice. The contemplated hearing in such matter to the assessee must be ....