TaxTMI 
TaxTMI 
2022 (4) TMI 1284
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....2021 issued by Respondent No.1 u/s.127(2) of the Act. C. Pending admission, hearing and final disposal of present Petition, this Hon'ble Court be pleased to stay the implementation, operation and execution of impugned order at Annexure-A dated 08/07/2021 issued by Respondent No.1 u/s.127(2) of the Act and consequential assessment order at Annexure-B dated 28/09/2021 passed by Respondent No.2 u/s.143(3) of the Act for A.Y. 2018-19 in pursuance to impugned order dated 08/07/2021 at Annexure-A passed by Respondent No.1 u/s.127(2) of the Act. D. Pending admission, hearing and final disposal of present Petition, this Hon'ble Court be pleased to direct Respondents not to take any coercive steps under the Act in any manner against the Petitioner Firm in respect of the amount quantified in the assessment order without prior permission of this Hon'ble Court. E. This Hon'ble Court be pleased to grant ex-parte adinterim relief in favour of the Petitioner and against the Respondents as prayed for in Para-C and Para-D of the Petition. F. This Hon'ble Court be pleased to grant any other just and proper relief in the facts and circumstances of the case in the i....
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....this writ-application, the writ-applicant had to prefer one civil application with the following prayers : "A. This Hon'ble Court be pleased to allow present Civil Application for stay filed by the applicant. B. This Hon'ble Court be pleased to stay the execution, operation and implementation of impugned order dated 08/07/2021 passed by respondent no.1 u/s.127(2) of the Act. C. Pending admission, hearing and final disposal of Special Civil Application No.16529/2021, this Hon'ble Court be pleased to direct income tax authorities as mentioned in Column-5 and Column-6 of an order dated 08/07/2021 passed by respondent no.1 u/s.127(2) of the Act, not to pass any coercive orders in any manner against applicant assessee for A.Y. 2017-18 and for any assessment years without prior permission of this Hon'ble Court. D. Pending admission, hearing and final disposal of Special Civil Application No.16529/2021, this Hon'ble Court be pleased to direct income tax authorities as mentioned in Column-5 and Column-6 of an order dated 08/07/2021 passed by respondent no.1 u/s.127(2) of the Act that no proceedings under the provisions of the Income Tax Act including rev....
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.... Financial Year 2020-21 and conduct of assessment proceedings. Following the directions of the Director General of Income Tax (Investigation), Ahmedabad, and subsequent communication from the Principal Commissioner of Income Tax-Central, Ahmedabad, an order under Section 127(2) of the Act came to be passed by the Principal CIT-3, Ahmedabad, transferring the case of the writ-applicant from the ITO Ward-2, Surendranagar Circle, Surendranagar, to the ACIT-Central Circle-2(3), Ahmedabad, with effect from 8th July 2021. 16. Mr.Bhatt put forward the following propositions on behalf of the department in defence of the impugned order : (a) A statute can, in appropriate cases, exclude the principles of natural justice; (b) Since the assessee has no legal right of being assessed by any particular Assessing Officer, the principles of natural justice can be validly excluded in the matter of the Income Tax Act; (c) Section 127 restricts the obligation of hearing and passing a speaking order only when the case is to be transferred suo motu; (d) Section 127 excludes, by necessary implication, an opportunity of hearing when the transfer is on account of the a....
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....ent proceedings to be conducted by 1 Cases pertaining to survey u/s. 133A of the Income-tax Act, 1961 ("Act") Cases pertaining to survey u/s 133A of the Act, excluding those cases where books of accounts, documents, etc were not impounded and returned income (excluding any disclosure made during the Survey) is not less than returned income of preceding assessment year. However, where assessee has retracted from disclosure made during the Survey, such cases will be considered for scrutiny. (i) In respect of such cases selected for compulsory scrutiny and where there is impounded material (ii) In respect of such cases selected for compulsory scrutiny and where there is no impounded material (i) After the issue of notice u/s 143(2) of the Act by the Jurisdictional Assessing Officer for compulsory selection, such cases shall be transferred to Central Charges u/s 127 of the Act within 15 days of issue of notice u/s 143(2) of the Act. (ii) After the issue of notice u/s 143(2) of the Act by the Jurisdictional Assessing Officer for compulsory selection, assessment proceedings in such cases will be conducted by NeAC. The Assessing Officer shall upload the Surv....
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....ral Charges by issue of orders u/s 127 of the Act, immediately after service of notice u/s 143(2) of the Act. 6. These instructions may be brought to the notice of all concerned for necessary compliance. 7. This issue with the approval of Chairman (CBDT)." 7. Pursuant to the above instructions dated 17.09.2020 and 30.09.2020 of the CBDT, the office of the Director General of Income-tax (Investigation), Ahmedabad vide letter No. DGIT(Inv)/Ahd/Centralization/Search/Survey/ 2021-22 dated 30.06.2021 had granted "in principle" approval for centralization of assessee's case with any Assessing Officer holding central charge under the charge of PCIT (Central), Ahmedabad. A copy of letter dated 30.06.2021 of the DGIT(Inv), Ahmedabad is annexed hereto and marked as Annexure-R3. 8. Keeping in view the CBDT's instructions dated 17.09.2020 (supra), the directions of the Director General of Income-tax (Investigation), Ahmedabad and the request of Pr. CIT (Central), Ahmedabad; an order under section 127(2) of the Act was passed by the then Pr. CIT-3, Ahmedabad on 08.07.2021 transferring the case (Sr. No. 14) from ITO Ward-2, Surendranagar to ACIT Central Circle....
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....as difficulties being faced amid COVID-19 pandemic. It is to reiterate that CBDT is empowered to issue instructions to subordinate authorities under section 119(2)(b) of the Act. Relevant portion is reproduced as under : "(b) the Board may, if it considers it desirable or expedient so to do for avoiding genuine hardship in any case or class of cases, by general or special order, authorise [any income- tax authority, not being a Commissioner (Appeals)] to admit an application or claim for any exemption, deduction, refund or any other relief under this Act after the expiry of the period specified by or under this Act for making such application or claim and deal with the same on merits in accordance with law;" 13. To obviate the difficulties being faced by the assessee due to COVID-19, CBDT issued such instructions to help the assessee to avoid physical contact and complete the assessment in e-proceedings manner which is in the interest of the assessee. 14. Considering the above facts of the case, it is submitted that the order dated 08.07.2021 passed u/s 127(2) of the Act by the then Pr.CIT-3, Ahmedabad was as per the provisions of the Act and in complianc....
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....so 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 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, and after recording his reasons for doing so, pass the order; (b) where the Director General or Chief Commissioners or Commissioners aforesaid are not in agreement, the order transferring the case may, similarly, be passed by the Board or any such Director General or Chief Commissioner or Commissioner as the Board may, by notification in the Official Gazette, authorize in this behalf. (3) Nothing in Sub-section (1) or Sub-section (2) shall be deemed to require any such opportunity to be give....
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.... to raise a plea of quantitative insufficiency of material, so as to make the reasons recorded as arbitrary or bad. 24. In the case of Mahabir Prasad Santosh Kumar vs. State of UP and Ors., MANU/SC/0018/1970 : [1971]1 SCR 201, it has been held by the Supreme Court as under : "....Recording of reasons in support of a decision on a disputed claim by a quasi-judicial authority ensures that the decision is reached according to law and is not the result of caprice, whim or fancy or reached on grounds of policy or expediency. A party to the dispute is ordinarily entitled to know the grounds on which the authority has rejected his claim." 25. In the case of Power Controls and Ors. vs. CIT and Ors., MANU/DE/1195/1999 : (2000) 158 CTR (Del) 222, more particularly, para 19 of the report, the Court observed as under : "....though it may neither be possible nor desirable to confront the assessee with the entire material on record necessitating transfer of case to a particular AO for coordinated investigation but in order to provide a reasonable and proper opportunity to him to make an effective representation, as contemplated in Section 127(2), some basic summary of fac....
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.... Income Tax Act would go a long way in allaying the apprehensions of the assessees and if that is done in the true spirit, no assessee will be in a position to charge the Revenue with administering the provisions of the Act with 'an evil eye and unequal hand'. 29. In the case of Hindustan Petroleum Corporation Ltd. vs. Darius Shapur and Ors., MANU/SC/0610/2005: AIR 2005 SC 3520 , the Supreme Court observed as under : "....When an order is passed by a statutory authority, the same must be supported either on the reasons stated therein or on the grounds available therefore in the record. A statutory authority cannot be permitted to support its order relying on or on the basis of the statements made in the affidavit de hors the order or for that matter de hors the records." 30. The question as to whether the exercise of power under Section 127(2) is administrative in nature or it is quasi-judicial has also been seriously argued by the parties, the stand of the Revenue being that it is administrative exercise of power, whereas the assessees' counsel submitted that it is quasijudicial function of the authority. 31. The requirement of giving opportunity to the asses....
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....aw and non-communication thereof is not saved by showing that the reasons exist in the file although not communicated to the assessee. Mr. Sharma drew our attention to a decision of the Delhi High Court in Sunanda Rani Jain vs. Union of India, (1975) 99 ITR 391 (Del), where the learned Single Judge has taken a contrary view. For the reasons, which we have given above, we have to hold that the said decision is not correct. The appellant drew our attention to a decision of this Court in Shri Pragdas Umer Vaishya vs. Union of India, (1967) 12 MPLJ 868, where rule 55 of the Mineral Concession Rules, 1960, providing for exercise of revisional power by the Central Government was noticed. It was held that under rule 55 the Central Government in disposing of the revision application must record its reasons and communicate these reasons to the parties effected thereby. It was further held that the reasons could not be gathered from the nothings in the flies of the Central Government. Recording of reasons and disclosure thereof is not a mere formality. Mr. Sharma drew our attention to a decision of this Court in Kashiram Aggarwal vs. Union of India, (1965) 56 ITR 14 (SC). I....
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....above decision is, therefore, clearly distinguishable. We are, therefore, clearly of opinion that non-communication of the reasons in the order passed under section 127(1) is a serious infirmity in the order for which the same is invalid. The judgment of the High Court is set aside. The appeal is allowed and the orders of transfer are quashed. No costs." 33. In Benz Corporation vs. ITO and Ors., [1998] 232 ITR 807 (Ker), the Kerala High Court held as under : ".....Chief CIT had filed a counter-affidavit stating certain facts and circumstances which were not disclosed in any of the communications. The Chief CIT could not supplement the notification with averments made in the counter-affidavit and that the power of transfer of assessment files from one authority to another is conferred on the CIT under Section 127(1) of the IT Act, 1961. The power is a quasi-judicial one. Such a power has to be exercised in a fair and reasonable manner and not in an arbitrary and mechanical way. The passing of a reasoned order is one of the requirements of fairness in action." 34. We find that a Division Bench of this Court in the case of Arti Ship Breaking vs. Director of IT ....
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....ase, the search was carried out at Bhavnagar and as there is no office of the CIT (Central Circle-I) at Bhavnagar, for administrative reasons, it was thought proper by the transferring authority to transfer the case of the petitioner-assessee from Bhavnagar to the office of the Dy. CIT (Central Circle-I), Rajkot. The said administrative reason appears to be just and reasonable. Looking to the said administrative reason which has been also incorporated in the reasons recorded by the concerned CIT, we do not think that this Court should interfere with the said decision with regard to the transfer. It is true that the order with regard to the transfer and the reason for which the case was transferred from Bhavnagar to Rajkot were not communicated to the petitioner before the petition was filed, but, looking to the affidavit-in-reply filed by the respondent concerned and the submissions made by the learned advocate, Shri Naik, it is clear that the reasons were recorded by the concerned authority on the file. The said reasons have already been communicated to the petitioner in the present proceedings. In the circumstances, it cannot be said that the order with regard to the transfer of ....
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....do not think that in this writ petition, at this stage, this Court should interfere especially when, as a result of the search, some material has already been found by the authorities. Moreover, even after the assessment is framed, it would be open to the petitioner to challenge the order of assessment by filing an appeal as per the provisions of the Act. The petition, therefore, stands disposed of as rejected with no order as to costs." 35. It appears from the above reasons recorded by the Division Bench for not following the decision of the Supreme Court in the case of Ajantha Industries (supra) was that Their Lordships were of the opinion that in view of the subsequent decisions of the Supreme Court in the cases of Managing Director, ECIL vs. B.Karunakar AIR 1994 SC 1074; and State Bank of Patiala vs. S.K. Sharma AIR 1996 SC 1669, the principles laid down in the case of Ajantha Industries (supra) are no longer a good law. According to their lordships in the above two later decisions it was held that at times non-communication of a report or reasons recorded by the authority would not vitiate the entire enquiry or the proceedings especially when even after furnishing ....
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....n, the delinquent employee should have the benefit of the report of the Inquiry Officer before the disciplinary authority records its findings on the charges levelled against him. 15. In the case of State Bank of Patiala v. S.K.Sharma (supra), a two-judge-bench of the Supreme Court was dealing with a case where in a disciplinary enquiry against a bank officer for temporary misappropriation, the enquiry officer failed to furnish the copies of the statements of two witnesses. However, the delinquent was permitted to peruse them and take notes there from more than three days prior to their examination. Of the two witnesses, one witness was examined and the delinquent had not raised any objection during the enquiry that the non-furnishing of the copies of the statements was disabling him or has disabled him, as the case may be, from effectively cross-examining the witnesses or to defend himself. In such a case it was held that no prejudice was resulted to the delinquent on account of not furnishing him the copies of the statements of witnesses. On account of the said violation of rule, according to the said decision, it could not be said that the delinquent did not have a fair....
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....n substantive provisions, e.g., who is the authority competent to impose a particular punishment on a particular employee/officer. Such provisions must be strictly complied with. However, there may be any number of procedural provisions which stand on a different footing. Even among procedural provisions, there may be some provisions, which are of a fundamental nature in the case of which the theory of substantial compliance may not be applicable. 17. We find that in those two decisions, the question related to irregularities in course of disciplinary proceedings, which has nothing to do with the statutory provision contained in Section 127 of the Act conferring power of transfer. In none of those decisions, the court had any occasion to consider the said statutory provision as well as the specific view taken by a three-judge-bench in the case of Ajantha Industries (supra) on the above point. Thus, with great respect to the learned judges, we are unable to subscribe to the view that the decision of Ajantha Industries (supra), has lost its force in view of those two subsequent decisions. 18. Since we propose to hold that the law laid down in the case of Ajantha Ind....
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....both the writ-applications came to be disposed of as not pressed vide order dated 20th February 2013. 40. We are of the view that the principles enunciated by the Supreme Court in the case of Ajantha Industries (supra), hold the field. This Court, over a period of time, has been following Ajantha Industries (supra) in its letter and spirit. We may refer to and rely upon a decision rendered by a Coordinate Bench of this Court in the case of Genus Electrotech Ltd. vs. Union of India and others (Special Civil Application No.10328 of 2017, decided on 13th September 2017), wherein referring to and relying upon Ajantha Industries (supra), it was held as under : "Section 127 of the Act is founded on three principles. One is the requirement of transferring the assessment in appropriate cases which would have element of public interest. Second is that the assessee cannot choose his Assessing Officer. Section 124 of the Act which lays down the jurisdiction of the Assessing Officers ensures proper administration of assessments giving consistency, transparency and predictability on the question of which Assessing Officer would deal with which assessments. Nevertheless, an assessee ....
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....agreement for transfer of the case cannot be equated with the decision to transfer. The decision can be reached only after hearing the assessee. He can form a final opinion that the case is to be transferred only after hearing the assessee, failing which, his decision would be ex-parte. Without the representation or involvement of the assessee, the requirement of hearing would then be rendered into an empty formality." 41. We are not impressed with the submission canvassed on behalf of the Revenue that Section 127 excludes, by necessary implication, an opportunity of hearing when transfer is on account of the administrative exigency or convenience. This proposition put forward by Mr.Bhatt, the learned senior counsel appearing for the Revenue, is based on the maxim 'expressio unius est exclusio alterius', which is a rule of prohibition by necessary implication. We do not think that the above rule will apply in the instant case. In this context, we can do no better than to quote the following passage from De Smith's 'Judicial Review of Administrative Action', fourth edition (at page 187) : "(3) Where legislation expressly requires notice and hearing for certain purpos....
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....an this Court not take into consideration the fact that any such declaration regarding the 10.3.1999 order will restore an earlier order dated 30.7.1997 in favour of Bharat Petroleum Corporation which has also been passed without notice to HPCL and that if the order dated 10.3.1999 is set aside as being in breach of natural justice, Bharat Petroleum will be getting two plots rather than one for which it has no right after the passing of the latter order of this Court dated 7.4.98 ? 15. Courts are not infrequently faced with a dilemma between breach of the rules of natural justice and the Court's discretion to refuse relief even though rules of natural justice have been breached, on the ground that no real prejudice is caused to the affected party. 16. We shall initially refer to two cases where discretion was exercised not to grant relief and the first one was a case where relief was refused even though there was breach of natural justice. The first one is Gadde Venkteswara Rao v. Government of Andhra Pradesh and Ors. MANU/SC/0020/1965 : [1966] 2 SCR 172. There the Panchayat Samithi, in exercise of its statutory powers passed a resolution on 25.8.1960 to locat....
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....he Act and also because it did not give notice to representatives of Dharmajigudem village. His Lordship concluded as follows: In those circumstances, was it a case for the High Court to interfere in its discretion and quash the order of the government dated April 18, 1963 ? If the High Court had quashed the said order, it would have restored an illegal order it would have given the Health center to a village contrary to the valid resolutions passed by the Panchayat Samithi. The High Court, therefore, in our view, rightly refused to exercise its extraordinary discretionary power in the circumstances of the case. 17. The above case is clear authority for the proposition that it is not always necessary for the Court to strike down an order merely because the order has been passed against the petitioner in breach of the natural justice. The Court can under Article 32 or Article 226 refuse to exercise its discretion of striking down the order if such striking down will result in restoration of another order passed earlier in favour of the petitioner and against the opposite party, in violation of principles of natural justice or is otherwise not in accordance....
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....hinnappa Reddy J also laid down an important qualification (p.395) as follows: As we said earlier, where on the admitted or indisputable facts only one conclusion is possible and under the law only one penalty is permissible, the Court may not issue its writ to compel the observance of natural justice, not because it is not necessary to observe natural justice but because Courts do not issue futile writs. 21. It is, therefore, clear that if on the admitted or indisputable factual position, only one conclusion is possible and permissible, the Court need not issue a writ merely because there is violation of principles of natural justice. 22. Before we go into the final aspects of this contention, we would like to state that cases relating to breach of natural justice, do also occur where all facts are not admitted or are not all beyond dispute. In the context of those cases there is a considerable case law and literature as to whether relief can be refused even it the court thinks that the case of the applicant is not one of "real substance" or that there is no substantial possibility of his success or that the result will not be different, even if natural ....
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....tted themselves to any one view though discretion is always with the Court. Wade (Administrative Law, 5th Ed. 1994, PP. 526-530) says that while futile writs may not be issued, a distinction has to be made according to the nature of the decision. Thus, in relation to cases other than those relating to admitted or indisputable facts, there is considerable divergence of opinion whether the applicant can be compelled to prove that the outcome will be in his favour or he has to prove a case of substance or if he can prove a "real likelihood" of success or if he is entitle to relief even if there is some remote chance of success. We may, however, point out that even in cases where the facts are not all admitted or beyond dispute, there is considerable unanimity that the courts can, in exercise of their "discretion", refuse certiorari, prohibition, mandamus or injunction even though natural justice is not followed. We may also state that there is yet another line of cases as in State Bank of Patiala v. S.K. Sharma MANU/SC/0438/ 1996 : (1996) II LLJ 296 SC, Rajendra Singh v. State of M.P. MANU/SC/0690/1996 : AIR 1996 SC 2736, that even in relation to statutory provisions requiring notice,....
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....h of principles of natural justice is in itself sufficient to grant relief and that no further de facto prejudice need be shown should be applied as far as possible. This principle in Ridge vs. Baldwin (supra) has been followed by the Supreme Court and various High Courts in several cases but not as an absolute rule. What we want to convey is that the 'empty formality theory' is an exception and should not be applied on mere asking. Ordinarily, this principle of 'empty formality' may be applied in the following category of cases : (1) Exclusion in case of emergency; (2) Express statutory exclusion; (3) Where disclosure would be prejudicial to public interest; (4) Where prompt action is needed; (5) Where it is impracticable to hold hearing; (6) Exclusion in case of purely administrative matters; (7) Where no right of person is infringed; (8) The procedural defect would have made no difference to the outcome; (9) Exclusion on the ground of 'no fault' of decision maker. 45. Having regard to the issue on which we have debated, it may be clinching to refer to the following observations made by a Constitu....