TaxTMI 
TaxTMI 
2023 (2) TMI 425
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....Tax, Kolkata- 9 (PCIT) dated 23rd February, 2022 under Section 127 of the Income Tax Act, 1961 (the Act for brevity). The said writ petition was dismissed by the impugned order and challenging the correctness of the said order the appellant has preferred this appeal. 2. We have heard Dr. Abhishek Manu Singhvi, learned Senior Advocate and Mr. J.P. Khaitan, learned Senior Advocate appearing for the appellant and Mr. Balbir Singh, learned Additional Solicitor General of India appearing for the respondent revenue. 3. The facts leading to the filing of the writ petition are as hereunder:- 4. The PCIT issued show-cause notice dated September 5, 2009 stating that a search and seizure operation under Section 132(1) and survey under Section 133A of the Act was conducted on Praveen Kakkar, Rajendra Miglani and others on April 7, 2009 at different places in Kolkata, Delhi, Indore, Bhopal and other places by the Investigation Department, Delhi. It was stated that the appellant was also covered in the above search and seizure operation under Section 132(1) and survey under Section 133A of the Act. It was stated that the search and survey resulted in gathering of evidences indicating as to ho....
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.... of such evidences/ documents collected during the survey, search and seizure and forming basis of the proposed action by the Department. Further, it was stated that the evidences/ documents should be shared with him in the larger interest of justice, equity and fairness of things as the issues sought to be raised and responded to or are not merely procedural but the same would have a substantial bearing on the issues to be ultimately adjudicated. Without prejudice to the aforementioned submission, it was stated that the appellant understands that Mr. Praveen Kakkar has filed a writ petition challenging the very basis of the search initiated by the Income Tax Department thus, reserving the right to file a detailed reply to the show-cause notice or to challenge the same from a legal stand point. Further, the appellant stated that the contents of the letter dated October 3, 2019 are without prejudice to his rights and contentions legally available to him and requested the department that no presumption as suggested in the show-cause notice should be arrived at till the appellant is able to respond to the contents on substance after receipt of requisite underlying documents from the ....
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.... September 17, 2021 and upon perusal of the same, the learned Writ Court has observed that it is an admitted position that the objection/ representation of the appellant was received by the office of the respondent concerned, the objections/ representations of the appellant against the proposed transfer was not considered and not disposed of and without giving an opportunity of hearing the case of the appellant has been transferred and the said order was not even communicated with the appellant. The appellant filed a supplementary affidavit challenging the transfer of the case by order dated February 18, 2021 as also the intimation dated September 16, 2021, as being invalid and without jurisdiction and in gross violation of principles of natural justice and in violation of the statutory provisions since, the same was passed by not considering and disposing the representations/ objections given by the appellant and without recording the reason for not giving opportunity of hearing before passing such order of transfer and without disposing of the reply/ objection to the show-cause notice, the transfer of the case of the appellant is illegal, invalid and not sustainable in law and ac....
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....did not have any financial transactions with Praveen Kakkar and three others whom he denied to have known, but stated that he may have had financial transaction with Rajendra Miglani before he became the Chief Minister of the State of Madhya Pradesh which is not the period of consideration in the present case. However, he has stated that he had no financial transaction with Rajendra Miglani after he became the Chief Minister. Further, with regard to the certain sums of money which was mentioned in the show-cause notice, it was stated that those sums were shown in the books of the political party received from a State Committee and they have nothing to do with his personal income tax assessment. The appellant also stated as to how he had fully cooperated with the investigation and had personally appeared before the Deputy Director of Income Tax, Investigation, Unit 5(3), New Delhi on January 11, 2021. Further, it was stated that he reliably understands that the search assessments were all completed on September 30, 2021 and if that be the case, there can be no question of any concerted or coordinated investigation or assessment as alleged in the show-cause notice. Further, the appel....
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.... rejected the objections raised by the appellant and ordered the appellant's case be transferred from the jurisdiction of the ITO, 132(1) Kolkata 2, DCIT Central Circle- 19, Delhi. This order was impugned in the writ petition. 8. The learned Writ Court by order dated March 8, 2022 directed the department to maintain status quo with regard to the order of transfer till March 16, 2022 or until further orders whichever is earlier. By order dated March 10, 2022, the interim order was extended till March 28, 2022 or until further orders whichever is earlier. The interim order was further extended till June 30, 2022 or until further orders whichever is earlier by order dated March 29, 2022 subsequently the interim order was extended till August 30, 2022. By order dated July 5, 2022 the interim order was extended till September 30, 2022. By order dated August 10, 2022, the interim order was further extended till November 30, 2022, by order dated September 28, 2022 and by order dated November 11, 2022 the interim order was extended till one week after the winter vacation or until further orders whichever is earlier. The writ petition was finally heard and judgment was reserved on December....
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....eferring to Section 127 of the Act and the requirements which are to be complied with therein, the learned senior advocate referred to the explanation in Section 127 which defines the word "case". It is submitted that the "case" comprises all proceedings under the Act in respect of any year which may be pending or which may have been completed as also all proceedings which may be commenced and transfer of such proceedings under Section 127 is from one assessing officer to another assessing officer, the proceedings adverted to in the explanation in respect of any year or proceedings relating to determination of income and consequential financial liability of the assessee under the Act which may be pending or may have been completed or which may be commenced. It is further submitted that the income tax department is an All-India body and has officers all over the country in every state. The officer performs mostly quasi-judicial functions independent of any interference unless the statutes stipulate approval/sanction of an higher authority. The mere desire of transferring authority to transfer the income tax case of an assessee on the ground that the transferee officer will be the mo....
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....tor General after referring to the necessity to centralize the cases of thirty four persons and the facts which are relevant for such purpose submitted that few of those persons whose cases have been centralized had filed the writ petitions before the High Court of Madras in WP No. 12186 of 2020 etc. and they were dismissed by order dated March 25, 2021 and as of now, the assessment of the appellant has already commenced and the assessment is required to be completed before 31.03.2023 or else it may become time barred subject to the exclusion of the period during which an appropriate interim orders were operating when the writ petition was pending. Further it is contended that there is no fundamental right in assessee to be assessed in a particular locality or area and it is incorrect to contend that the order of transfer is a quasi-judicial exercise rather it is an administrative exercise resulting in an administrative order which will seldom be referred and interfered by the courts. Further it is submitted that the appellant has in his reply to the show cause notice has accepted that he has had financial dealings with one of the five persons who have been named in the show cause ....
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....ommissioner of Income Tax to transfer any case from one income tax officer subordinate to him to another and the Central Board of Revenue may transfer any case from anyone income tax officer to another and such transfer will be made at any stage of the proceedings and shall not render necessary to reissue of any notice already issued by the Income Tax Officer from whom the case is transferred. In the said decision, the Constitution Bench pointed out that there is no fundamental right in the assessee to be assessed in a particular area or locality. Even considering in the context of Section 64(1)(2) of the 1922 Act this right which is conferred upon the assessee to be assessed in a particular area or locality is not an absolute right but is subject to the exigency of tax collection. It was further pointed out that there is a broad distinction between discretion which has to be exercised with regard to the fundamental right guaranteed by the Constitution and some other right which is given by the statute and if the statute deals with the right which is not fundamental in character, the statute can take it away but a fundamental right is a statute cannot take away. 15. In Kashiram Ag....
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....e aware of the reasons which impelled the authorities to pass the order of transfer. It is apparent that if a case file is transferred from the usual place of residence or office where ordinarily assessments are made to a distant area, a great deal of inconvenience and even monetary loss is involved. That is the reason, why before making an order of transfer the legislature has ordinarily imposed the requirement of a show cause notice and also recording of reasons The question then arises whether the reasons are at all required to be communicated to the assessee. It is submitted, on behalf of the Revenue, that the very fact that reasons are recorded in the file, although these are not communicated to the assessee, fully meets the requirement of Section 127(1). We are unable to accept this submission. 10. The reason for recording of reasons in the order and making these reasons known to the assessee is to enable an opportunity to the assessee to approach the High Court under its writ jurisdiction under Article 226 of the Constitution to even this Court under Article 136 of the Constitution in an appropriate case for challenging the order, inter alia, either on the ground that it i....
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....ers as to how the administrative order has to be tested for its validity and correctness. The test permissible to be applied are whether there is an error in the decision-making process the decision itself may not be open of being questioned by a court exercising writ jurisdiction. The broad parameter is by applying the Wednesbury principles, to see as to whether the aggrieved person had reasonable opportunity to put forth his case, whether the authority exercised its jurisdiction with due application of mind, whether the relevant factors were taken into consideration and nothing irrelevant was the basis of such decision. If the administrative order passes this test, the Writ Court would refuse to exercise their jurisdiction and interfere with those decisions as it would amount to converting the jurisdiction of the Court to that of an appellate authority over a decision of an administrative authority. 19. In Rajesh Mahajan and Others, the court pointed out that the authority must not only take into consideration the objections raised by the assessee but the reasons recorded in the order must also have direct nexus/bearing to the object sought to be achieved and that suspicion even....
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....t year. It would not be correct to contend that only because explanation appended to Section 127 refers to the word 'case' for the purpose of the said Section as also Section 120, the source of power for transfer of the case involving block assessment is relatable only to Section 120 of the Act. It is a well-settled principle of interpretation of statute that a provision must be construed in such a manner so as to make it workable. When the Income Tax Act was originally enacted, Chapter XIVB was not in the statute book. It was brought in the statute book only in the year 1996. 21. The Hon'ble Supreme Court held that the power of transfer is in effect provides for machinery provision and it must be given its full effect and must be construed in a manner so as to make it workable and that even Section 127 of the Act is a machinery provision it should be construed to effectuate a charging section so as to allow the authorities concern to do so in a manner where for the statute was enacted. 22. Having noted the legal position that exercise of power under Section 127 of the Act is an administrative exercise with the ultimate object of assessments and collection of taxes, an ....
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....and assessment. Further the claim of the assessee that such transactions are not linked to his personal income account cannot be taken at face value without proper investigation and assessment. Therefore, the authority opined that the assessing officer who is entrusted with assessment of all other parties involved in the unaccounted money transactions is the most suitable assessing officer to complete the assessment as he is aware of the whole picture of the case and can do justice to the revenue as well as to the assessee. Further in the order it has been stated that contrary to the claim of the appellant, mobile phones of the involved persons and the copy of its chat as was seized and subsequently shared with the assessee, clearly identifies the appellant's active role in unaccounted money transfer and also his links with the persons involved in the unaccounted money transfer. The learned Senior Counsel of the appellant submitted that no mobile phones chat was furnished or shared with the assessee as set out in the order of transfer and only screen shot of certain information appearing in the mobile phones had been shared. While examining the correctness of the administrative act....
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....ls in the second category. It is submitted that what is required to be considered is whether there is sufficient ground for transfer, the facts are not subject matter of consideration in this litigation. It is submitted that Chapter XIII of the Income Tax Act has four parts, Part (A) comprising of Sections 116 to Section 119A, Part (B) Section 120 to Section 128, Part (C) Section 131 to Section 136 and Part (D) Section 137 to Section 138. The assessee has no right to question the jurisdiction of an officer under Chapter XIII of the Act. It is further submitted that there is no allegation of mala fide and in the absence of any such allegation/ pleading, paragraph 10 of the judgment in Ajantha Industries would not be of assistance to the appellant. On the plea of inconvenience as raised by the assessee, the learned Additional Solicitor General would submit that there is no income for the assessee in Kolkata, income of the assessee is from Delhi and other places, the bank account of the assessee is in Delhi, thus no inconvenience can be pleaded by the assessee on account of the transfer of his assessment. The travel of the consultants or accountants from Kolkata to Delhi cannot be ple....
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....such circumstance the question of applying the "suitable boy" theory would/ does not arise. 29. It was argued that the appellant is only a witness, not searched, no survey on him, hence no jurisdiction for transfer. We find no material on record to hold that the appellant is only a witness, such contention, being self serving, is rejected. 30. Argument was made that the income tax department is expanding the scope by submitting additional information, bringing on record new facts. This again is on account of the facts that the assessee in the writ petition has sought to justify his stand on the reasons recorded, this has necessitated that income tax department to bring facts on record, thus the assessee having invited such a response cannot be heard to raise any complaint in this regard. 31. All that is required by the Writ Court is to consider as to whether there are grounds for transfer as emanating from the reasons recorded. We are satisfied there are adequate reasons. We refrain from commenting upon the reasons as it would impinge upon the rights of the assessee during the assessment proceedings at Delhi as a part of the centralization done by the income tax department in th....