TaxTMI 
TaxTMI 
2009 (1) TMI 109
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....a show-cause notice dated June 30, 2005, issued under section 127(2) of the Act intimating the proposal for transfer of the case of the petitioner from Kolkata to New Delhi and the order dated August 9, 2005, passed by respondent No. 1 transferring the case of the petitioner from the Deputy Commissioner of Income-tax, Circle B, Kolkata, respondent No. 2 to the Deputy Commissioner of income-tax, Central Circle 6, New Delhi and the Assistant Commissioner of Income-tax, Central Circle 6, New Delhi, respondents Nos. 3 and 4, respectively. The matter was moved on October 5, 2005, when an order was passed, the relevant portion of which is as under: "The petitioner herein has challenged the validity and/or legality of the Order No. 7/2005-06, dated August 9, 2005, issued by the Commissioner of Income-tax, Kolkata-III, regarding centralization of "SAHARA" group of cases on the ground that the respondents herein did not consider that the principal place of business of the petitioner is at Lucknow and the petitioner along with other assessees of the Sahara group are assessed to income-tax at Lucknow. Mr. Bajoria, learned senior counsel appearing on behalf of the petitioner also referre....
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.... the said judgment a batch of special leave petitions before the Supreme Court of India was preferred by the Sahara group of companies which too by order dated March 3, 2006, was dismissed. The order passed by the apex court is as under: "Heard learned counsel for the petitioners. No merits. The special leave petitions are dismissed." 4. Learned senior advocate appearing for the petitioner reiterating the statement in the writ petition submitted that the company is incorporated in Kolkata and the dispute is regarding transfer of file to New Delhi. In the matter decided by the Lucknow Bench of the Allahabad High Court in Sahara Airlines [2006] 286 ITR 33 (All) the question was whether assessment would be at Lucknow or at New Delhi and it has been held that it would be in New Delhi for investigation and assessment. In the instant case, request was never made by the petitioner for transfer of its case either to New Delhi or to Lucknow. Nor such proposal was made earlier by the Revenue. In or about 1996, an application for transfer of certain cases from Lucknow to New Delhi was filed because at that time the management of the Sahara group was contemplating to shift its orig....
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....ed August 9, 2005, was passed. Referring to the reply dated July 19, 2005, it was submitted that it does not deal with the ground of interlacing and interconnection of funds. Though it appears from the audited accounts of the assessee for the assessment year 2004-05 that there were interlacing and interconnection of business activities as there being joint ventures and transfer of funds within the Sahara group, in the reply dated July 19, 2005, it has been stated to be as a "sweeping observation". Moreover, the annexure to the reply dated August 9, 2008, regarding the presence of employees and directors based in Kolkata and details of the bank accounts do not support the cause of the petitioner. Further, neither the petitioner sought the reasons for co-ordinated investigation nor has challenged the order impugned on the ground of perversity. Centralisation of cases is being done in public interest as there is mobilisation of public money. According to him, the show-cause notice, replies thereto and the averments in the writ petition are similar to the cases before the Allahabad High Court, Lucknow Bench and as in Sahara Airlines [2006] 286 ITR 33 judgment has been passed upho....
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....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 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 Directors-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 ....
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....ases being assessed in the Central Circle, Lucknow, on the ground that the administrative/control offices of most of cases of this group has shifted to Delhi. It is a fact that presently most of the offices of the group has shifted to Delhi. It is a fact that presently most of the offices of the group concerns, including that of M/s. Sahara Airlines Ltd. and of Sahara India (Firm), are located in Delhi and many of the companies are also assessed to tax at New Delhi. In view of the above, I am of the opinion that for co-ordinated investigation and assessment, the cases of the Sahara group should be centralized in New Delhi. It is, therefore, proposed to transfer your case to New Delhi and centralise the same under the jurisdiction of the Chief Commissioner of Income-tax (Central), New Delhi. You are hereby afforded an opportunity of being heard in the matter in terms of the provisions of section 127(2) of the Income-tax Act, 1961, and for this purpose, you may attend my office either personally or through your authorised representative on July 19, 2005, at 12-00 noon. Yours faithfully, (Sd.) .............. Commissioner of Income-tax, Kolkata-III, Kolkata" Pursuant ....
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....; Circle-6 New Delhi Before passing this order, a reasonable opportunity was given to the assessee of hearing in the matter, through this office letter bearing No. CIT. Kol-III/2005-06/63/T-17 (....
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.... 31, 2004, can be furnished. (e) From note 10 of schedule 21 of the accounts for the year ending March 31, 2004, filed with the assessee's return for the assessment year 2004-05, it is seen that loans to others included under the head 'Loans and advances' included loans to subsidiary companies, e.g., Sahara India International Corporation Ltd. of Rs. 46,56,51,440 and Sahara Airlines Ltd. Rs. 4,17,41,180.764. (f) It is further seen from the details of investment of Rs. 3,702 crores as on March 31, 2004, that the assessee made a huge investments in a number of group companies such as Sahara Airlines Ltd. (Rs. 2,89,07,05,459), Sahara India Corpn. Ltd. (Rs. 2,79,79,46,000), Sahara India Financial Corpn. Ltd. (Rs. 1,42,00,54,367), Sahara India International Corpn. Ltd. (Rs. 39,01,83,820), Sahara Sanchar Ltd. (Rs. 5,21,30,000) and many others. (g) Out of the total 4371 number of employees as on June 30, 2005, only 28 are posted in Kolkata. Out of 8 directors of the company as on June 30, 2005, only one is based in Kolkata. (h) The company is developing a real estate project approximately 8000 acres near Lonavala, District-Pune, Maharashtra. 4. It is clear from what has bee....
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.... is evident from the order dated October 5, 2005, wherein reference has been made to and reliance was placed on the interim orders passed by the Allahabad High Court. Thereafter, paragraphs 7 to 20 deal with the facts and the submissions in support of the challenge to the order of transfer. That the facts stated in this petition are similar to the cases before the Allahabad High Court is evident from the pleadings in paragraph 21 of the writ petition which are as under : "Your petitioner states that it is apparent from the facts and circumstances of the instant case that the entire actions of the Income- tax Department for transfer of the 35 cases from Lucknow and two cases from Kolkata including that of your petitioner were a concerted move actuated by extraneous considerations. All the cases were sought to be transferred to New Delhi where the assessees concerned do not have the infrastructure or manpower to handle income-tax cases with the object of subjecting them to great harassment, inconvenience, hardship and costs. Your petitioner states that the income- tax authorities are fully aware of the fact that the books of account and records of the assessees whose cases are sou....
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....nd taken before the Allahabad High Court. In Pannalal Binjraj [1957] 31 ITR 565 (SC) it has been held by the apex court that (page 587) "There is no fundamental right, in an assessee to be assessed in a particular area or locality. Even considered in the context of section 64(1) and (2) of the 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 exigencies of tax collection." Though, in Pannalal Binjraj the Supreme Court was considering the provisions contained in the Income-tax Act, 1922, the settled proposition of law is that the inconvenience of an assessee should give way to the exigencies of tax collection. Therefore, a comparison of the issues and pleadings in the present case with the cases before the Allahabad High Court and the order passed on October 5, 2005, by the learned single judge leaves no manner of doubt that the issues are identical. 12. On the question whether the impugned order directing transfer only on the ground of interlacing and interconnection of funds and business, activities of the Sahara group is sufficient to warrant transfer, it is to be noted that the no....
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.... entities of the Sahara group, have led the Revenue to propose and, thereafter, in the absence of denial of facts, to pass an order of transfer under section 127(2) of the Act for the purpose of co-ordinated investigation. Co-ordination in this context would mean bringing in the assessment records of all the companies, firms and individual assessees of the Sahara group including that of the petitioner under one umbrella—that is, under one single Assessing Officer to have a correct picture of the transactions after investigation. In the instant case, it assumes significance since there are intercorporate transactions within the Sahara group. What is important is that with the exception of Y. Moideen Kunhi [1993] 204 ITR 29 (Karn), in all other judgments cited courts have consistently upheld in all cases belonging to a group, co-ordinated investigation as valid in public interest. Therefore, in the cases of a group, co-ordinated investigation is a relevant ground for transfer. In the present case since there is neither any denial of the facts by the petitioner who is a member of the Sahara group nor are the reasons for transfer unconvincing and vague, the order directing co-ordinat....