TaxTMI 
TaxTMI 
2024 (5) TMI 456
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....4054/2024 [Dollar Gulati v. Principal Commissioner of Income Tax], which was the lead matter, is taken into consideration. The brief facts that are pertinent to decide the controversy at hand would reveal that on 11 April 2023, a search operation under Section 132 of the Act was conducted on the premises of M/s. Zee Lab Group which has its headquarters in Karnal, Haryana. 3. Pursuant to the aforementioned search, some incriminating material alluding to the assessee was discovered and therefore, on 26 April 2023, a notice under Section 131(1A) of the Act was issued to the assessee, whereby, the assessee was called on to furnish details of income earned by him since Assessment Year ['AY'] 2017-18 4. Thereafter, the assessee furnished a reply to the aforesaid notice, whereby, the financial statements of bank accounts, particulars of the investments made and details of the unsecured loan transactions etc. were provided to the Revenue. 5. Subsequently, on 2 February 2024, a show cause notice was issued to the assessee, whereby, for the purpose of an 'administrative, convenience, coordinated investigation and assessment', the case of the assessee was sought to be centralized at ....
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....rder bears in mind the legislative mandate of Section 127 of the Act and considers the objections raised by the assessee. 12. Before adverting to the merits of the case, it is pertinent to refer to the scope and ambit of powers conferred upon the Revenue under Section 127 of the Act. Scope and ambit of Section 127 of the Act 13. Chapter XIII of the Act deals with the income tax authorities and their jurisdictional powers. Section 116 of the Act enlists the various classes of income tax authorities which are aimed to fulfil the objectives of the Act. Section 120 of the Act, which is another vital Section which talks about the jurisdiction of the income tax authorities and how the jurisdiction of the income tax authorities is inter alia based upon the territorial area, persons or classes of persons, income or classes of income and cases or classes of cases. Going on further, Section 124 of the Act deals with the jurisdiction of the AOs, whereby, he has been vested with the jurisdiction over any person carrying on business or profession over any prescribed territorial limit or where the principal place of business of persons is within such area and any person residing within ....
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....n) to any other Assessing Officer or Assessing Officers (whether with or without concurrent jurisdiction) and the offices of all such officers are situated in the same city, locality or place. (4) The transfer of a case under sub-section (1) or sub-section (2) may be made at any stage of the proceedings, and shall not render necessary the re-issue of any notice already issued by the Assessing Officer or Assessing Officers from whom the case is transferred. Explanation.-In Section 120 and this section, the word 'case', in relation to any person whose name is specified in any order or direction issued thereunder, means all proceedings under this Act in respect of any year which may be pending on the date of such order or direction or which may have been completed on or before such date, and includes also all proceedings under this Act which may be commenced after the date of such order or direction in respect of any year.' 15. Section 127 of the Act empowers the Principal Director General or Director General or Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner to transfer any case from subordinate AOs after providing a r....
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....s business or profession is situate within the area, and (b) in respect of any other person residing within the area. This provision clearly indicates that where a transfer is made under the proviso to Section 127(1) from one Income Tax Officer to another in the same locality, it merely means that instead of one Income Tax Officer who is competent to deal with the case, another Income Tax Officer has been asked to deal with it. Such an order is purely in the nature of an administrative order passed for considerations of convenience of the department and no possible prejudice can be involved in such a transfer. Where, as in the present proceedings, assessment cases pending against the appellant before an officer in one ward are transferred to an officer in another ward in the same place, there is hardly any occasion for mentioning any reasons as such, because such transfers are invariably made on grounds of administrative convenience, and that shows that on principle in such cases neither can the notice be said to be necessary, nor would it be necessary to record any reasons for the transfer. The provisions contained in Section 124(3) of the Act deal with the same ....
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....absolute right and must be subject to the primary object of the Act itself, namely, the assessment and collection of the income tax; and it was also held that where the exigencies of tax collection so required, the Commissioner of Income Tax or the Central Board of Revenue had the power to transfer his case under Section 5(7-A) to some other officer outside the area where the assessee resided or carried on business. That is how Section 5(7-A) was sustained. 9. It is in the light of these considerations that we have to construe the proviso to Section 127(1). As we have already indicated, the construction for which Mr Jain contends is a reasonably possible construction. In fact, if the words used in the proviso are literally read, Mr Jain would be justified in contending that the requirement that reasons must be recorded applies even to cases falling under it. On the other hand, if the obvious object of the proviso is taken into account and the relevant previous background is borne in mind, it would also seem reasonable to hold that in regard to cases falling under the proviso, an opportunity need not be given to the assessee, and the consequential need to record reasons for....
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....nacted.' 18. The Division Bench of this Court in the case of ATS Infrastructure Ltd. v. Commissioner of Income-tax, 2009 SCC OnLine Del 1627 after following the dictum laid down by the Supreme Court in the case of Pannalal Binjraj v. Union of India, (1957) SCR 233 wherein, it was held that there is no fundamental right to be assessed at a particular place, has also held that when powers are invoked under Section 127 of the Act, territorial nexus becomes irrelevant and what becomes more prominent are the interests of adjudication and collection of taxes. The Court in the said decision held as follows:- '9. In Pannalal Binjraj v. Union of India [1957] 31 ITR 565 (SC) the Constitution Bench had repulsed a siege laid to the vires of section 5 of the Indian Income-tax Act, 1922. The assessee had one of its branches in Calcutta where the karta of the Hindu undivided family resided and carried on business. The Hindu undivided family, however, was being assessed at Patna but the cases were transferred to Calcutta and subsequently to Circle-VI, New Delhi. Their Lordships observed thus (pages 580 and 587) : 'Prima facie it would appear that an assessee is entitled under ....
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....act that the business activities of the assessee were located in Muzaffarnagar and also keeping in perspective the fact that other cases of the assessee pertaining to the same group were also transferred to Meerut. Another Division Bench of this court in K. K. Loomba v. CIT [2000] 241 ITR152 applied Bidi Supply Co. v. Union of India [1956] 29 ITR 717 (SC) and Pannalal Binjraj v. Union of India [1957] 31 ITR 565 (SC) to reject the challenge to the transfer of cases from Amritsar to Delhi. In K. P. Mohammed Salim v. CIT [2008] 300 ITR 302 (SC) their Lordships have clarified that: 'The power of transfer is in effect provides for a machinery provision. It must be given full effect. It must be construed in a manner so as to make it workable. Even section 127 of the Act is the machinery provision. It should be construed to effectuate a charging section so as to allow the authorities concerned to do so in a manner wherefor the statute was enacted.' 11. In this conspectus and analysis of the law it will be relevant to note that, firstly, there is no fundamental right of an assessee to be assessed at a particular place. Under section 124, the assessment must be carried out at the p....
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....*** The argument that the power of transfer under the notifications is a two-step process is untenable in law. 66. The argument of the petitioners that the power to transfer cases under Section 127 of the Act, after coming into force of the faceless assessment scheme and notifications is a two-step process i.e. from faceless assessing officer to jurisdictional assessing officer and then from jurisdictional assessing officer to the transferee assessing officer, is untenable in law for the reason stated hereinabove that in clause (2) of Notification No. 62 of 2019, the Principal Chief Commissioner or Principal Director General in charge of National e-Assessment Centre has the power to transfer back the case to the jurisdictional assessing officer at any stage of the assessment to complete assessment, whereas the power under Section 127 of the Act can be exercised at any stage even when no assessment is pending. This is apparent from the definition of the expression 'case' in Explanation to Section 127 of the Act. For the sake of convenience the expression 'case' as defined in Section 127 of the Act is extracted as below: 'Explanation.-In Section 120 and thi....
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.... review when the order of transfer duly reflects application of mind on the part of the authority. The relevant paragraphs of the said decision are reproduced herein for reference:- '8. We have considered the submissions. The power to transfer cases under section 127 of the Act is to be undoubtedly exercised after following the principles of natural justice. However, the discretion of the authority to transfer a case has to be examined on the touchstone of the same not being arbitrary and/or perverse and/or mala fide. If there are reasons in the impugned order which indicates due application of mind to reach a view to transfer a case from one jurisdiction to another, then this court will not interfere with the discretion of the administrative authority who transfers the case. This discretion is vested by the Act in high ranking officer, viz., Commissioner of Income-tax, and the necessity to transfer a case from the jurisdiction of one officer to another officer for better administration of the Act could be diverse and impossible to enumerate. It is for the above reason that section 127 of the Act has not limited the exercise of jurisdiction by specifying any circumstances ....
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....ction 127 of the Act is to be exercised in public interest and in the interest of administration of the Act. In order to safeguard the interest of the assessee, an opportunity of being heard is granted and the section further requires reasons to be stated for transferring a case. The decision to transfer can be taken, in a case like the present, only if there is a concurrence between the two Commissioners of Income-tax who may be concerned with the transfer. When such high functionaries agree to the transfer and a show-cause notice is issued and reasons are contained in the order of transfer and those reasons appear to be germane to the transfer and show that the transfer has been made in the public interest and for a proper adjudication under the Act, we do not see how the impugned provision can be said to be ultra vires.' 23. It is relevant to point out that the Division Bench of the Allahabad High Court in the case of Bhatia Minerals v. Commissioner of Income-Tax, 1992 SCC OnLine All 970 has also held that the 'coordinated investigation' is a good ground for transfer as it eases the administrative convenience of the income tax authorities. The relevant paragraph of the said d....
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....ction of tax and other relevant matters then the proper and co-ordinated investigation is a good ground for transfer of the case. It cannot be laid down as a proposition of law that the said ground cannot be a valid ground for transfer. In a given case the same may not be a good ground for transfer, on being noticed that the co-ordinated investigation in no way will help to achieve the object of the Act. No doubt, transfer of a case from the place where the assessee has its place of residence or business to another place causes inconvenience but if it is necessary in the public interest then the transfer on the ground of proper and co-ordinated investigation cannot be held to be impermissible in law. I find myself in disagreement with the view that co-ordinated or centralised investigation will not be a ground of transfer u/s 127 of the Act. I am in agreement with the view taken by the different High Courts as mentioned above holding that proper and co-ordinated investigation would be a relevant, ground to exercise the power u/s 127 of the Act.' 25. Therefore, it is evident from the legislative mandate and dictum laid down by the abovementioned judicial pronouncements on the sco....
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.... 3. Copies of Audited & detailed Balance Sheet, Profit & Loss account along with all its schedules, notes, narration since F.Y. 2016-17 onwards.' 29. As it is evident from the notice that pursuant to the search conducted in the cases of Mr. Anil Chaudhary, Mr. Jitender Singh (alias Rakesh), Mr. Bharti Sehgal and Mr. Dheeraj Bakshi on 11 April 2023, the assessee was called upon to furnish the ITR details and particulars of the unsecured loan transactions. 30. The assessee filed his response to the abovementioned notice on 7 June 2023 reiterating his ITR and details of the loan transactions from Financial Year ['F.Y.'] 2016-17 to F.Y. 2022-23. Thereafter, after considering the reply, a show cause notice was issued on 2 February 2024, whereby, the assessee's case was proposed to be centralized to the file of DCIT, Central Circle, Karnal, Haryana and objections were invited. Pursuant thereto, the assessee filed his objections on 03 February 2024. Having considered the reply, the Revenue on 11 March 2024 passed the impugned order under Section 127 of the Act. For the sake of convenience, the impugned order dated 11 March 2024 is reproduced herein:- 'A search & seizur....
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....culars of which are mentioned in Column No.2 & 3 from the Assessing Officer mentioned in Column No.4 to the Assessing Officer mentioned in Column No.5 and direct that the power of the Assessing Officer mentioned in Col.4, in respect of these cases shall be exercised by the Assessing Officer mentioned in Col.5. The transfer order is affected for coordinated enquiries, investigations and administrative convenience and will come into force with immediate effect." 31. As it is evident from an ex facie reading of the impugned order that an opportunity of hearing was given to the assessee and the Revenue has considered the objections raised by the assessee before passing the impugned order, and moreover, the case of the assessee was centralized on the grounds of 'coordinated enquiries, investigations and administrative convenience', therefore, the contention of the assessee that the impugned order reflects no application of mind and the Revenue had not considered the objections raised by the assessee holds no merit. 32. It is also pertinent to point out that the notice dated 26 April 2023 points out that due to the search conducted in the cases of Mr. Anil Chaudhary, Mr. Jitender S....
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....es. 2. During the course of search proceedings, it was also found that Sh. Jitender alias Rakesh (accountant), who used to live at the residence of Sh. Bharti Sehgal ( in Goa at Villa No. 3004, Riviera Hermitage, Double Tree by Hilton, Arpora, Goa) maintained day book and property wise registers of various expenses. Various incriminating registers & documents were seized from the said premise and annexurised as A-1 to A-33. 3. Details of expenses made by Sh. Mark Gulati (PAN - AZAPG9859N) are maintained in Annexures A-7, A-9,A-19, A-23, A-24, A-26,A-29 and A-32. Sh. Mark Gulati had invested INR 4,25,42,951/- (unaccounted expenditure) to construct/develop properties in Goa during the F.Y : 2018-19 to F.Y : 2022-23. This establishes the fact that Sh. Mark Gulati (PAN - AZAPG9859N) has made substantial unaccounted investment with the persons covered during the search proceedings. Details of expenses made by Sh. Navdeep Chhabra (PAN - ABDPC9877B) are maintained in Annexures A-3, A-21, A-22,A-28,A-30 and A-32. Sh. Navdeep Chhabra had invested INR 1,17,11,160/- (unaccounted expenditure) to construct/develop properties in Goa during F.Y : 2022-23. This establishes the fa....
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....risdiction or suffers with mala fide intention. Conclusion 39. Therefore, in light of the aforenoted discussion and judicial pronouncements, we are hereby not inclined to interfere with the orders dated 20 February 2024 [W.P.C. 4086/2024] and 11 March 2024 [W.P.(C) 4054/2024] passed under Section 127 of the Act. 40. Furthermore, these observations have been made only for the purpose of deciding the challenge which stands raised before us; they should not be construed to be an expression on the merits of the case or otherwise. 41. Accordingly and subject to the aforesaid observations, we dismiss these writ petitions. All pending applications shall stand disposed of. ============= Document 1 UNSECURED LOANS TAKEN/ ADVANCED FOR EACH F.Y. IN THE FOLLOWING FORMAT FOR THE PERIOD OF F.Y. 2016-17 ONWARDS YEAR NAME PAN OP. BAL ADDITION DURING THE YEAR REPAYMENT IF PAID THE AMOUNT WITH MODE OF PAYMENT) CL. BAL. INTEREST RECEIVED/P AID 84,030 84,030 NIL WORLDWIDE 2016-17 AAJPG3078R COMMUNICATION TOTAL 84,030 84,030 YEAR NAME PAN OP. BAL ADDITION DURING THE YEAR REPAYMENT IF PAID....
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....R SINGH AOGPS9991A 1,00,00,000 1,00,00,000 NIL 2019-20 SANJAY VERMA 2019-20 BHARTI SEHGAL ACUPV7401N ATGPS7517M 2,00,000 38,00,000 2,00,000 NIL 30,00,000 8,00,000 NIL TOTAL 2,95,70,530 95,64,193 1,42,54,193 2,48,80,530 ADDITION YEAR NAME PAN OP. BAL DURING THE YEAR REPAYMENT IF PAID THE AMOUNT WITH MODE OF PAYMENT) CL. BAL. INTEREST RECEIVED/P AID ALL THROUGH WORLDWIDE 2020-21 COMMUNICATION AAJPG3078R 36,80,530 9,34,080 9,81,580 BANKING 36,33,030 NIL CHANNEL ALL THROUGH 2020-21 SUREKHA GULTI AGJPG8181D 79,40,000 8,00,000 4,50,000 BANKING 82,90,000 NIL CHANNEL Document 3 2020-21 PARDEEP GULATI 2020-21 CHERRY SEHGAL 2020-21 AKANKSHA GULATI 2020-21 DHIRAJ BAKSHI AAJPG3078R 53,50,000 DMYPS8674D 22,00,000 ANQPG5418B 20,60,000 ANCPB6672L 20,00,000 2020-21 DOLLAR GULATI HUF AAKHD3477Q 6,50,000 2020-21 SANJAY VERMA ACUPV7401N 2,00,000 2020-21 BHARTI SEHGAL ATGPS7517M 8,00,000 12,50,000 20,75,500 TOTAL 2,48,80,530 29,84,080 35,07,080 53,50,000 ....