TaxTMI 
TaxTMI 
2025 (6) TMI 982
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....nk/Designation 1 W.P.No.2089 of 2021 19.01.2021 3rd respondent/Commissioner of Income Tax (Exemptions). 2 W.P.No.2102 of 2021 19.01.2021 3rd respondent/Commissioner of Income Tax (Exemptions). 3 W.P.No.6711 of 2021 26.02.2021 & 04.03.2021 4th respondent/Assistant Commissioner of Income Tax, Central Circle - 1(3) &6th respondent in W.P.No.6711 of 2021/Assistant Commissioner of Income Tax, Office of Deputy Commissioner, Central Circle - 1(3) [Note: The petitioner in S.Nos.1 & 3 is DMK Charitable Trust. The petitioner in S.No.2 is Dravida Munnetra Kazhagam] 2. The respective petitioners have challenged the Impugned Orders/Notification both dated 19.01.2021. They were passed by the 3rd respondent viz., the Commissioner of Income Tax (Exemptions) under Section 127 of the Income Tax Act, 1961 (hereinafter referred to as IT Act). Both the Impugned Orders dated 19.01.2021 are identical. 3. The respective petitioners herein have challenged the Impugned Orders/Notification dated 19.01.2021 on the ground that they have been issued in gross violation of Section 127(2) of the IT Act by the 3rd Respondent. 4. By virtue of Impugned Or....
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....nts or matters specified therein, on or before 04/03/2021 at 11.00 AM. (c) The above mentioned evidence/information is to be furnished online electronically in 'E-Proceeding' facility through your account in 'e-filing' website of Income Tax Department. (d) Para(s) (a) to (c) are applicable if you have an account in e-filing website of Income Tax Department. Till such an account is created by you, assessment proceedings shall be carried out either through your e-mail account or manually (if e-mail is not available). (e) In cases where order has to be passed under section 153A/153C of the Income Tax Act, 1961 read with section 143(3), assessment proceedings would be conducted manually." 11. Since there was a failure to furnish the informations called for vide Impugned Notice dated 26.02.2021 due to pendency of W.P.No.2089 & 2102 of 2021, the 4th Respondent (the 6th respondent in W.P.No.6711 of 2021) issued Impugned Notice dated 04.03.2021. Thus, the Impugned Notices dated 26.02.2021 & 04.03.2021 have been challenged in W.P.No.6711 of 2021. 12. The 2nd respondent Director General of Income Tax (Investigation), Tamil Nadu & Puducherry, C....
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....neral Secretary of petitioner in W.P.No.2102 of 2021 and Permanent Trustee of petitioner in W.P.Nos.2089 & 6711 of 2021). 18. Information shared indicates that the Assessment Orders have also been passed against Mr.D.Duraimurugan (General Secretary of petitioner in W.P.No.2102 of 2021 and Permanent Trustee of petitioner in W.P.Nos.2089 & 6711 of 2021) and his son and the Trust run by them. 19. During the course of hearing, it was informed that all the Office bearers and the Trustee of the DMK Charitable Trust (the petitioner in W.P.Nos.2089 & 6711 of 2021) are also members of the DMK Party (the petitioner in W.P.No.2102 of 2021). 20. On 30.03.2021, this Court granted an order of interim stay of further proceedings of assessment for the year 2018-2019 in W.P.No.2102 of 2021 and the said order of stay was extended till 22.11.2023. Thereafter, vide order dated 24.01.2025, the Court had directed the respondents herein to maintain status-quo as on date. 21. As far as DMK Charitable Trust is concerned, this Court vide its order dated 30.03.2021 in W.P.Nos.2089 and 6711 of 2021 had stayed all further proceedings for assessment for the year 2018-2019. 22. All the writ petiti....
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....he party in power at the Centre during the period in dispute as also how to tarnish the image of the respective petitioners herein. 28. It is submitted that merely because a search was conducted at the premises of Mr.D.Duraimurugan and the Trust run by him on 30.03.2019 & 01.04.2019, ipso facto did not mean that the proceedings can be initiated under Section 127 of the IT Act to transfer the case of the respective petitioners viz., DMK Charitable Trust and DMK Party on the pretext of the coordinated investigation. 29. It is submitted that if Mr.Jayaraman Saravanan (6th respondent in W.P.No.6711 of 2021) or any other Officer presides as the Assessing Officer, the petitioners cannot expect fairness under the circumstances and would also loose the benefit of Faceless Assessment under the provisions of the IT Act since Mr.Jayaraman Saravanan (6th respondent in W.P.No.6711 of 2021) has acted only with a view to please the political rivals of the petitioners. 30. That apart, it is submitted that Mr.Jayaraman Saravanan (6th respondent in W.P.No.6711 of 2021) acted with a mala fide intention and had sent a proposal to the 2nd respondent, Director General of Income Tax (Investigati....
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....tion 2021 in alliance with a major Party in Tamil Nadu, the 6th respondent in W.P.No.6711 of 2021 wanted transfer of cases to please his master to transfer the cases of the respective petitioners. 36. It is further stated that after having slept over for 2 years from the date of search and seizure which took place on 30.03.2019 & 01.04.2019 in the group case of Mr.D.Duraimurugan and his Trust (the General Secretary of petitioner in W.P.No.2102 of 2021 and Permanent Trustee of petitioner in W.P.Nos.2089 & 6711 of 2021), Mr.Jayaraman Saravanan (6th respondent in W.P.No.6711 of 2021) had initiated the proposal for transferring the cases of the respective petitioners viz., DMK Charitable Trust & DMK Party only on 13.01.2021, when the Legislative Assembly Election for Tamilnadu was conducted during April - May 2021 since the DMK Party (petitioner in W.P.No.2102 of 2021) had a bright prospects of winning in the Legislative Assembly Election 2021. 37. The learned Senior Counsel for the petitioner has placed reliance on the following decisions:- (i) Shivajirao Angre Vs. Commissioner of Income-Tax reported in (1986) 158 ITR 162 (ii) Global Energy Private Limited Vs. ....
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....absent in the present case and cannot be equated that there is no disagreement. The file pertaining to the centralization has been produced before this Court by the learned counsel for the respondents. It can be seen that there is no recording of agreement between the two officers on the file. 40. It is submitted that the facts and legal precedents discussed above establishes that the impugned transfer order under Section 127 of the IT Act is legally untenable. The transfer was executed in blatant violation of the mandatory procedural safeguards, including the requirement to provide the petitioners with a reasonable opportunity of being heard and the necessity of recording specific, valid and legally justifiable reasons. The vague and unsubstantiated justification of "coordinated investigation" fails to meet the statutory and judicially established standards for a valid transfer of jurisdiction. 41. Furthermore, the timing of the transfer, just before the Tamil Nadu State Elections coupled with transfer order issued in connection with search and seizure operation conducted nearly before 2 years and the repeated issuance of notices despite the pending judicial challenge, indic....
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....for the DMK Charitable Trust, assessment for the Assessment Year 2018-2019 alone was pending. After Centralisation for the DMK Charitable Trust, one notice under Section 142(1) for the Assessment Year 2018-2019 was issued on 26.02.2021 with respect to basic details of the Trust for the Assessment Proceedings. A Reminder Notice was also issued on 04.03.2021. 48. It is submitted by the learned Additional Solicitor General that the contention of the Petitioner that 2nd Respondent DGIT (Investigation) has jurisdiction only in carrying out search and seizure operations and monitoring assessments in Central Circles. It is highlighted that in consequence of search and seizure conducted if it is found necessary to investigate any associated entity of the search person as the entity may have a bearing on the details found in the search, the jurisdiction of such entity also can be centralised for coordinated investigation. 49. It is submitted by the learned Additional Solicitor General that the averment of the petitioner that rights and protection of the petitioner to be assessed by Faceless Assessment has been violated is not logical or factually correct. It is to be stressed that jur....
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.... (iv) Advantage Strategic Consulting (P) Ltd. Vs. Principal Commissioner of Income Tax, Chennai reported in (2021) 430 ITR 1 (Madras) DB (v) J.R.Tantia Charitable Trust Vs. Deputy Commissioner of Income-tax, Central Circle Bikaner reported in (2013) 355 ITR 226 (Rajasthan) (vi) MRL Posnet (P) Ltd. Vs. Principal Commissioner of Income- Tax, Chennai reported in (2019) 418 ITR 349 (Madras) (vii) S.L.Singhania Vs. Assistant Commissioner of Income-Tax / Wealth-tax reported in (1992) 193 ITR 275 (Delhi) (viii) Inlott E Gaming Services (P) Ltd. Vs. Principal Commissioner of Income-Tax reported in (2024) 168 taxmann.com 696 (Madras) 53. I have considered the arguments advanced by the learned Senior Counsel for the petitioners as well as the learned Additional Solicitor General and learned Senior Standing Counsel for the respondents. 54. In Vijayasanthi Investments Pvt. Ltd. Vs. Chief Commissioner of Income-Tax & Ors. reported in (1990) SCC Online AP 382, the Andhra Pradesh High Court held that the reasons cannot be vague and too general in nature but must be specific and based on material facts. Further, it is submitted that Section 127 of the IT ....
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....oner, the commissioner from whose jurisdiction the case is being transferred has to record reasons and give reasonable opportunity. However, in the present case neither such reasonable opportunity was provided nor reason were recorded despite the assessing office are not subordinate to same commissioner. 58. In M/s.Ajantha Industries & Ors. Vs. Central Board of Direct Taxes, New Delhi & Ors. reported in (1976) 1 SCC 1001, the Hon'ble Supreme Court held as follows:- "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 or 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 is mala fide or arbitrary or that it is based on irrelevant and extraneous considerations. Whether such a writ or special leave application ultimately fails is not relevant for a decision of the question. 11. We are clearly of opinion that the requirement of recording reasons under Section 127(1) is a mandatory direct....
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.... Number (PAN). The expression "person" has been defined in Section 2(31) of the IT Act. Section 2(31) of the IT Act defines the term "person" to include: (i) An Individual (ii) A Hindu Undivided Family (HUF) (iii) A Company (iv) A Firm (v)An Association of Persons (AOP) or a Body of individuals (BOI), whether incorporated or not. (vi) A Local Authority (vii) Every Artificial Juridical Person (AJP) not falling under any of the above categories. 63. Though, really not relevant, it will be still useful to refer to the manner in which the 10 Digit PAN numbers are allocated. Permanent Account Number (PAN) is a 10 Alphanumeric identifier. 64. Each character in PAN has its own meaning. The first five characters are alphabets. Next four characters are numbers and the last character is again an alphabet. They are as follows: (i) First 3 characters: Alphabetic series (random) (ii) 4th character : Type of PAN holder (as above) (iii) 5th character : First letter of surname (for individuals) or name of entity (iv) Next 4 characters : Numeric (0001 to 9999) (v) Last character : Alpha....
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....AATD0567F 71. The status of the respective petitioners as a "Trust" and "Body of Persons" can be discerned from the alphabets 'T' and 'B' in the above mentioned PAN Numbers. 72. There was however no clear explanation as to why the DMK Charitable Trust which is registered as a "Trust" would also get itself separately registered as a "Body of Person" and have a dual identity for the purpose of IT Act. 73. Therefore, while hearing the case, I did quiz the respective Senior Counsels as to why a Trust which runs a Political Party would obtain separate PAN for its Political party. 74. I could only surmise this position from a reading of the scheme of the IT Act. The only explanation that is plausible for the dual PAN and dual identity is the presence of Section 13A of the IT Act. As a political party, DMK Party (the petitioner in W.P.No.2102 of 2021) enjoys certain privilege under the IT Act. 75. Section 13A of the IT Act has given 100% exemption to political parties on their income from house property, income from other sources, capital gains and voluntary contributions received from any person subject to conditions. 76. Under Section 13A of the IT Act,....
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....ssioner or Chief Commissioner or Principal Commissioner or Commissioner as the Board may, by notification in the Official Gazette, authorise in this behalf. 83. At the same time, the arguments of the learned Senior Counsel for petitioners that General Secretary of petitioner in W.P.No.2102 of 2021 and Permanent Trustee of petitioner in W.P.Nos.2089 & 6711 of 2021 are independent, merits consideration since the individuals who have joined together to run the DMK Party and DMK Charitable Trust have obtained separate PAN numbers under the IT Act as Body of Person in terms of Section 13A of the IT Act. 84. The reasons given in the Impugned Orders passed under Section 127 of the IT Act that under the guise of coordinated investigation pursuant to the search and seizure operations conducted at the premises of Mr.D.Duraimuguran (General Secretary of petitioner in W.P.No.2102 of 2021 and Permanent Trustee of petitioner in W.P.Nos.2089 & 6711 of 2021) on 30.03.2019 & 01.04.2019 have to be revisited afresh in the light of the fact that the members of the petitioner Trust in W.P.Nos.2089 & 6711 of 2021 are the members of the petitioner in W.P.No.2102 of 2021 is not sufficient. 85. Se....
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....Chief Commissioner or Principal Commissioner or Commissioner as the Board may, by notification in the Official Gazette, authorise in this behalf. 87. Sub-section (1) and sub-section (2) to Section 127 of the IT Act are the substantive provisions. They also contemplate the procedures to be followed by the Officers named therein namely Principal Director General or Director General or Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner. 88. Therefore, the requirements of sub-section (1) to Section 127 of the IT Act to that extent has applied to the facts of the case. Technically, the respective petitioners are not entitled to any opportunity of being heard as is contemplated either under sub-section (1) or sub-section (2) to Section 127 of the IT Act as the transfer is within the city. 89. Sub-section (1) to Section 127 of the IT Act applies to a situation where transfer is to be made from one or more Assessing Officers subordinate to the Principal Director General or Director General or Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner or transfer to any Assessing Officer or Assessing Office....
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....Director General of Income Tax (Investigations). 95. The 5th respondent namely the Income Tax Officer (Exemptions) in W.P.Nos.2089 & 6711 of 2021 (DMK Charitable Trust) and the 5th respondent namely the Deputy Commissioner of Income Tax (Exemptions) in W.P.No.2102 of 2021 (DMK Party) are subordinate to the 3rd respondent namely the Commissioner of Income Tax (Exemptions) in all the Writ Petitions. 96. There are also indications that pursuant to Representation dated 13.01.2021 of the Assistant Commissioner of Income Tax, Central Circle - 1 (3), Chennai 4th respondent in W.P.Nos.2089 and 2102 of 2021/6th respondent in W.P.No.6711 of 2021 is subordinate to the 2nd respondent Director General of Income Tax (Investigations) in all the Writ Petitions. 97. It was he who made a request for transferring of cases. Pursuant to the aforesaid representation dated 13.01.2021, the Director General of Income Tax (Investigations) the 2nd respondent in all the Writ Petitions has requested the 3rd respondent Commissioner of Income Tax (Exemptions), Chennai in all the Writ Petitions for transferring the cases of the respective petitioners to the Assistant Commissioner of Income Tax, Central C....