AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2025 (12) TMI 1527
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....her subsequent dates, search and survey proceedings under Sections 132 and 133A of the 1961 Act were conducted by the Income Tax authorities at various premises of M/s Blue Ocean Beverages Private Limited, Panaji, Goa (for short - M/s Blue Ocean). Since M/s Aaroha Alcobev Distribution Private Limited, New Delhi (for short - M/s Aaroha) was found to be one of the main distributors of M/s Blue Ocean, the search and survey proceedings of M/s Blue Ocean led to survey proceedings under Section 133A of the 1961 Act at the premises of M/s Aaroha. On the basis of evidence found against the petitioner during the afore search and survey proceedings, the petitioner was issued summons dated 26.03.2025 by DCIT/ADIT (Investigation), Panaji under Section 131(1A) of the 1961 Act as per which the petitioner was required to attend the office of the DDIT/ADIT(Investigation), Panaji on 31.03.2025 at 2.30 PM to produce either personally or through an authorized representative his books of accounts and other documents specified in such notice. In pursuance to the said summons the petitioner appeared before the concerned Revenue Officer at Panaji. Thereafter, through notice dated 08.07.2025, issued under....
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....assed under Section 127(2) of the 1961 Act, was of the view that there was enough incriminating evidence found with regard to huge amounts of undisclosed cash received by the petitioner in the sale of M/s Queen Distillers to Gaurav Sharma which was interlinked with the inquiry being conducted against M/s Blue Ocean and its group companies with regard to manipulation of accounts/ fraud etc. Therefore, it was in public interest that all the matters, including that of the petitioner, be centralized at Panaji, Goa especially when both the revenue authorities at Goa and Chandigarh had also no objection to the same. On the issue of inconvenience and hardship it was observed that in these days of technological advancement the physical presence of the petitioner would not be normally required as these proceedings were mostly in digital form. The order dated 08.09.2025, passed by the PCIT, Chandigarh-I, is the subject matter of challenge through the instant petition at the petitioner's behest. SUBMISSIONS 4. Learned senior counsel appearing for the petitioner submitted that the search and seizure operations at the premises of M/s Blue Ocean at Goa had led to the survey operations at M/s ....
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.... appearing for the revenue submitted that search and survey proceedings undertaken under Section 132 and 133A of the 1961 Act at various premises of the M/s Blue Ocean group had led to survey proceedings under Section 133A against M/s Aaroha which was one of the main distributors of M/s Blue Ocean; in the course of survey proceedings against M/s Aaroha incriminating evidence in the form of WhatsApp chats between Lokesh Saran, Managing Director of M/s Aaroha and one Gaurav Sharma revealed undisclosed cash transactions of over Rs.10 crores between the petitioner and the said Gaurav Sharma in the sale of rights by the petitioner in M/s Queen Distillers to Gaurav Sharma; on being questioned by the revenue officials Lokesh Saran explained that he was fully aware that during the transaction of sale by the petitioner of his share in M/s Queen Distillers to Gaurav Sharma Rs.10 crores in cash was received by the petitioner; Lokesh Saran further stated that he was responsible for overseeing the execution of the sale-purchase agreement between the petitioner and Gaurav Sharma; even before such transaction had actually taken place, it was Lokesh Saran who had reviewed all relevant aspects with....
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....order issued under sub-section (1) or sub-section (2) of section 120, the Assessing Officer has been vested with jurisdiction over any area, within the limits of such area, he shall have jurisdiction- (a) in respect of any person carrying on a business or profession, if the place at which he carries on his business or profession is situate within the area, or where his business or profession is carried on in more places than one, if the principal place of his business or profession is situate within the area, and (b) in respect of any other person residing within the area." 11. Section 127 of the 1961 Act which grants the power to transfer cases from one assessing officer to another substituted Section 5(7A) of the Income Tax Act, 1922 (hereinafter referred to as the 1922 Act). Section 5(7A) of the 1922 Act reads as follows:- "The Commissioner of Income-tax may transfer any case from one Income-tax Officer subordinate to him to another, and the Central Board of Revenue may transfer any case from any one Income-tax Officer to another. Such transfer may be made at any stage of the proceedings, and shall not render necessary the reissue of any notice alre....
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....deemed to require any such opportunity to be given where the transfer is from any Assessing Officer or Assessing Officers (whether with or without concurrent jurisdiction) 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." 13. As per Section 124(1) of the 1961 Act, through passing of directions/or....
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....cedure; the power exercised under Section 5(7A) of the 1922 Act was for administrative convenience of the machinery set up for assessing incomes of the assessee which are chargeable to income tax; the power under Section 5(7A) was not to be exercised by the competent authority in a discriminatory manner; this power is exercised by higher officials and therefore, it cannot be easily assumed that the same has been exercised in a discriminatory fashion; the power to transfer the case of an assessee is guided and controlled by the purpose which is to be achieved by the Act itself i.e. the chargeable to income tax, assessment and collection thereof and is to be exercised for efficient collection of tax; wherever circumstances permitted, before any order of transfer under Section 5(7A) is made by the competent authority notice is required to be given to the affected party and thereafter reasons, however briefly, are to be supplied and that if there is any abuse of power by the competent authority in the transfer of the assessee's case it can always be remedied by appropriate action either under Article 226 or under Article 32 of the Indian Constitution and the same can be struck down if ....
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....rdinate to him to another and to the Central Board of Revenue to transfer any case from any one Income Tax Officer to another. This is the administrative machinery which is set up for assessing the incomes of the assessees which are chargeable to income tax. There is, therefore, considerable force in the contention which has been urged on behalf of the State that Section 5(7-A) is a provision for administrative convenience. 28. It may also be remembered that this power is vested not in minor officials but in top-ranking authorities like the Commissioner of Income Tax and the Central Board of Revenue who act on the information supplied to them by the Income Tax Officers concerned. This power is discretionary and not necessarily discriminatory and abuse of power cannot be easily assumed where the discretion is vested in such high officials. (Vide Matajog Dobey v. H.C. Bhari [Matajog Dobey v. H.C. Bhari, (1955) 2 SCC 388 : (1955) 2 SCR 925].) There is moreover a presumption that public officials will discharge their duties honestly and in accordance with the rules of law. (Vide People of the State of New York v. John E. Van De Carr [People of the State of New York v. John E. ....
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....onstrate that the order of transfer is an abuse of power vested in the authority concerned. This apprehension is, however, ill-founded. Though the burden of proving that there is an abuse of power lies on the assessee who challenges the order as discriminatory, such burden is not by way of proof to the hilt. There are instances where in the case of an accused person rebutting a presumption or proving an exception which will exonerate him from the liability for the offence with which he has been charged, the burden is held to be discharged by evidence satisfying the jury of the probability of that which the accused is called upon to establish (vide R. v. Carr-Briant [R. v. Carr-Briant, (1943) 1 KB 607 (CCA)]), or in the case of a detenue under the Preventive Detention Act seeking to make out a case of want of bona fides in the detaining authority, the burden of proof is held not to be one which requires proof to the hilt but such as will render the absence of bona fides reasonably probable (vide Ratanlal Gupta v. District Magistrate [Ratanlal Gupta v. District Magistrate, ILR 1951 Cut 441 at p. 459] ; also Brundaban Chandra Dhir Narendra v. State of Orissa [Brundaban Chandra Dhir Na....
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....o be achieved by the Act itself viz. the charge of income tax, the assessment and collection thereof, and is to be exercised for the more convenient and efficient collection of the tax. A wide discretion is given to the authorities concerned, for the achievement of that purpose, in the matter of the transfer of the cases of the assessees from one Income Tax Officer to another and it cannot be urged that such power which is vested in the authorities is discriminatory in its nature. 33. There is a broad distinction between discretion which has to be exercised with regard to a fundamental right guaranteed by the Constitution and some other right which is given by the statute. If the statute deals with a right which is not fundamental in character the statute can take it away but a fundamental right the statute cannot take away. Where, for example, a discretion is given in the matter of issuing licences for carrying on trade, profession or business or where restrictions are imposed on freedom of speech, etc. by the imposition of censorship, the discretion must be controlled by clear rules so as to come within the category of reasonable restrictions. Discretion of that nature m....
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....opportunity is given to the assessee in such case, it is all the more surprising to find that, when an order of transfer under Section 5(7-A) is made transferring the case of the assessee from one Income Tax Officer to another irrespective of the area or locality where he resides or carries on business, he should not be given such an opportunity. There is no presumption against the bona fides or the honesty of an assessee and normally the Income Tax Authorities would not be justified in refusing to an assessee a reasonable opportunity of representing his views when any order to the prejudice of the normal procedure laid down in Sections 64(1) and (2) of the Act is sought to be made against him, be it a transfer from one Income Tax Officer to another within the State or from an Income Tax Officer within the State to an Income Tax Officer without it, except of course where the very object of the transfer would be frustrated if notice was given to the party affected. If the reasons for making the order are reduced however briefly to writing it will also help the assessee in appreciating the circumstances which make it necessary or desirable for the Commissioner of Income Tax or the Ce....
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....s also relevant. Section 124 of the Act deals with the jurisdiction of Income Tax Officers. Section 124(3) provides that within the limits of the area assigned to him the Income Tax Officer shall have jurisdiction- (a) in respect of any person carrying on a business or profession, if the place at which he carries on his business or profession is situate within the area, or where his business or profession is carried on in more places than one, if the principal place of his 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 appe....
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....uthorised by Section 5(7-A) would take the case from the jurisdiction of an officer entitled to try it under Section 64(1) and (2) to another officer who may not have jurisdiction to try the case under the said provision. That, indeed, was the basis on which the validity of Section 5(7-A) was challenged. This Court, however, repelled the plea raised against the validity of the said section on the ground that the right conferred on the assessee by Sections 64(1) and (2) was not an 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. 8. Even so, this Court observed in the case of Pannalal Binjraj [(1957) SCR 233] that it would be better if an opportunity is given to the assessee in cases where the powers conferred by Section 5(7-A) were intended to be exercised, because he ....
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....There is no presumption against the bona fide or the honesty of an assessee and normally the Income Tax authorities would not be justified in refusing to an assessee a reasonable opportunity of representing his views when any order to the prejudice of the normal procedure laid down in Section 64(1) and (2) of the Act is sought to be made against him, be it a transfer from one Income Tax Officer to another within the State or from an Income Tax Officer within the State to an Income Tax Officer without it, except of course where the very object of the transfer would be frustrated if notice was given to the party affected. If the reasons for making the order are reduced however briefly to writing it will also help the assessee in appreciating the circumstances which make it necessary or desirable for the CIT or the Central Board of Revenue, as the case may be, to transfer his case under Section 5(7-A) of the Act and it will also help the court in determining the bona fides of the order as passed if and when the same is challenged in court as mala fide or discriminatory. It is to be hoped that the Income Tax authorities will observe the above procedure wherever feasible." 9. T....
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....nder Section 127(1) are held in that decision to be "purely administrative in nature" passed for consideration of convenience and no possible prejudice could be involved in the transfer. It was also held therein that under the proviso to Section 127(1) it was not necessary to give the appellant an opportunity to be heard and there was consequently no need to record reasons for the transfer. This decision is not of any assistance to the Revenue in the present case since that was a transfer from one Income Tax Officer to another Income Tax Officer in the same city, or, as stated in the judgment itself, "in the same locality" and the proviso to Section 127(1), therefore, applied. 15. When law requires reasons to be recorded in a particular order affecting prejudicially the interests of any person, who can challenge the order in court, it ceases to be a mere administrative order and the vice of violation of the principles of natural justice on account of omission to communicate the reasons is not expiated. 17. 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 wh....
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.... 127 of the 1961 Act or is mala fide or violates his fundamental rights, the Revenue could be called upon to justify its action and if such action is found to be mala fide or violating the assessee's fundamental rights or beyond the provision under which such power has been exercised, the same would be struck down. 20. The position would be different if the assessment jurisdiction of an assessee is transferred by the revenue authorities in the exercise of powers under Section 127(3) of the 1961 Act within the same city, locality or place. In such a situation, in terms of the law laid down by the Constitution Bench of the Supreme Court in Kashiram Agarwala's case (supra) such order of transfer would be only for convenience of the department with no possible prejudice to the assessee. Therefore, in such situation, neither any prior notice to the assessee would be necessary nor the requirement to record reasons for such transfer. 21. In the case in hand, which pertains to the transfer of the assessment jurisdiction of the petitioner from Chandigarh to Goa, no mala fides on the respondent's part have even been alleged. It further remains undisputed that before transferring the pe....
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....titioner's assessment jurisdiction from Chandigarh to Goa has been exercised by the revenue for its administrative convenience; to facilitate effective investigation and coordinated assessment; for efficient collection of tax and in public interest. Prior thereto, principles of natural justice were duly followed and that the transfer order also contains adequate and acceptable reasons. Therefore, in the exercise of our discretionary jurisdiction under Article 226 of the Indian Constitution, we are not inclined to interfere with the impugned order especially at the petitioner's behest who is suspected to be involved in dubious transactions and more so when it is the unrebutted case of the respondent revenue that in the present era of technological advancement, where the proceedings against the petitioner at Goa are normally going to take place digitally, he shall also not be put to much inconvenience and hardship. In any case, the petitioner's interest would be subservient to public interest. 26. Before we part with the judgment, it would be only be fair to deal with the two circulars of the CBDT dated 24.08.2009 and 11.02.2013 as also the judgments cited on the petitioner's beha....
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....he "specified person" for the purposes of this section) with respect to whom search was initiated under section 132 or requisition was made under section 132A, then any money, bullion, jewellery, virtual digital asset or other valuable article or thing or any books of account or other documents seized or requisitioned or any other material or information relating to the aforesaid undisclosed income shall be handed over to the Assessing Officer having jurisdiction over such other person and that Assessing Officer shall proceed under section 158BC against such other person and the provisions of this Chapter shall apply accordingly: Provided that,- (a) where there is one specified person relevant to such other person, the block period for such other person shall be the same as that for the specified person; and (b) where there is more than one specified persons relevant to such other person, the block period for such other persons shall be the same as that for the specified person in whose case the block period ends on a later date: Provided further that in case of such other person, for the purposes of abatement under sub-sections (2) and (3) of se....