2006 (5) TMI 46 - HC - Income Tax

Transfer of case - Department transfer the case of assessee from Delhi to Chandigarh due to the reason of administrative problem but assessee can t agreed with the transfer - Held that transfer is valid

Summary

Issues Involved
1. Validity of the transfer of income-tax assessment proceedings from Delhi to Chandigarh.
2. Adequacy of reasons provided for the transfer.
3. Alleged violation of natural justice.
4. Procedural fairness in the transfer order.
5. Allegations of coercion in obtaining statements.
6. Communication of the transfer order to the petitioner.

Detailed Analysis

1. Validity of the Transfer of Income-Tax Assessment Proceedings from Delhi to Chandigarh
The primary issue is whether the transfer of the petitioner's income-tax assessment proceedings from Delhi to Chandigarh is valid. The petitioner contends that despite having a corporate office in Chandigarh, the assessments should continue in Delhi due to historical precedence and administrative convenience. The court examined the circumstances, including the fact that the corporate office and the majority of business operations are conducted from Chandigarh. The court found that the transfer was justified based on the statement of the managing director, who acknowledged that the entire business is run from Chandigarh.

2. Adequacy of Reasons Provided for the Transfer
The petitioner argued that the transfer order lacked detailed reasons and was a non-speaking order. The court referred to the statement of the managing director, which clearly indicated that the business operations are centered in Chandigarh. The court held that the reasons for the transfer, primarily "administrative convenience," were sufficiently communicated through the statement and subsequent actions. The court referenced the case of Ajantha Industries v. CBDT, emphasizing that recording and communicating reasons is mandatory, but found that this requirement was met in the present case.

3. Alleged Violation of Natural Justice
The petitioner claimed a violation of natural justice, arguing that they were not given a fair opportunity to contest the transfer. The court noted that the petitioner was issued a show-cause notice and their objections were considered before the transfer order was passed. The court cited Aligarh Muslim University v. Mansoor Ali Khan, stating that procedural fairness was maintained, and the petitioner was given adequate opportunity to present their case.

4. Procedural Fairness in the Transfer Order
The petitioner argued that the procedural fairness was lacking, as the statement of the managing director, which formed the basis of the transfer, was only provided after the court's direction. The court found that the reasons for the transfer were evident from the managing director's statement and were communicated in the counter-affidavit. The court referenced Ridge v. Baldwin, emphasizing that procedural fairness was maintained, and the transfer order was justified based on the available evidence.

5. Allegations of Coercion in Obtaining Statements
The petitioner alleged that the statements of the managing director and company secretary were obtained under duress. The court found no evidence to support this claim, noting that the managing director did not contest the statement immediately after it was recorded. The court dismissed the allegations of coercion as an afterthought and emphasized the importance of the managing director's statement in justifying the transfer.

6. Communication of the Transfer Order to the Petitioner
The petitioner argued that the transfer order was not properly communicated. The court found that the transfer order was passed on February 10, 2006, and communicated through various channels, including a letter from the Deputy Commissioner of Income-tax. The court noted that the petitioner acknowledged receiving the transfer order and related communications, thereby fulfilling the requirement of proper communication.

Conclusion
The court concluded that the transfer of the income-tax assessment proceedings from Delhi to Chandigarh was valid and justified based on administrative convenience and the centralization of business operations in Chandigarh. The court dismissed the petitioner's claims of inadequate reasons, violation of natural justice, procedural unfairness, and coercion. The writ petition was dismissed, and the transfer order was upheld.