2019 (12) TMI 920 - HC - Income Tax

Centralization of case - centralized for administrative requirement or other reasons - HELD THAT - In the present case, when the survey was conducted on 3.8.2016 a detailed questionnaire was put to the Chairman-cum-Managing Director of the petitioner, and the replies he had given to the questions clearly indicate that he was well aware of the reasons for which the exercise was being carried out. It is not a case where the assessee was left in the dark, not knowing what the reasons were for the centralization of its case. A perusal of the pleadings and the documents shown to us (in a sealed cover) reveal that the petitioners had full and complete knowledge of the reasons which had weighed with the competent authority while passing the order of centralization of the cases. The petitioners in the replication have also strangely not denied any of the averment made by the Revenue in the preliminary objections of their written statement. In fact, as rightly pointed out by counsel for the Revenue, totally vague and evasive replies have been given to paragraph No.2 of the written statement and there is no categoric denial to the averment that the petitioners were connected in some manner to the Augusta Westland case and to the Gautam Khaitan Group of companies. In our considered opinion, because of the possibility of the involvement of the assessee in a scam having international ramifications it may not have been possible for the Revenue department to have expressed or given more reasons than what were given in the impugned order and, in the facts of the present case this would be in the larger public interest; particularly when we find that the reasons were well knows to the petitioners.

Summary

Issues:
Challenge to transfer of assessment from one tax authority to another without providing reasons.

Analysis:
The petitioners challenged the transfer of their assessment from one tax authority to another without providing any reasons. The petitioners argued that the impugned order lacked transparency and failed to provide any justification for the transfer. They relied on various judgments emphasizing the importance of recording reasons in such orders. The Supreme Court's ruling in Ajanta Industries case highlighted the necessity of communicating reasons to the assessee, enabling them to challenge the order. The petitioners contended that a mere show-cause notice without disclosing reasons was insufficient. They also pointed out circulars issued by the Revenue department emphasizing the need to record reasons in such orders.

In response, the Revenue department justified the transfer by citing the petitioners' connections to certain groups under investigation for financial irregularities. The department mentioned the involvement of the petitioners in a high-profile scam with international implications. They argued that disclosing detailed reasons could compromise ongoing investigations and other related cases. The department provided a detailed list of connections between the petitioners and the groups under scrutiny. They also referred to a circular outlining categories of cases suitable for centralization, emphasizing the need for coordinated investigations in complex cases.

The court considered the arguments from both sides and examined the facts of the case. They found that the petitioners were well aware of the reasons for the transfer, as evidenced by their responses during the survey and subsequent communications. The court noted that the petitioners did not deny their connections to the groups under investigation, indicating their awareness of the situation. Given the international ramifications of the case and the sensitive nature of the investigations, the court concluded that disclosing more detailed reasons may not be in the public interest. Therefore, the court dismissed the petition, stating that it was not a suitable case for intervention under Article 226 of the Constitution.

In conclusion, the court upheld the transfer of assessment, considering the peculiar circumstances of the case and the petitioners' awareness of the reasons for the transfer. The judgment highlighted the balance between transparency in administrative decisions and the need for confidentiality in sensitive investigations.