2024 (9) TMI 372 - HC - Income Tax

Transfer u/s 127 - transfer of the case from Coimbatore to Central Circle, Kolkata - whether the respondents have sufficient material for transfer of the case from Coimbatore to Central Circle, Kolkata? - whether the respondents have provided an opportunity for filing a reply and for personal hearing? - HELD THAT - The petitioner expressed their personal difficulties citing the age factor, costs of litigation as well as they are having the registered office at Coimbatore and the availability of documents at Coimbatore, etc. Therefore, they made an objection for transferring the case to Central Circle, Kolkata. Petitioner is having their registered office at Coimbatore, but, they have a place of business directly or indirectly at Kolkata. Therefore, these are all the facts that have been known upon search and seizure conducted on 12.10.2023 by the Kolkata Circle. Only the Kolkata Office Circle had seized some incriminating materials, which were directly linking the involvement of the petitioner into the business of Lotteries, which was carried out within the jurisdiction of Kolkata Office Circle. Therefore, they have requested the Coimbatore Office Circle to transfer the cases to Kolkata. Thereafter, the show cause notice was issued and a reply was also filed. Taking into consideration of all these aspects, the Notification dated 17.05.2024 was issued. As all the materials have been collected in Kolkata Office, the respondents, taking into consideration of the reply filed by the petitioner, have decided to transfer the petitioners' case to Central Circle, Kolkata. Of course, in the present case, since the incriminating materials were found by the Kolkata Office against the petitioner, connected with the search conducted with regard to Lottery business, it was closely linked with the assessment of the petitioner. No material to show that the respondents failed either to provide an opportunity or sufficient materials to transfer the case from Coimbatore to Central Circle, Kolkata. Even if it is so, it will not alter in anyway the final decisions to transfer the cases to Calcutta Circle and it would not affect in any manner. Accordingly, Issue Nos. 1 and 2 answered. This Court is of the opinion that if any search was conducted based on the place of business of an Assessee, though the Registered Office is situated at Coimbatore, it will be appropriate to make the assessment through the Circle, where the incriminating materials have been seized based on the place of business of the Assessee, irrespective of situation of registered office. This is what happened in the present case - Section 127 also empowers under the circumstances of these nature, for transfer of cases from one place to other place. If the contention of the petitioner is accepted and allowed, the Coimbatore jurisdictional Officer will be directed to proceed with the assessment and it will be difficult for those officers to complete the assessment, since they neither have any material nor have any place of business within their jurisdiction. Hence, it would be appropriate to transfer the cases in the present matter, since the Kolkata Circle Officer have traced out and seized some incriminating material with regard to the involvement of the petitioner in the Lottery business for the evasion of taxes within their jurisdiction. Therefore, the respondent has rightly transferred the cases from Coimbatore jurisdiction to Kolkatta jurisdiction. Hence, not find any reasons to interfere with the notification dated 17.05.2024. In such case, the present writ petition is liable to be dismissed. No prejudice would be caused due to the present notification because no adverse order was passed except the transfer of the petitioner's case by the respondents from Coimbatore to Central Circle, Kolkata, and no show cause notice was issued for the purpose of making any assessment, whereby to affect the petitioners' interest.

Summary

Issues Involved:
1. Whether the respondents have sufficient material for transfer of the case from Coimbatore to Central Circle, Kolkata?
2. Whether the respondents have provided an opportunity for filing a reply and for personal hearing?

Detailed Analysis:

Issue 1: Sufficient Material for Transfer
The petitioner, with a registered office in Coimbatore, contested the transfer of their case to the Central Circle, Kolkata. The respondents conducted a search and seizure under Section 132 of the Income Tax Act on 12.10.2023, uncovering incriminating documents linked to the petitioner. These documents necessitated a coordinated investigation, prompting the proposal to centralize the case in Kolkata for effective assessment. The show cause notice detailed the necessity of analyzing the documents together, which could only be done at one location. The petitioner argued against the transfer, citing logistical and financial difficulties, and suggested centralizing the case in Coimbatore instead. However, the court found that the materials seized in Kolkata were directly linked to the petitioner's business activities there, justifying the transfer to Kolkata.

Issue 2: Opportunity for Filing a Reply and Personal Hearing
The petitioner claimed that their reply to the show cause notice was not considered and that they were denied a personal hearing, violating principles of natural justice as per Section 127(1) of the Income Tax Act. The respondents issued a show cause notice on 09.04.2024, to which the petitioner replied on 13.04.2024, expressing their objections. The court noted that the respondents had provided sufficient opportunity for the petitioner to file their reply. The petitioner's reply highlighted personal difficulties and the impracticality of transferring the case to Kolkata. Despite these objections, the court found that the respondents had considered the reply and decided to transfer the case based on the incriminating materials found in Kolkata.

Conclusion:
The court concluded that the respondents had sufficient material for the transfer and had provided the petitioner with an opportunity to file a reply. The transfer was deemed appropriate given the location of the incriminating materials and the necessity for a coordinated investigation. The court dismissed the writ petitions, stating that no prejudice would be caused by the transfer, and found no merit in the petitioner's arguments. The case laws cited by the petitioner were not applicable to the present case. Consequently, the writ petitions were dismissed with no order as to costs, and the connected miscellaneous petitions were closed.