2024 (9) TMI 963 - HC - Income Tax

Transfer the case case to the Central Circle at Kolkata from Coimbatore - Whether the respondents have sufficient material for transfer of the case from Coimbatore to Central Circle, Kolkata? - replies filed by the petitioners, the petitioners 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. HELD THAT - The petitioners are 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 by the Kolkata Circle. Only the Kolkata Office Circle had seized some incriminating materials, which were directly linking the involvement of the petitioners 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 and non appearance of the petitioners for the personal hearing held on 02.01.2024, the Notification dated 25.04.2024 was issued, wherein it is stated that the case falls under the category of either 133A or 153A / 153C of the Income Tax Act having impounded materials or under FATCA / Benami or Black Money Act. As all the materials have been collected in Kolkata Office, the respondents, taking into consideration of the replies filed by the petitioners, 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 petitioners, connected with the search conducted with regard to Lottery business, it was closely linked with the assessment of the petitioners. No material to show that the respondents failed either to provide an opportunity of personal hearing 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. Thus, 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 different place, 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.

Summary

Issues Involved:
1. Whether the respondents have sufficient material for the 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.

Issue-Wise Detailed Analysis:

1. Sufficiency of Material for Transfer:
The petitioners argued that their registered office is in Coimbatore and they do not conduct any business in Kolkata. The respondents countered that incriminating documents were found during a search and seizure operation conducted on 12.10.2023 under Section 132 of the Income Tax Act by the Principal Director of Income Tax (Investigation), Kolkata. The documents seized were interconnected and affected the petitioners' assessment. The respondents proposed to centralize the petitioners' Income Tax files in Kolkata to facilitate a coordinated investigation. The court noted that the incriminating materials were found in Kolkata and were directly linked to the petitioners' business activities, justifying the transfer. Thus, the court found sufficient material for the transfer.

2. Opportunity for Filing a Reply and Personal Hearing:
The petitioners contended that their replies to the show cause notice were not considered and no opportunity for a personal hearing was provided. The respondents issued a show cause notice on 26.12.2023, requesting replies by 02.01.2024 and offering a personal hearing on the same date. The petitioners filed their replies on 27.12.2023 and 28.12.2023 but failed to appear for the personal hearing. The court found that the respondents had provided the opportunity for a reply and personal hearing, which the petitioners did not utilize. Thus, there was no violation of principles of natural justice.

Conclusion:
The court concluded that the transfer of the case from Coimbatore to Central Circle, Kolkata, was justified due to the incriminating materials found in Kolkata. The court also found that the respondents had provided adequate opportunities for the petitioners to file replies and attend a personal hearing. Consequently, the writ petitions were dismissed, and the court upheld the notification dated 25.04.2024 for the transfer of the case. The court also noted that no prejudice was caused to the petitioners due to the delay in receiving the notification. The case laws cited by the petitioners were deemed inapplicable to the present case.