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TMI Blog2011 (2) TMI 1242X X X X Extracts X X X X X X X X Extracts X X X X ..... a (Orissa). Facts being common to the controversy raised in instant bunch of petitions are being taken note out of CWP-13411/2010 (KJS Ahluwalia v. Union of India and Ors). The petitioners are regular income tax assessees having held their Permanent Account Numbers (PAN) and got their income tax assessments made every year on having filed IT returns in the office of Dy. Commissioner of Income-tax Circle-II, Jaipur and indisputably they are members of Ahluwalia group. It has come on record that a search and seizure operation u/s 132 of IT Act was carried out in Ahluwalia group including their assets on 12/11/2009 by investigation wing of IT Department at Bhubneshwar - during which, as alleged, they made a disclosure of Rs.150 Crores of concealed income. It was alleged that there were evasion of income tax by Ahluwalia Group and to ensure co-ordination and co-operation in proper investigations of evasion of income tax, it was proposed to centralize cases of Ahluwalia group vide letter dt. 08/12/2009 (Ann.R/1) whereby request of centralization was made by Addl. Director of Income-tax (Inv.) Unit-1, Bhubneshwar to the Chief Commissioner of IT Bhubneshwar -pursuant to wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, is a proprietary Firm and at the same time, KJS Ahluwalia (CWP-13411/2010) is also one of the working Directors of M/s Kamal Sponge Power and Steel Ltd-CWP-13272/2010. As regards petitioner-assessees (M/s Kaype Enterprises-CWP-13277/2010, Indu Ahluwalia-CWP-13280/2010, Prashant Ahluwalia-CWP-13299/2010 and Pawan Ahluwalia-CWP-13303/2010), KJS Ahluwalia might be representing their cases, as alleged by respondents but they all are individual assessees and nothing has been placed on record that these assessees at any point of time had authorized KJS Ahluwalia to represent or having executed any power of attorney for acting on their behalf to deal with IT cases regarding transfer of their assessments before the assessing officers or the Department of IT. Counsel for petitioners submits that show-cause notice served upon individual petitioner (KJS Ahluwalia) was completely laconic and does not disclose reasons/justification for which the Department of IT took decision to transfer their IT cases from Jaipur to Rourkela - in absence whereof, opportunity to submit objection pursuant to impugned notice served as required u/s 127(2) of IT Act has been denied and their action is in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t cases, individual notice has not been served upon these four petitioners, and their right of audience which is a cardinal principle of administrative law that no one should be condemned un-heard, has been violated and transferring their IT cases, has certainly caused prejudice and such action of respondents is also in violation of S. 127(2) of IT Act. Counsel lastly urged that in the facts (supra), very process initiated by the authority from whose jurisdiction, cases are to be transferred and serving him a notice before passing final order in the facts of instant case was completely farce and in fact the decision impugned was taken by the higher authority to transfer the cases and the authority competent i.e. Commissioner in the instant case has not applied his independent mind while examining the objections raised by KJS Ahluwalia; thus in the facts of instant case, valuable right of petitioners submitting individual defence for being examined by the authority has become an empty formality and the decision communicated to the petitioner (KJS Ahluwalia) deserves to be set aside. Respondents have filed reply to the writ petition and it has been inter alia averred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion cases were to be transferred, and after being satisfied, order was passed transferring the IT cases. Counsel for the Revenue further submits that compliance of statute provided u/s 127(2) has been made and it is not the fundamental right of the assessee to be assessed at any particular place of having their principal place of business which has no nexus so far in regard to invoking powers u/s 127 of IT and the venue for assessment has to be governed by statute. Counsel submits that once the decision has been taken by competent authority to exercise powers in the interest of the Revenue and for proper adjudication of tax liability and collection whereof, action cannot be said to be arbitrary which may call for interference more so when the mandate of S. 127(2)(a) has been complied with by the authority in its true spirit and the action being in conformity with law, it does not call for interference in limited scope of judicial review u/Art.226 of the Constitution. This Court has considered rival contentions advanced at the Bar and with their assistance, examined the material on record. Before dealing with contentions raised, it has been considered appropriate to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 127 as envisaged confers power to transfer cases of an assessee at the discretion of competent authority that it is necessary to do so after affording a reasonable opportunity of hearing and record of reasons for doing so. However, such discretion is not guided nor controlled by provisions of S.124 which defines jurisdiction in normal circumstances while S.127 is attracted only when it is felt by the Commissioner or the Central Board of Direct Taxes or the authority competent and is a sequel to the aforesaid principle if the authority comes to the conclusion that it is in the interest of the Revenue or for proper adjudication of tax liability or collection thereof, then transferring IT case of an assessee can be ordered for facilitating the task of effective investigation and for best and co-ordinated assessment. However, it goes without saying that discretionary powers vested u/s 127(2) has to be exercised keeping in mind the in-built restraint that such an action should not be taken arbitrarily or for any extraneous reason or with malice but only with a view to get correct assessment of tax being computed wherein by and large, paramount considerations to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 318) ITR 299), had an occasion to examine scope of order passed by the authority in exercise of powers u/s 127(2) of IT Act and taking note of earlier judgments of Apex court and also of various High Court and it has been observed ad infra:- "In this conspectus and analysis of the law it will be relevant to note that - firstly there is no fundamental right of an assessee to be assessed at a particular place, under section 124 the assessment must be carried out at the principal place of business but when powers under section 127 are invoked, territorial nexus becomes irrelevant. Secondly, the determination of the venue of the assessment would be governed by the greatest effectivity for collection of taxes. Thirdly, the decision to transfer cases cannot be capricious or mala fide. If the venue is changed from year to year, or periodically for no apparent reason, it would not manifest an instance of exercise of power which is not available, but an example of an abuse of power in the manner in which it is exercised. Fourthly, whilst the convenience of the assessee should be kept in mind, it would always be subservient to the interests of adjudication and collection of taxes." ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n view of the above nature of discrepancies the physical inspection of mines and enquiries from various parties in whose name the expenses specifically "Removal of Rejects" have been books, would be required to be verified by assessing officer and it would be extremely difficult for assessing officer at Jaipur to conduct such enquiries/inspection. (e) Further statements of key employees of Ahluwalia group in Orissa located in Orissa have been recorded during the investigation which will have immense importance in the assessment proceedings. The Assessing Officer may require to re-examine or allow cross examination of the same persons during the assessment stage and in that event, it would be highly disadvantageous for the A.O. at Jaipur due to jurisdiction constraints. Further the Assessing officer at Jaipur cannot personally examine on oath the key witness in the case under section 131 of the IT Act due to lack of jurisdiction beyond the limits envisaged in the Code of Civil Procedure Act, 1908. The same difficulty may arise if it becomes imperative to examine other local persons who have aided in the tax evasion scheme, thus hampering the progress of investigation which u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... their IT cases from Jaipur to Rourkela. Whereas the defence of respondents authority that Kamlajeet S. Ahluwalia was always representing all the assessees; as such no individual notice to the assessees was required to be served. In the opinion of this Court, in absence of material on record about authorizing Kamaljeet S. Ahluwalia to represent on behalf of other assessees named supra; or holding power of attorney on their behalf and they being individual assessees, their rights are seriously prejudiced in the absence of notice being individually served and opportunity of hearing being afforded to each of them, which is a mandate of law u/s 127(2) of IT Act, the very order impugned regarding transfer of IT cases qua petitioners named (supra) is held to be not sustainable and deserves to be set aside. Consequently, CWP-13277/2010(M/s Kaypee Enterprises), CWP-13280/2010 (Indu Ahluwalia), CWP-13299/2010 (Prashant Ahluwalia) and CWP-13303/2010 (Pawan Ahluwalia) are allowed and impugned order dt. 26/09/2010 qua each of them is quashed and set aside; however it would not preclude the respondents, if advised, to initiate proceedings regarding transfer of their IT cases, acc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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