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TMI Blog2016 (7) TMI 212X X X X Extracts X X X X X X X X Extracts X X X X ..... ent case, we find no such justification. Entire approach of the Principal Commissioner, was erroneous since he proceeded on an incorrect premise that the petitioner also was subjected to search operation. There being no further reliable material justifying such consolidation of cases, impugned order is set aside. - SPECIAL CIVIL APPLICATION NO. 1195 of 2016 - - - Dated:- 28-6-2016 - MR. AKIL KURESHI AND MR. A.J. SHASTRI, JJ. FOR THE PETITIONER : MR TUSHAR P HEMANI, ADVOCATE, MS VAIBHAVI K PARIKH, ADVOCATE FOR THE RESPONDENT : MR KM PARIKH, ADVOCATE ORAL JUDGMENT (PER : HONOURABLE MR.JUSTICE AKIL KURESHI) 1. The petitioner has challenged an order dated 09.12.2015 passed by the respondent-Principal Commissioner of Income-tax, transferring the assessment cases of the petitioner in exercise of powers under section 172(2) of the Income Tax Act, 1961 ('the Act' for short). 2. Brief facts are as under. 3. Petitioner is a company registered under the Companies Act and is engaged in the activity of manufacturing chemicals. The petitioner has two manufacturing units in Gujarat. A search and seizure operation was carried out by the investigation wing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... than Engineering Industries Ltd. group i.e. searched person. It is this order that the petitioner has challenged in this petition. 7. Taking us through the materials on record, learned counsel for the petitioner submitted that; I. No search action had been taken against the petitioner contrary to what has been recorded by the respondent in the impugned order. Entire order is thus based on factually incorrect premise. II. The CBDT's circular referred to in the impugned order is for consolidation of search cases and the reliance on such instructions by the respondent authority in the present case is wholly unjustified. III. Mere declaration that for effective and coordinate investigation it is necessary to consolidate cases is not sufficient for transfer of assessment proceedings without there being any material on record justifying the transfer. IV. No incriminating material was found from the premises of the petitioner during the survey operations and therefore also, transfer of the assessment was not permissible. V. The petitioner is a professionally managed company and has no connection with the searched person except for the two directors of both the comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Spectra C405/ 406, CASA Bella Goid, Kalyan Shil Road, Palav City, Dombivali, Mumbai, 421 203. The directors other than Mr.Nikunj Mehta are the nominees of the Investor Groups. The day to day operations of the Company are managed by Shri Nikunj Mehta (who is based at Bharuch and Mumbai) with the assistance of the other staff based at Bharuch. The Company is thus professionally managed and operates independently under the supervision of the Board. (ii) In the course of survey at the company's premises, no incriminating material or document was found except for certain discrepancies in the valuation of inventory amounting to ₹ 50,48,489/- . There was no record or material to indicate any transaction with the group concerns or the persons of the group which can be said to be incriminating so as to require centralization of the assessee's case at Kolkata and therefore it is not understood as to how the centralization of company's case to Kolkata is going to help in coordinated investigation. Thus, the company requests your kindself to provide the material/documents available with the Department to justify the centralization a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion with Hindusthan Engineering Industries Ltd. The reasons put forth for requesting not to centralize are observed to be general in nature and do not carry any forceful acceptable legal arguments. 8.2 With respect to point no.(ii) of the contention, it is to state that the statement that during the course of survey at the company's premises, no discriminating material or document was found except for certain discrepancies in the valuation of inventory and there was no record or material to indicate any transaction with the group concerns or the persons of the group which can be said to be incriminating so as to require centralization of the assessee's case at Kolkata, cannot be considered as it is not mandatory or a precondition that there has to be seizures of valuable or incriminating documents etc. for every action to follow actions u/s. 153A / 153C for the purpose of consideration of cases u/s. 127 of the I.T.Act. 8.3 Moreover, at this stage, for the purpose of actions u/s. 127(2) of the I.T.Act, it is too premature to arrive at any conclusive finding, for such a conclusion cannot be logically drawn at this moment stage, and it is neither the requireme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on given facts and circumstances. 12. From the perusal of the above quoted portion of the impugned order, it can be seen that the Principal Commissioner has proceeded on the footing that like the searched person, the petitioner is also subjected to search operations. In the preamble portion of the impugned order also after referring to the search operations in case of Hindusthan Engineering Industries Ltd. group i.e. searched person, he has mentioned that in this context, the search operations were carried out at the premises of the petitioner also. This admittedly is incorrect. The department now agrees that the petitioner was never subjected to search. The observations and conclusions of the Principal Commissioner therefore, would have to be viewed in the background of this discrepancy. His reference to the CBDT circular would also have to be seen from this angle. In such circular it is provided inter alia; Instances have come to notice of the Board that Search cases are not being centralized promptly, thereby causing delay in initiation of the search assessment proceedings, deferment of payment of taxes and finally resulting in completion of search assessments at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Authorities to transfer assessment proceedings under section 127 of the Act. In the context of the reason of coordinate and effective investigation, the Court observed as under: 18. From the above it can be seen that there is cleavage of opinion between different Courts on the issue. Some of the Courts have taken a view that indication of reason of for effective and coordinated investigation or the like would not be sufficiently clear. If such reasons are indicated in the show cause notice, would not put the assessee to sufficient notice on the grounds on which the competent authority proposed to transfer the cases. Some Courts have held that such reasons for transferring the case would not be sufficient. On the other hand several Courts of the country have taken a view that such reasons are sufficient to permit transfer of cases. 19. We would therefore, like to express our opinion on the issue. 20. Section 127 of the Act, as already noticed, pertains to power to transfer cases. Subsection( 1) empowers the Director General, Chief Commissioner or the Commissioner after giving the assessee a reasonable opportunity of being heard wherever it is possible to do so and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ne hand and personal inconvenience on the other. However, as long as such powers are exercised bona fide, for public purpose and in the interest of Revenue, the role of the Court to dissect such reasons and to come to a different conclusion would be extremely limited. It is by now well settled that judicial review against the administrative order in exercise of writ jurisdiction, the Court is concerned with the decision making process and not the final decision itself. Unless the reasons which prompted the competent authority to transfer the case can be stated to be wholly irrelevant or arbitrary, the Court would not interfere with such reasons. Ofcourse an order of such nature can and need to be quashed if it is demonstrated that same is passed either without jurisdiction or is actuated by mala fide either in fact or in law. 26. We therefore side with the school of thought that the reason for effective and coordinate investigation for transfer of assessment cases is neither vague or ground not insufficient. Particularly in the present case when through show cause notice and during hearing of such notices, it was clearly brought to the notice of the assesses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Kolkata at this stage. The Revenue brings to our notice that before this order was passed, under communication dated 17.12.2015, the authority had transferred the case records of the petitioner for the assessment years 2014-15 and 201314 to the Deputy Commissioner of Income-tax, Central Circle 1(4), Kolkata. This communication should have been brought to the notice of the court by the petitioner itself. Had it been so done, surely the court would not have framed its interim directions in the manner noted above. Combined effect of these factors would be that on account of interim directions issued by the Court neither the petitioner's Assessing Officer at Bharuch, nor the assessing authority at Kolkata could proceed further with the assessment of the petitioners' returns for the assessment years 2014-15 and 2013-14. The question of limitation for completion of such assessments therefore, shall have to be seen from this angle. It is therefore, clarified that the effect of the interim order of the High Court and the pendency of the petition would be that from 25.01.2016 till the date when this petition is being disposed of, there was stay against the assessments of the pe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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