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TMI Blog2006 (2) TMI 94X X X X Extracts X X X X X X X X Extracts X X X X ..... e competent authority under the Income-tax Act, 1961 (called "the Act"). The Commissioner of Income-tax-I, Kanpur, vide impugned order dated January 23, 2004, exercising powers under section 127(2) of the Act, transferred the assessment cases of the petitioners (particulars given in the schedule contained in the impugned order itself) from Kanpur to New Delhi. Being aggrieved the petitioners have filed the present writ petition claiming writ, order or direction in the nature of certiorari to quash the impugned order of transfer dated January 23, 2004, and also a writ, order or direction in the nature of mandamus to restrain the Assistant Commissioner of Income-tax, Central Circle-9, Range-4, New Delhi/respondent No. 2 from proceeding with the case in pursuance of its notice under section 153A of the Act dated March 1, 2004. Initially, the said Commissioner of Income-tax-I, Kanpur, served notices dated January 9, 2004/annexure 1 to the writ petition upon the petitioners to submit explanation, filed collectively as annexure 1 to the writ petition. The relevant extract of the aforesaid notices dated January 9, 2004, for convenience is reproduced below: "Sub: Transfer of your rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... suppliers of raw material including packing materials; it is disclosed as to how the petitioners are inter-related and that the different petitioners were, in fact, managing and carrying on business in different business names (collectively called the Shikhar Gutkha group). In para. 3(d) of the counter affidavit it is stated that during the course of search, cash of Rs. 5.5 crores was admittedly recovered at the Delhi premises belonging to Pradeep Kumar Agrawal who stated on July 3, 2003 (re. search on July 2, 2003), on oath under section 132 that the said cash belonged to his father who was involved in speculation business. In para. 9 of the said counter affidavit it was again pleaded that the notice was issued under section 127(2)(a) of the Act giving opportunity of hearing to the concerned and that the notice itself mentioned that the cases were transferred with an object of centralisation of cases relating to Shikhar Gutkha group of the petitioners. Then again in para. 14 of the counter affidavit it is highlighted that there were contradictory statements made by different parties belonging to the Shikhar Gutkha group: Pradeep Kumar Agrawal, was resident of D-8, Preet Vihar, Ne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reflected in the impugned order does not vitiate the said order of transfer inasmuch as the order dated January 9, 2004/annexure 1 to the petition issued by the Commissioner of Income-tax, Kanpur, addressed to the petitioner clearly refers to the search and seizure operation conducted on July 2, 2003, in the Shikhar Gutkha group of cases informing that all cases were required to be transferred to New Delhi and for that purpose the petitioners were required to attend the office of the Commissioner of Income-tax-I, Kanpur, along with their explanation, if any. It is also pointed out that the petitioners in their reply dated January 16, 2004, admitted that the search was conducted on July 2, 2003, at the business offices, factories and residence situate in Kanpur and also on other establishments of the petitioner at Delhi; the petitioners-as individual, Hindu undivided family or the partner/directors of the firms and companies relating to them were closely related and one of them Pradeep Agrawal, was doing business and residing at Delhi; that sixteen cases out of 26 cases of this group were already assessed at Delhi; it was expedient for proper coordinated investigation to transfer t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om the usual place of residence or office where ordinarily assessments are made to a distant area, a great deal of inconvenience and even monetary loss is involved. That is the reason why before making an order of transfer the Legislature has ordinarily imposed the requirement of a show-cause notice and also recording of reasons. The question then arises whether the reasons are at all required to be communicated to the assessee. It is submitted, on behalf of the Revenue, that the very fact that reasons are recorded in the file, although these are not communicated to the assessee, fully meets the requirements of section 127(1). We are unable to accept this submission. 10. The reason for recording of reasons in the order and making these reasons known to the assessee is to enable an opportunity to the assessee to approach the High Court under its writ jurisdiction under article 226 of the Constitution or even this court under article 136 of the Constitution in an appropriate case for challenging the order, inter alia, either on the ground that it is mala fide or arbitrary or that it is based on irrelevant and extraneous considerations. Whether such a writ or special leave applicati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... td. v. Asst. CIT [1991] 187 ITR 403 and the apex court judgment in the case of Ajantha Industries [1976] 102 ITR 281, it held that no reasons whatever were mentioned in the order transferring the cases. The Division Bench in the case of Bansal Sharevests Services Ltd. [2006] 283 ITR 332 (All) referring to the case of Mohinder Singh Gill v. Chief Election Commissioner, AIR 1978 SC 851 observed "the apex court has held that when a statutory functionary makes an order based on certain grounds, its validity must be judged by the reasons so mentioned and cannot be supplemented by fresh reasons in the shape of affidavit or otherwise. Otherwise an order bad in the beginning may, by the time it comes to court on account of a challenge, get validated by additional grounds later brought out. As in the impugned order, no mention has been made to circular No 225 dated September 20, 2001, and the various objections raised by the petitioner had not been dealt with, the impugned order cannot be sustained ..." In view of the settled proposition of law declared by the apex court and this court, the reasons must be incorporated in the order of transfer itself. It is to be appreciated that the stat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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