9911796707
TMI Blog1999 (12) TMI 54X X X X Extracts X X X X X X X X Extracts X X X X ..... t received the same, is for "administrative convenience and coordinated investigation". However, no reason has been given in the orders passed by respondent No. 1 in the cases of Power Controls, Power Engineers and Smt. Savitri Suneja, petitioners Nos. 1, 2 and 5, respectively. Petitioner No. 1 is a proprietorship concern of one R. K. Suneja and was being assessed by the Assessing Officer Ward 10(1), New Delhi ; petitioner No. 2 is a partnership firm regularly assessed by the Assessing Officer Ward 10(1), New Delhi ; petitioner No. 3 is an incorporated company assessed by the Assessing Officer, Company Circle 26(2), New Delhi ; petitioner No. 4 is a Hindu undivided family of which the said R. K. Suneja is the karta and is assessed at Faridabad and petitioner No. 5, wife of R. K. Suneja, is a partner in petitioner No. 2 and is assessed by the Assessing Officer, Ward 10(1), New Delhi. Respondents Nos. 1 to 5 are, respectively, Commissioner of Income-tax, Delhi-VII, Commissioner of Income-tax, Delhi-I, Commissioner of Income-tax (Central), Ludhiana, Commissioner of Income-tax, Rohtak and Deputy Commissioner of Income-tax, Central Circle, Faridabad. The impugned orders were precede ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Sd.) (D. K. Sandila), Deputy Commissioner of Income-tax (Co-ordination), New Delhi. The petitioners filed replies to the show-cause notices objecting to the transfer of their cases mainly on the ground that three of the four main business entities, namely, Power Controls, Power Engineers, Diana Organics Private Limited and R. K. Associates (HUF), have their principal place of business at Delhi and are assessed at Delhi for the last ten years ; the proprietors/partners and directors of the said concerns were assessed in Delhi in their individual capacities ; the books of account were maintained and audited at Delhi ; all major bank accounts and credit limits were in Delhi and all books of account and the major assets were found and seized during the course of search at Delhi. It was, thus, pleaded that the transfer of cases to Faridabad will cause enormous hardship and difficulty to all the assessees and also defeat the purpose of coordinated investigation in the group cases. The Commissioners concerned, after considering the replies to the show-cause notices, passed the impugned orders transferring the cases of the petitioners along with some other cases on the abovesaid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order of transfer invalid. It is urged that mere communication of the alleged aforenoted reason does not meet the requirement of reasonable opportunity of being heard as it is only a communication of final decision. In support, reliance is placed on Ajantha Industries v. CBDT [1976] 102 ITR 281 (SC), Vijayasanthi Investments Pvt. Ltd. v. Chief CIT [1991] 187 ITR 405 (AP) and Saptagiri Enterprises v. CIT [1991] 189 ITR 705 (AP). On the facts, the objections taken in the reply to the show-cause notices have been reiterated. On the other hand, Mr. Pandey has contended that there has been sufficient compliance with the provisions of section 127 of the Act inasmuch as before the final orders of transfer were passed, the petitioners were made fully aware of the aforenoted reason for transfer, which was clearly understood by them and they filed whatever objections they had to the proposed transfer. Relying on S. L. Singhania v. Assistant CIT/WT [1992] 193 ITR 275 (Delhi), Sameer Leasing Co. Ltd. v. Chairman, CBDT [1990] 185 ITR 129 (Delhi), Bhatia Minerals v. CIT [1993] 200 ITR 591 (All) and Jharkhand Mukti Morcha v. CIT [1997] 225 ITR 284 (Patna), learned counsel has urged that "admini ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of petitioner No. 4, since the case is sought to be transferred from one ward to another in the same city, the provisions of sub-section (3) of section 127 are attracted, which does not provide for either recording of reasons for ordering transfer or communication of reasons to the assessee. The concept of natural justice in the form of reasonable opportunity of being heard and the requirement of recording of the reasons for making an order of transfer was introduced in the 1961 Act. Though, in the corresponding section 5(7A) of the Indian Income-tax Act, 1922, there was no provision for providing an opportunity of hearing to the affected party, but still the apex court in Pannalal Binjraj v. Union of India [1957] 31 ITR 565 (SC), emphasised the need for observing the principle of natural justice by granting an opportunity of hearing to the affected person and recording of reasons in the order of transfer to enable the assessee to appreciate the circumstances which make it necessary or desirable for the Commissioner etc., to transfer his case. It was observed that it would also help the court in determining the bona fides of an order passed if and when the same is challenged in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se to give a personal hearing. It is also necessary to mention in the notice the reasons for the proposed transfer so that the assessee could make an effective representation with reference to the reasons set out. It is not sufficient merely to say in the notice that the transfer is proposed 'to facilitate detailed and coordinated investigation'. The reasons cannot be vague and too general in nature but must be specific and based on material facts. It is again not merely sufficient to record the reasons in the file but it is also necessary to communicate the same to the affected party." Affirming the principle laid down in Vijayasanthi Investments' case [1991] 187 ITR 405 (AP), another Division Bench of the Andhra Pradesh High Court in Saptagiri Enterprises' case [1991] 189 ITR 705, held as follows: "Furnishing specific and intelligible reasons for the proposed transfer of the case is only a concomitant of the concept of reasonable opportunity enshrined in section 127(1) and (2). Unless the assessee knows the precise reasons for the transfer, he would be handicapped in putting forth his objections effectively. If a vague and omnibus ground such as the one mentioned in the show- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es from New Delhi to Faridabad were passed. From the three show-cause notices, reproduced above, it is evident that in the notices issued on January 21, 1999 and February 12/15, 1999, to R.K. Suneja and Associates and R. K. Suneja, respectively, requiring the notices to appear before the Commissioner/send their objections, if any, to the proposed transfer, there was no indication whatsoever of the reasons for the transfer. In the notice dated February 4, 1999, issued to Diana Organics Private Limited, though it states the reason for transfer, namely "for the sake of co-ordinated investigation" in the group cases, it does not spell out even briefly or remotedly any reason requiring coordinated investigation much less various reasons now mentioned in the counter affidavits filed on behalf of respondents Nos. 1, 2 and 5. Furthermore, even the orders of transfer passed by respondent No. 1 is a mere communication of transfer of the case of the assessee from one ward to another and it does not contain any reason. The order is merely a communication of the Deputy Commissioner of Income-tax, Head Quarters VIII, to petitioners Nos. 1, 2 and 5 informing them that the Commissioner has trans ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was no requirement of giving an opportunity to the assessee to be heard before the transfer is effected. In the case of Sameer Leasing Co. Ltd. [1990] 185 ITR 129 (Delhi), while holding that there is no reason why a properly co-ordinated investigation cannot be a ground for directing that the cases belonging to a group should be decided by a single Assessing Officer, it was noticed that in the order passed under section 127 of the Act it was mentioned that the authorisation under section 132 of the Act had been issued for search and seizure of the premises ; the officers of the Department were prevented from performing their duties and subjected to humiliation and severe physical injuries and the Assessing Officers and the staff at Muzaffarnagar were under constant threat and pressure of the assessees and were under fear that they would not be able to discharge their duties, which necessitated transfer of the cases from Muzaffarnagar to Meerut in public interest, which, as noticed above, is not the case here as no such indication appears in the impugned orders of transfer. Similarly, in the case of Jharkhand Mukti Morcha [1997] 225 ITR 284 (Patna), while upholding the transfer on t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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