9911796707
TMI Blog2019 (5) TMI 782X X X X Extracts X X X X X X X X Extracts X X X X ..... ompany acquired all the equity shares of a Company by name, M/s. Dhananjaya Hotels Private Limited, incorporated in the year 1977 at Hyderabad and changed the name to M/s. Soma Enterprise Private Limited. In June, 1997, the petitioner was converted into a Public Limited Company. The Registered office of the petitioner was shifted from Hyderabad to Pune on 26.03.1998. 4. According to the petitioner, they are carrying on the business of execution of infrastructure works in various regions of the Country and their registered office is at Pune. According to the petitioner, they located their registered office in the State of Maharashtra only for the purpose of becoming eligible to bid for infrastructure projects in the State of Maharashtra, as mandated by the local State Government, but their Corporate Office continued to be in Hyderabad. It is the case of the petitioner that they just have six employees in the registered office at Pune out of whom, two are Site Accounts Managers, one is a Material Manager, another a Regional H.R. Manager and the remaining two take care of filing Tenders. In contrast, the petitioner has 80 employees in their Corporate Office at Hyderabad. 5. Ever s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dicate that almost all share-holders and Directors of the petitioner are partners of M/s. Maganti Constructions; (g) that investigation revealed that ABIL Group of entities did not execute any infrastructure projects, as they did not possess the domain expertise; (h) that Shri Avinash Bhosale, founder and promoter of ABIL Group of entities was holding approximately 13% of the equity shares of the petitioner till 2007-08 and thereafter he became the joint Managing Director of the petitioner till 2010; (i) that his son, Amit Bhosale was also a Director of the petitioner till 2013; and (j) that the members of the same family which hold shares of the petitioner, are also the partners in M/s. Maganti Constructions. 8. It appears that a search action was undertaken under Section 132 of the Act, 1961, on 24.07.2017 at Pune in the premises of one Avinash Bhosale and others and in the offices of some companies, viz., ABIL Infra Projects Limited and M/s. Splendor Developers Private Limited. According to the petitioner, the search conducted at Pune on 24.07.2017 did not lead to any incriminating material found against the petitioner. According to the petitioner, the proportion o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... completion of the investigation, the petitioner can always seek re-transfer of his file to the jurisdictional Commissioner. 11. In response to the averments contained in the counter affidavit, the petitioner has filed a rejoinder. The rejoinder primarily seeks to answer the allegations of; (i) suppression of material facts; (ii) requirement under the Income Tax Act, 1961 to maintain the books of accounts in the place where the registered office of the company is situate; (iii) inflation of expenses; (iv) stripping off profits; and (v) the probable delay in completion of investigation if multiple authorities are involved; 12. We have carefully recorded the pleadings as well as the contentions raised on both sides. We do not think that it is necessary to shift our focus to certain ancillary contentions, such as suppression of material facts, inflation of expenses, requirement under the 1961 Act to maintain the books of accounts in the place where the registered office is located etc. The main focus in the case on hand should only be on the scope of Section 127 of the Act, 1961 vis-à-vis the jurisdiction of this Court. 13. As pointed out by a Bench of this Court in its d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cate any reason. The show-cause notice, dated 21.11.2017, merely stated that the petitioner may file their objections against the centralization of their case. No reasons were indicated in the show-cause notice, dated 21.11.2107. 16. But, it is not as though the petitioner did not understand the reasons behind the show-cause notice. Though the show-cause notice merely called upon the petitioner to file their objections on the proposal for centralization, without furnishing any reasons, the petitioner gave a very detailed reply on 06.07.2017 objecting to the proposal and even explaining the background in which the proposal had emanated. It is needless to point out that the object of providing reasons in the show-cause notice is to enable the Noticee to formulate their objections point-wise. But, in cases where the noticee had understood the reasons and given an elaborate response, the objection relating to lack of reasons pales into insignificance. 17. We may also look at it from another angle. If the petitioner was really aggrieved by a one-line show-cause notice which did not indicate any reasons for the proposal; the petitioner could have given a one-line reply demanding the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ainst the petitioner was found in the search conducted in ABIL Group of Companies in July, 2017, it is not fair to order centralization at Mumbai, especially when the Corporate office of the petitioner is in Hyderabad, and such centralization to Mumbai would cause serious financial, managerial and logistic stress. 22. It is true that centralization and transfer would result in some kind of hardship to every Assessee. But, the hardship is unavoidable. The only safeguard statutorily provided against such transfers is that there should be reasons recorded and that the transfer must be preceded by an opportunity of hearing. Once the statutory requirements are complied with, the question of hardship cannot take the front seat. 23. In any case, we do not think that this argument is available to the petitioner. Even as per the affidavit filed by the petitioner (paragraph No.3 of the affidavit), they originally had their registered office at Hyderabad and they shifted the same to Pune just for the purpose of becoming eligible to bid for infrastructure projects in the State of Maharashtra. An Assessee who faces no hardship in shifting their registered office to another State just for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d order and the same was not even supported by any material. But, in the case on hand, the requirements for coordinated and effective investigation are justified by various facts mentioned in the impugned order. They include the back to back contracts, the share holding pattern etc. Therefore, the petitioner cannot pick up one statement in the impugned order that summarized the position and attack the same as bald and vague. 28. In the next decision in Saptagiri Enterprises v. Commissioner of Income-Tax and othersrelied upon by Dr. C.P. Ramaswami, learned counsel for the petitioner, this Court followed the decision in Vijayasanthi Investments Private Limitedand held that the phraseology "coordinated investigation" would not convey any intelligible reason, from the Assessee's point of view. 29. But, as we have pointed out earlier, the phraseology "coordinated and effective investigation" is not used in the impugned order as a mantra. The background facts commencing from the search conducted in ABIL Group of Companies in July, 2017, the nexus between the Promoters and Directors of the ABIL Group of Companies and the Promoters of the petitioner, the back to back contracts that led ..... X X X X Extracts X X X X X X X X Extracts X X X X
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