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TMI Blog2020 (3) TMI 287X X X X Extracts X X X X X X X X Extracts X X X X ..... s subject to scrutiny / assessment every year and orders were passed under Section 143(3) of the Act. While so, the officials of the Income Tax Department came to the premises of the petitioner and effected search including the residence of his partners and his relatives on 25.10.2018 under Section 132 of the Act. 3.The proceeding under Section 132 of the Act was concluded against the petitioner without any incriminating materials being found against him. Later, the petitioner received a notice dated 28.01.2019 from the first respondent under Section 127(2) of the Act, proposing transfer of the petitioner's cases to the DCIT, Central Circle-2, Madurai. The petitioner was also directed to give his response and personal hearing was fixed on 12.02.2019. The petitioner has also sent a reply on 16.02.2019 seeking certain documents in order to enable him to file objections. However, the request of the petitioner was ignored, notifying the date of hearing as 18.02.2019. Though the petitioner insisted that the documents requested are vital for the petitioner to respond and make his objections, without even furnishing the documents sought for, the impugned order came to be passed. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o pre-determination on the part of the first respondent, as alleged by the petitioner. It is, thus, stated that since the procedure contemplated under the Act is followed properly, the writ petition is liable to be dismissed. 8. The second respondent in the counter dated 19.11.2019 has stated that after the search proceedings, the material seized were transferred to the "Central Circle", which were created exclusively for assessment of search cases, and the effective assessment would be made therein, based on the evidence collected during the search. The second respondent relied on the instructions issued by the Central Board of Direct Taxes in F.No.286/88/2008-IT (Inv.II), dated 17.09.2008, which lays down the procedure to transfer such search cases to the central circles for effective assessment. 9. The second respondent alleged that the undisclosed income of the petitioner group companies for Financial Years from 2011-12 to 2016-17 runs to tune of Rs. 2,262 Crores, as per the evidence unearthed during the search and it is one among the largest search in the recent past in the entire country. It is claimed that the petitioner was given opportunity to raise objections to the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ner relied on a decision of this court in MRL Postnet Private Ltd. V. Principal Commissioner of Income Tax, 2018 SCC OnLine Mad 11651. 14. The learned counsel for the petitioner further contended that the impugned order is vitiated for the reason that the assessee/the petitioner herein was given a reasonable opportunity of being heard in this matter and also for not recording reasons for such transfer. The learned counsel for the petitioner, in order to substantiate the said contention of not being heard and for not giving reasons for transfer, would draw the attention of the Court to the decisions of the Hon'ble Supreme Court in 1976 1 SCC 1001 [M/s.Ajantha Industries and others V. CBDT, New Delhi & Ors] and 1990 2 SCC 48 [Management of M/s.M.S.Nally Bharat Engineering Co.Ltd., V. State of Bihar and others]. 15. The learned counsel for the petitioner also contended that the assessee should be informed of the reason and the grounds for the proposal. If the reason for transfer is not communicated in the show cause notice, the opportunity will be illusionary and not an effective one. In support of the said contention he relied on the decision of the Division Bench of Andhra P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which was duly complied with by the respondents. 19. Heard the learned counsel appearing for the petitioner and the learned Standing Counsels for the Revenue and perused the materials available on record. 20. Before delving into the merits of the case, it is apt to reproduce Section 127(1) and (2) of the Act as hereunder : 127. Power to transfer cases - (1) The Director General or Chief Commissioner or Commissioner may, after giving the assessee a reasonable opportunity of being heard in the matter, wherever it is possible to do so, and after recording his reasons for doing so, transfer any case from one or more Assessing Officers subordinate to him (whether with or without concurrent jurisdiction) to any other Assessing Officer or Assessing Officers (whether with or without concurrent jurisdiction) also subordinate to him. (2) Where the Assessing Officer or Assessing Officers from whom the case is to be transferred and the Assessing Officer or Assessing Officers to whom the case is to be transferred are not subordinate to the same Director General or Chief Commissioner or Commissioner,- (a) where the Directors General or Chief Commissioners or Commissioners,. to whom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has to necessarily record his reasons with certain facts and circumstances warranting the transfer and to justify that centralised/coordinated investigation is required in a particular case. No doubt, the learned counsel for the respondents contended that since the reasons are clearly stated in the show cause notice, they need not be reiterated once again in the order rejecting the objections against transfer. I do not find any justification on such submission. If such view is accepted, then there would be no meaning or purpose in issuing the show cause notice. Needless to say that reasons stated in the show cause notice are only to be construed as a prima facie view of the Authority issuing such show cause notice and not as his conclusive view or finding in respect of the subject matter in issue. Therefore, any reason stated in the show cause notice is always subject to change or affirmation depending upon the consideration of the objection raised against the propose made in the show cause notice. Therefore, an order passed in pursuant to the show cause notice, should necessarily deal with the reasons stated in the show cause notice as well as the objections raised against those ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to another. Such transfer may be made at any stage of the proceedings, and shall not render necessary the re-issue of any notice already issued by the Income tax Officer from whom the case is transferred." 22.This Section did not provide for affording an opportunity to the assessee before transferring his case from one Income Tax Officer to another. The assessee challenged the constitutional validity of the Section. This Court upheld its validity on the ground that it is a provision for administrative convenience. N.H. Bhagwati, J., speaking for this Court, however remarked (at 589): " ..... it would be prudent if the principles of natural justice are followed, where circumstances permit, before any order of transfer under section 5(7A) of the Act is made by the Commissioner of Income-Tax or the Central Board of Revenue, as the case may be, and notice is given to the party affected and he is afforded a reasonable opportunity of representing his views on the question and the reasons of the order are reduced however briefly to writing ... There is no presumption against the bona fide or the honesty of an assessee and normally the income-tax authorities would not be justified in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the commissioner which reveals that why it is necessary to transfer the case for the purpose of co-ordinated investigation. In our view unfortunately, Commissioner of Income Tax apart from stating that case has been transferred for co-ordinating investigation has not given any other reason. Impugned order is therefore quashed and set aside. Matter is however remanded back to the Commissioner of Income Tax who shall pass fresh order under Section 127(1) of the Income Tax Act after giving an opportunity to the petitioner and pass an order in accordance with law after recording his reasons." 27. In Devidas Vs. Union of India & Ors. reported in (1993) 200 ITR 697 (BOM), in paragraph - 9, it is observed as follows: "9.Thus in the matter of objection to the jurisdiction of the assessing officer and transfer of the case, a valuable right of an assessee is clearly involved, which cannot be adversly adjudicated upon without affording him an opportunity of hearing and disclosing him the reasons for not accepting his point of view." 28. The aforementioned decisions of the Hon'ble Apex Court and various High Courts make it clear that providing a reasonable opportunity of being hear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce on the judgment of the Hon'ble Apex Court in Patel KNR JV Vs. Commissioner of Income Tax, (2016) 76 taxmann.com 11 (SC), to drive home the point that where assessee did not challenge the order of transfer of its case at the earliest letting all believe that such transfer was accepted, assessee should be barred from challenging the same on exercise of jurisdiction by a new authority. In the said case the Hon'ble Apex Court refused to interfere with the judgment of the First Bench of the High Court of Bombay, in the case in Patel KNR JV Vs. Commissioner of Income Tax, (2014) 50 taxmann.com 82 (Bombay), wherein, it was held as follows : "5.We have considered the rival submissions. Before examining the merits of the impugned order dated August 31, 2012, we shall first examine the objection of the Revenue that the petition ought not to be entertained on account of delay. In this case, the impugned order was passed on August 31, 2012. The petitioner states that the impugned order of transfer of its case from Mumbai to Hyderabad was received by it on December 7, 2012. The petitioner has filed the petition only on February 11, 2013, i.e., after about two months after the rece ..... X X X X Extracts X X X X X X X X Extracts X X X X
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