9911796707
TMI Blog2024 (8) TMI 1304X X X X Extracts X X X X X X X X Extracts X X X X ..... ns as undertaken by the department revealed that the petitioner, who is an Indian citizen but based in UAE, Dubai, had multiple financial interests in India and abroad. Such material also revealed the petitioner s involvement in evasion of taxes, abetment and facilitation of the evasion of taxes by various other individuals and companies and that the petitioner had many transactions with persons whose names are set out in the show cause notice. The cases of such related parties/persons were covered separately under Section 132 and their cases were also centralized in Central Circle, Delhi and it is for such reason, the petitioner s case was proposed to be centralized with Delhi charge for coordinated investigation. It is in such context and reasons the petitioner was called upon to reply to the show cause notice. As noted above, the petitioner responded to the show cause notice by his letter dated 01 April 2021, however, except for a vague denial and some health ground, the petitioner appears to have not made out any case against transfer of the said proceedings. It is most significant that on such show cause notice and even assuming that the reply of the petitioner was to be taken ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ices under Sections 153A, 143 (2), 142 (1) and 142 (2A) of the Act, as also an order of penalty under Section 270 of the Act was passed. These proceedings cannot be discarded and overlooked as these are substantial events which have transpired after passing of the impugned order dated 14 June 2021, till the filing of the petition. Thus, post transfer of the petitioners case to the Delhi authorities, it is implicit in the receipt of such notices and the several proceedings initiated against the petitioner under such notices, including an order passed against the petitioner of imposing penalty, that the petitioner has certainly acquiesced in the order dated 14 June 2021 passed under Section 127 of the Act, which was already implemented and acted upon. WP dismissed. No case for interference in exercise of our jurisdiction under Article 226 of the Constitution of India is made out by the petitioner, in assailing the impugned order passed u/s 127. - G. S. KULKARNI SOMASEKHAR SUNDARESAN, JJ. For the Petitioner : Mr. Persi Pardiwalla, Senior Advocate with Mr. Suraj Iyer, Mr. Rajat Manchanda, Ms. Gauri Joshi i/b Ganesh Co. For the Respondent No. 1 : Mr. Akhileshwar Sharma. For the Respon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th Central Circle-20, New Delhi . The notice recorded that search and seizure action was undertaken in the petitioner s case on 30 June, 2019 by the DDIT (Inv.), Unit 3 (2), New Delhi. It further recorded that during the course of post search proceedings, a proposal for centralization of the petitioner s case was forwarded to the Chief Commissioner of Income Tax (Central), New Delhi by the office of the Principal Director of Income Tax (Inv)-1, New Delhi and an approval to such proposal was granted on 12 March 2020. The notice further recorded that during the course of search/ survey proceedings, on related entities/parties and the pre-search and post-search investigations, it was noticed that the petitioner, an Indian citizen, based in Dubai, had multiple financial interests in India and abroad. It was stated that the investigations revealed petitioner s involvement in evasion of taxes, abetment and facilitation of the evasion of taxes by various other individuals and companies. It was noticed that the petitioner had many transactions with the said persons who were covered separately under Section 132 and their cases were already centralized in Central Circle, Delhi. It was stated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that if at all there has to be an investigation or assessment, the petitioner was ready and willing to participate and appear before the Delhi authorities, however, at Mumbai. The petitioner stated that transferring the case to Delhi would cause an unnecessary harassment to him. The petitioner also set out the medical issues which the petitioner was facing thereby referring to an order dated 25 February 2019 passed by the Special Judge, CBI, Rouse Avenue Court, under the provisions of Prevention of Money Laundering Act and thus on the ground of such medical condition and as the doctors are available in Mumbai, the petitioner contended that the petitioner s case ought not to be not transferred to the Delhi Authorities. 6. The petitioner has contended that although he submitted the aforesaid reply dated 1 April 2021, to the said show cause notice issued to him under Section 127 of the Act, no order was passed on such show cause notice and that the department had remained silent. It, however, appears that respondent No. 1 passed an order dated 14 June 2021 transferring the proceedings to New Delhi and confirming the show cause notice. 7. After the order dated 14 June 2021 was passe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to why the special audit under the said provision should not be carried out in the petitioner s case. Accordingly, a hearing was fixed on 29 March 2022 at 02.30 p.m. 10. Further, the Delhi Authority also passed an order under Section 272A (1) (d) of the Act imposing penalty on the petitioner of Rs. 10,000/- for the reason that the petitioner defaulted in complying with any of such notices under Sections 153 (A), 142 (1) dated 16 June, 2021 and 3 August, 2021 respectively. In such context, a show cause notice dated 08 September 2021 was issued to the petitioner fixing the case for 14 September 2021 which was not responded by the petitioner, much less another notice under Section 274 read with Section 272A (1) (d) of the Act, as issued to the petitioner on 04 March 2022, fixing the case for hearing on 11 March 2022, however, the petitioner did not file any response to the same and no reasonable cause was shown by the petitioner for furnishing the requisite details. As the petitioner did not comply with the requirements of the provisions of Section 142 (1) of the Act, as also did not reply to the penalty show cause notice issued under Section 272A (1) (d) of the Act, the Delhi Author ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pportunity of being heard to the petitioner. It is stated that since the PAN (Permanent Account Number) of the petitioner was lying in the jurisdiction of respondent No. 1, a centralization proposal was received from the office of PCIT(C)-2, New Delhi vide e-mail dated 30 July 2020 as also a reminder vide letter dated 29 January 2021. It is stated that accordingly, a show cause notice dated 19 March 2021 was issued to the petitioner. The petitioner was requested to submit response either personally or through authorized representative in writing, failing which it shall be presumed that the petitioner has nothing to say. It is stated that the petitioner s contention that no hearing or opportunity of being heard was granted to the petitioner, is false and misleading. It is further stated that the show cause notice dated 19 March 2021 was sent on the e-mail id of the petitioner the details of which are set out in paragraph 6 (e) of the reply affidavit. It is stated that the physical letter was also sent through speed post, which was returned with remarks incomplete address . The show cause notice dated 19 March 2021 was also shared with the petitioner s e-proceedings portal on 20 Marc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bmissions. His contention is that the impugned order passed under Section 127 is required to be held illegal as it is passed in breach of the principles of natural justice, in as much as no hearing was granted to the petitioner. It is his submission that it is apparent that although the petitioner had replied to the show cause notice dated 19 March 2021 by his reply dated 01 April 2021, the same has not been taken into consideration in passing the order under Section 127 of the Act. Mr. Pardiwalla would submit that the mandate of the provision, that the assessee is required to be given reasonable opportunity of being heard in the matter, has been clearly breached. 17. Mr. Pardiwalla would next submit that on a bare reading of the show cause notice dated 19 March 2021, it is clear that already a decision was taken to transfer the proceedings and hence issuance of show cause notice dated 19 March 2021 was a farce. It is submitted that even such show cause notice was vague and did not make out any substantial ground for transfer of the proceedings to the Delhi authorities from the Mumbai Authority. Mr. Pardiwalla would also submit that even assuming that the show cause notice dated 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of this Court. In support of such submission, reliance is placed on the decision of the Supreme Court in Pannallal Binraj vs. Union of India [1957] 31 ITR 565 (SC) wherein the Supreme Court repelled a challenge to the erstwhile pari materia provision of Section 5 of the Indian Income Tax Act, 1922. It is, hence, submitted that it is well settled that the exercise of power under Section 127 of the Act is a mere administrative power based on administrative exigencies of assessment and collection of taxes, which does not adversely affect the petitioner as the petitioner s right to a fair assessment under the law remains intact. It is contended that if reasons exist for transfer, the scope of interference against an administrative order would be limited and the Courts ordinarily refrain from interfering with exercise of such power. It is contended that in the facts of the present case, there are valid reasons to transfer the petitioner s case from Mumbai to the Delhi authorities. It is submitted that the petitioner has not shown any justification much less acceptable as set out in the show cause notice dated 19 March 2021. 22. On the petitioner s contention on breach of principles of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ansferred 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, pass the order; (b) where the [Principal Directors General or Directors General] or [Principal Chief Commissioner or Chief Commissioner] or [Principal Commissioner or Commissioner] aforesaid are not in agreement, the order transferring the case may, similarly, be passed by the Board or any such [Principal Director General or Director General] or [Principal Chief Commissioner or Chief Commissioner] or [Principal Commissioner or Commissioner] as the Board may, by notification in the Official Gazette, authorise in this behalf. (3) Nothing in sub-section (1) or sub-section (2) shall be deemed to require any such opportunity to be given where the transfer is from any Assessing Officer or Assessing Officers (whether with or without concurrent jurisdiction) to any other Assessing Officer or Assessing Officers (whether with or without concurrent jurisdiction) and the offices of all such officers are situated in the same city, locality or place. (4) The transfer of a case under sub-section (1) or sub-section (2) may b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ultiple financial interests in India and abroad. The investigations have revealed your involvement in evasion of taxes, abetment and facilitation of the evasion of taxes by various other individuals and companies. You have many transactions with persons like Ratul Puri, Gautam Khaitan, Sushen Mohan Gupta, Pankaj Jain and Sanjay Jain. They have also been covered separately u/s. 132 and their cases have been centralized in Central Circle, Delhi. Since the cases of all the entities mentioned above have been centralized in Delhi, your case is also proposed to be centralized with Delhi charge for coordinated investigation. In view of the above mentioned facts, you are hereby given an opportunity to show cause as to why your case should not be centralized with the Pr. Commissioner of Income Tax (Central)- 2, New Delhi for post search coordinated investigation and assessment proceedings. You are requested to submit your response either personally or through your authorized representative in writing (within 14 days of receipt of this notice) failing which, it shall be presumed that you have nothing to say in the matter. AJAY KUMAR SHARMA CIT (IT), Mumbai-4. (emphasis supplied) 27. It is th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase of the petitioner from AY 2010-11 to AY 2020-21 should not be referred to special audit. On 19 March 2022, Central Circle 20-Delhi issued a notice under Section 142 (1) of the Act to the petitioner directing the petitioner to furnish accounts and documents for the assessment year 2020-21 before 24 March 2022. A reminder titled Show Cause Notice for referring the matter for a special audit u/s. 142 (2A) of the Act came to be issued to the petitioner. On 24 March 2022, the petitioner filed his objections to the notice dated 19 March 2022. On 25 March 2022, Central Circle 20-Delhi rejected the petitioner s objections which were raised by the petitioner on 24 March 2022 and the case of the petitioner was referred to the Principal Commissioner, Income Tax, New Delhi for seeking approval for referral of the petitioner s case for special audit. The petitioner has not disputed that all these notices/orders were sent by e-mail on the petitioner s email-id which was operational. 30. Further, on 26 March 2022, the Delhi authorities addressed a letter to the petitioner calling upon the petitioner for a hearing on the backdrop of the notices issued to the petitioner dated 13 March 2022, 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elay of almost one year, is certainly a vital factor to be considered by the Court when the Court is called upon to exercise its discretionary and extraordinary jurisdiction under Article 226 of the Constitution of India, the reasons for which, we discuss hereafter. The argument that the petitioner was unaware of the transfer proceedings does not inspire confidence since the very show cause under section 127 had indeed been received and was also responded to. Therefore, even while the impugned order erroneously states that the petitioner had not replied to the show cause notice, in our opinion, the error of the Revenue does not turn the needle in the petitioner s favour. 34. When the petitioner calls upon this Court to exercise its discretionary, equitable and extraordinary jurisdiction, necessarily the approach of the Court would be to ascertain not only the bona fides of the petitioner, but also all the surrounding circumstances which would weigh with the Court, on whether to exercise such jurisdiction. This is can be imminently ascertained from the facts of the case. This would also include an endeavour of the Court to consider whether any plea of breach of principles of natural ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the ground of petitioner s health as set out by the petitioner also can be a valid ground for not transferring the petitioner s case to the Delhi authorities as the facts stand. In any case, the petitioner is a resident of Dubai and not a resident of Mumbai. 37. We have made the above observations considering the object, intention and purport of the provisions of Section 127 (1) of the Act which it recognizes the principles of natural justice, albeit in a manner as specifically envisaged by the express language of the provision. However, in our opinion, there cannot be a straight jacket formula in deciding any grievance in regard to breach of principles of natural justice. Certainly in a given situation as in the present case, and more particularly, when a provision as contained in a taxing statute, the Court would be guided by the language and the wording of the provision as the legislature has desired to frame the provision, in recognizing the extent of the applicability of such principles. Sub-section (1) of Section 127 makes a peculiar and specific reading when it provides after giving the assessee a reasonable opportunity of being heard in the matter, wherever it is possible t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as also an order of penalty under Section 270 of the Act was passed. These proceedings cannot be discarded and overlooked as these are substantial events which have transpired after passing of the impugned order dated 14 June 2021, till the filing of the petition. Thus, post transfer of the petitioners case to the Delhi authorities, it is implicit in the receipt of such notices and the several proceedings initiated against the petitioner under such notices, including an order passed against the petitioner of imposing penalty, that the petitioner has certainly acquiesced in the order dated 14 June 2021 passed under Section 127 of the Act, which was already implemented and acted upon. On such backdrop, possibly to avoid the said proceedings and quite belatedly, well after the impugned order transferring the petitioner s case to Delhi was passed and consequential actions were undertaken by the Revenue, the petitioner has approached this Court in the present proceedings. For all these reasons we cannot accept the petitioner s plea of the impugned order to be illegal and or in any manner in breach of the principles of natural justice. 39. We now refer to the decisions as relied on behal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al justice, held that, at the same time, it would be of no use if it amounts to completing a mere ritual of hearing without possibility of any change in the decision of the case on merits. It was so explained in the following terms: 64. Right of hearing to a necessary party is a valuable right. Denial of such right is serious breach of statutory procedure prescribed and violation of rules of natural justice. In these appeals preferred by the holder of lands and some other transferees, we have found that the terms of government grant did not permit transfers of land without permission of the State as grantor. Remand of cases of a group of transferees who were not heard, would, therefore, be of no legal consequence, more so, when on this legal question all affected parties have got full opportunity of hearing before the High Court and in this appeal before this Court. Rules of natural justice are to be followed for doing substantial justice and not for completing a mere ritual of hearing without possibility of any change in the decision of the case on merits. In view of the legal position explained by us above, we, therefore, refrain from remanding these cases in exercise of our disc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the High Court on the ground that natural justice has indeed been breached in the facts of the present case, not being a case of admitted facts leading to the grant of a futile writ, and that prejudice has indeed been caused to Respondent No. 1. In view of this finding, there is no need to examine the other contentions raised by the parties before us. 41. In Union of India Anr vs. Jesus Sales Corporation (1996) 4 Supreme Court Cases 69, the Supreme Court categorically held that under different situations and conditions the requirement of the compliance of the principle of natural justice vary. It was held that the Courts cannot insist that under all circumstances and under different statutory provisions personal hearing ought to be given to the persons concerned. It was held that if this principle of affording personal hearing is extended whenever statutory authorities are vested with the power to exercise discretion in connection with statutory appeals, it shall lead to chaotic conditions. The Court further held that many statutory appeals and applications are disposed of by the competent authorities who have been vested with powers to dispose of the same and that such authoritie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore an adverse order is passed on any appeal or application, it does not in all circumstances mean a personal hearing. The requirement is complied with by affording an opportunity to the person concerned to present his case before such quasi-judicial authority who is expected to apply his judicial mind to the issues involved. Of course, if in his own discretion if he requires the appellant or the applicant to be heard because of special facts and circumstances of the case, then certainly it is always open to such authority to decide the appeal or the application only after affording a personal hearing. But any order passed after taking into consideration the points raised in the appeal or the application shall not be held to be invalid merely on the ground that no personal hearing had been afforded. This is all the more important in the context of taxation and revenue matters. 42. Insofar as Mr. Pardiwalla s reliance on the decisions as noted hereinabove are concerned, in our opinion, in the facts of the present case, these decisions would not support the petitioner s case , which we discuss hereafter. 43. In Darshan Jitendra Jhaveri (supra) the Court observed that Sub-Section (1) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... justification. In these circumstances, it would be difficult to accept the petitioner s contention of any prejudice being caused to the petitioner and more so on the ground which was urged in the before us as also the grounds which are urged in the reply to the show cause notice. No prejudice would be caused to the petitioner, if he cooperates with Delhi Authorities in all matters relating to the assessment. 47. It is well settled that Section 127 of the Act is a procedural provision for ascertaining the tax liability for the assessee in fair, impartial and effective manner. In the present case as noted above, there were material and significant reasons which weighed with the authorities to transfer the case of the petitioner at Delhi as also the impugned order has recorded reasons for such transfer. Thus, these vital considerations of Section 127 being satisfied, we cannot accept the contention of the petitioner that as a personal hearing was not given to the petitioner, the impugned order needs to be set aside. This also for the reason that Section 127 (1) of the Act itself provides that it would not be obligatory to the authority to give hearing in every case and it would be re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... directing transfer of a case from one Income Tax Officer to another. It further requires that whenever power conferred by Section 127 is intended to be exercised, an opportunity should be given to Assessee, whenever it is possible to do so and reasons have to be recorded for making order of transfer. Court thus held that opportunity to Assessee shall be offered whenever it is possible to do so but order must contain reasons for transfer. Court held that requirement that opportunity should be given, cannot be said to be obligatory, because it has been left to discretion of authority to consider whether it is possible to give such opportunity to Assessee. This is of course, true, in coming to the conclusion, that Authority must act reasonably and bona-fide; but if Authority comes to conclusion that it is not possible to give a reasonable opportunity to Assessee, same can be dispensed with. However, it is not so with regard to requirement that reasons must be recorded for making transfer. 24. So far as Section 127 (1) is concerned, there is no dispute about this position. The twin requirement under Section 127 (2) has some complication. It is true that under Act, 1961 i.e. Section 120 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Thus, at the pain of repetition, we hold that careful reading of Section 127 (2) (a) leads no manner of doubt that requirement of reasonable opportunity to Assessee is subjected and conditional i.e. whenever it is possible to do so department may proceed to pass an order of transfer without giving such opportunity. When a phrase has actually been used by Legislature in a statute, we cannot either ignore it or omit or render it redundant by reading that in every case an opportunity is must, else order of transfer would be rendered bad. The words used by legislature have to be read and given due meaning and effect and that is the basic principle of interpretation. Each and every word used by legislature has some meaning or consequence and whenever an statute is considered, every word must be given its logical meaning and consequence unless there appears to be some inconsistency or conflict resulting in consequences to be disturbing or there are other compelling reasons showing that some part does not convey the same meaning as it ought to be or the same is redundant or is inconsistent with rest of the provisions. However that is not so particularly in this case and from judgment of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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