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2007 DIGILAW 578 (JHR)

Raj Kumar Singhania v. Union of India (UOI)

2007-07-19

D.G.R.PATNAIK, M.Y.EQBAL

body2007
JUDGMENT M.Y. Eqbal, J. 1. In this writ application under Article 227 of the Constitution of India the petitioner has prayed for quashing the order dated 9.3.2007 passed by Commissioner of Income Tax, Hazaribagh under Section 127 of the Income Tax Act, 1961 (shortly the Act) whereby and where under the case of the petitioner has been transferred from the Income Tax Officer Ward 1 (2), Hazaribagh to Assistant Commissioner of Income Tax CC 3 New Delhi. 2. Petitioner's case is that his main business is manufacturing and selling of cement under the name and style of 'Sheo Shakti Cement Industries' having its head office at Kolkata and factory at Demotand, Hazaribagh where the petitioner has to stay for looking after day to day business affairs. The petitioner is also the Managing Director of M/s. Orbit Industries Ltd. and M/s. Lido Commercial Company Ltd. having registered office at Kolkata and assets at Kolkata also. Petitioner's further case is that he has to look after his family business in Bengal, Bihar, and Jharkhand and maintaining family Income tax files in Kolkata and Hazaribagh. The group cases of the petitioner consist of the ten files which belong to the family of the petitioner. Out of the said ten files nine files are assessed at Kolkata and one in the individual name of the petitioner is at Hazaribagh. Petitioner's further case is that he went to Delhi on or about the middle of January 2006 for certain property dealing and a search and seizure was conducted at the premises of Mr. Praveen Jain, the property dealer on 22.6.2006. During the course of somesearch papers relating to sales/purchase of property were found from the premises of Shri Praveen Jain and consequently a seizure was conducted at the premises at 104, New Rajdhani Enclave, Delhi which belong to M/s. Orbit Industries Ltd. where the petitioner is Director. It is stated by the petitioner that for the purpose of buying peace he surrendered a sum of Rs. 3,23,50,000.00 as additional income for the assessment year 2006-07 on the basis of paper in search and seizure in a search and seizure proceeding in Delhi. It is stated by the petitioner that for the purpose of buying peace he surrendered a sum of Rs. 3,23,50,000.00 as additional income for the assessment year 2006-07 on the basis of paper in search and seizure in a search and seizure proceeding in Delhi. Accordingly the petitioner was served with a show cause notice dated 27.2.2007 issued by the Commissioner of Income Tax, Hazaribagh asking the petitioner to show-cause as to why his case be not transferred to the Assistant Commissioner of Income Tax New Delhi for centralized investigation in the group's cases in view of search conducted in New Delhi. The petitioner submitted his show cause and it was explained that all the files relating to the property of the petitioner are, at Kolkata except one which stands in the name of the petitioner at Hazaribagh and accordingly it was requested that centralized investigation can be done at Kolkata instead of New Delhi. After hearing the counsel for the petitioner, the impugned order was passed by the Commissioner, Commercial Taxes, Hazaribagh whereby the case of the petitioner has been transferred from Income Tax Officer, Hazaribagh to the Income Tax Office of Assistant Commissioner of Income Tax, New Delhi. 3. Mrs. A.R. Choudhary, learned Counsel appearing on behalf of the petitioner, assailed the impugned order as being wholly illegal arbitrary and violative of Articles 14, 19 and 21 of the Constitution. Learned Counsel submitted that the impugned order passed by the Commissioner of Income Tax, Hazaribagh is incomplete and total disregard of the mandate of Section 127 of the Act. According to the learned Counsel, in the show-cause notice the case was sought to be transferred for centralized investigation in group's cases but the case has been transferred on the ground of coordinated investigation of assessee's case with other cases of search and seizure. Learned Counsel further submitted that the impugned order passed by the Commissioner of Income Tax is wholly without jurisdiction. Learned Counsel lastly submitted that no administrative approval or concurrence was sought for from the Commissioner of Income Tax, Ranchi in the matter of transfer of the files of the petitioner from Hazaribagh to New Delhi which was the mandatory requirement of Section 127 of the Act. 4. Mr. Learned Counsel lastly submitted that no administrative approval or concurrence was sought for from the Commissioner of Income Tax, Ranchi in the matter of transfer of the files of the petitioner from Hazaribagh to New Delhi which was the mandatory requirement of Section 127 of the Act. 4. Mr. K.K. Jhunjhunwala learned Counsel appearing on behalf of the Revenue drew our attention to the counter-affidavit and submitted that the Commissioner of Income Tax, New Delhi gave his concurrence for centralization of the above cases with Assistant Commissioner of Income Tax Central; Circle New Delhi and accordingly, requested the Commissioner of Income Tax, Hazaribagh to pass order under Section 127(2) of the Act. The Commissioner of Income Tax, New Delhi also concurred for centralization of the case with Assistant Commissioner of Income Tax, Central Circle, New Delhi. Learned Counsel further submitted that search and seizure was conducted in case of R.K. Singhania along with 12 others. All the cases are closely connected. Learned Counsel lastly submitted that the impugned order has been passed in full compliance of the provisions contained in Section 127 of the Act. 5. Before appreciating the rival contention of the parties I would first like to quote Section 127 of the Income Tax Act as amended by Direct Tax Laws (Amendment) Act, 1987 (Act 4 of 1988). Section 127 reads as under: Section 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) to any other 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 such Assessing Officers are subordinate are in agreement, then the Director General or Chief Commissioner or Commissioner from whose jurisdiction the case is to be transferred 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 Directors--General or Chief Commissioners or Commissioners aforesaid are not in agreement the order transferring the case may, similarly, be passed by the Board or any such Director-General or Chief Commissioner or Commissioner as the Board may, by notification in the official Gazette, authorize 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 be made at any stage of the proceedings, and shall not render necessary the reissue of any notice already issued by the Assessing Officer or Assessing Officers from whom the case is transferred. 6. From bare reading of the aforesaid provisions it is abundantly clear that cases can be transferred from the jurisdiction of one Assessing Officer to the jurisdiction of another Assessing Officer but before transferring the case, show-cause notice and reasonable opportunity of hearing is to be given to the assessee. Sub-section (3) of Section 127 of the Act provides that when the Assessing Officer from whom the case is to be transferred and the Assessing Officer to whom the case is to be transferred are not subordinate to the same Director-General or Chief Commissioner or Commissioner then the authority to whom the case is transferred must agree to the same. Sub-section (3) of Section 127 of the Act provides that when the Assessing Officer from whom the case is to be transferred and the Assessing Officer to whom the case is to be transferred are not subordinate to the same Director-General or Chief Commissioner or Commissioner then the authority to whom the case is transferred must agree to the same. The power under Section 127 of the Act is to be exercised in public interest and in the interest of proper adjudication of the Act. The requirement of Section 127 of the Act is that an opportunity is to be given to the assessee and the reasons for transfer is to be recorded in the order. The purpose and object of transfer of cases is for proper investigation. Therefore, centralized investigation is a valid ground for transfer of case from one jurisdiction to another jurisdiction. 7. In the instant case, as noticed above, it is the admitted case of the petitioner that he has been looking after his family business in different States. The group cases of the petitioner consist of ten files which belong to the family of the petitioner. The petitioner has admitted that during search and seizure operation, incriminating papers relating to the petitioner's transaction were found at the premises of others. The petitioner also admitted that after search and seizure he surrendered an amount of Rs. 3,23,50,000.00 as income for the assessment years 2006-2007 on the basis of papers detected in search and seizure operation. It was therefore, proposed by the Dy. Director of Income Tax, New Delhi to centralize the cases of the petitioner with other search cases. The said authority agreed with the centralization of the case pertaining to Singhania Group. It appears that the Chief Commissioner of Income Tax, Central, New Delhi, vide his order dated 18.10.2006 also gave his concurrence for centralization of the case of the petitioner with the Assistant Commissioner, Central, Circle-3, New Delhi. Accordingly, a request was made to the Commissioner of Income Tax, Hazaribagh to pass order under Section 127(2) of the Act. This fact is evident from the letter dated 18.11.2006 issued by the Commissioner of Income Tax, New Delhi. It further appears that by order dated 2.11.2006 the Commissioner of Income Tax, New Delhi also concurred for centralization of the case of the petitioner to the Assistant Commissioner of Income Tax, New Delhi. 8. This fact is evident from the letter dated 18.11.2006 issued by the Commissioner of Income Tax, New Delhi. It further appears that by order dated 2.11.2006 the Commissioner of Income Tax, New Delhi also concurred for centralization of the case of the petitioner to the Assistant Commissioner of Income Tax, New Delhi. 8. After the aforesaid approval, notice to show-cause was given to the petitioner and in reply to the said show-cause notice the petitioner filed his written statement. The concerned authority, after considering the entire facts of the case and after giving opportunity of hearing to the petitioner, passed the impugned order of transfer. Before passing the impugned order, a show-cause notice was given to the petitioner stating about the search and seizure and the petitioner was directed to files his show cause as to why his case should not be transferred to ACIT, CC-3, New Delhi. After giving full opportunity of hearing to the petitioner and on his admission of additional income to the extent of Rs. 3.23 crores, it was found proper to have centralized co-ordinated investigation of the petitioner's case with other cases of search and seizure. It is, therefore, clear that the mandatory requirement of law as contemplated under Section 127 of the Act has been fully complied with and there is no jurisdictional error in passing the impugned order of transfer of the case of the petitioner. The impugned order is wholly justified having regard to the fact that after the incriminating documents were detected in search and seizure operation, the petitioner surrendered additional income sum of Rs. 3,23,50,000.00 on the basis of the transaction made by the said papers. 9. For the aforesaid reasons, we do not find any merit in this writ petition, which is accordingly dismissed. D.G.R. Patnaik, J. 10. I Agree. Petition dismissed.