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2013 DIGILAW 16 (GAU)

Arrow Alloys Pvt. Ltd. v. Union of India

2013-01-08

ADARSH KUMAR GOEL, N.KOTISWAR SINGH

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JUDGMENT Adarsh Kumar Goel, C.J. 1. This petition seeks quashing of the order dated December 20, 2012, under section 127 of the Income-tax Act, 1961, transferring the assessment cases of the petitioners from Guwahati to Delhi "for proper, co-ordinated and effective investigation as to their involvement on the issue of receipt of bogus share capital by the Brahmaputra group". The Commissioner of Income-tax, Central-II, New Delhi, vide letter dated December 7, 2012, stated that search operations under section 132 of the Act were carried out in the Brahmaputra group of companies on September 28, 2010, on account of receipt of bogus share capital money from different companies. The names of the petitioners also figured in the said complaint. On that basis, assessment cases of the petitioners were proposed to be centralized with the Deputy Commissioner of Income-tax, New Delhi, for investigation in respect of bogus share capital money received by the Brahmaputra group. 2. According to the petitioners, they have been regularly assessed at Guwahati and there was no valid reason for transfer of their assessment to New Delhi. No opportunity of being heard was provided to them as statutorily required under section 127 of the Act. In the show-cause notice dated September 26, 2012, no reason for proposal to transfer was mentioned. On the petitioners' seeking the reasons for transfer, only reason mentioned in letter dated October 18, 2012, was that their cases related to Commonwealth games which were being monitored by the CVC which was factually incorrect. The reason being factually without any basis and perverse, transfer was beyond the scope of statutory power under section 127 of the Act. 3. We have heard learned counsel for the parties. 4. Learned counsel for the petitioners supported the stand and relied upon the judgments of the Andhra Pradesh High Court in Vijayasanthi Investments Pvt. Ltd. v. Chief CIT [1991] 187 ITR 405 (AP) and Saptagiri Enterprises V. CIT [1991] 189 ITR 705 (AP), the judgments of this court in Smt. Avijeeta Mohanti Casshyap v. CIT [2007] 293 ITR 399 (Gauhati) and of the Calcutta High Court in Chotanagpur Industrial Gases (P.) Ltd. v. CIT [1998] 233 ITR 377 (Cal). It was also pointed out that in the balance-sheet of the petitioner, amount of Rs. 8.63 crores was available and in computation of income the petitioner had shown taxable income of Rs. 57 lakhs. It was also pointed out that in the balance-sheet of the petitioner, amount of Rs. 8.63 crores was available and in computation of income the petitioner had shown taxable income of Rs. 57 lakhs. There was no doubt about the genuineness of income of the petitioners. 5. Learned counsel for the respondents supported the impugned order and submitted that the power of transfer under section 127 could be exercised in public interest for co-ordinated investigation even without showing any irregularities in the account or return of the assessee. The order of transfer had nexus with the object of centralization, of assessment of the case of the assessee with other assessees. Reliance has been placed on the judgment of the hon'ble Supreme Court in K. P. Mohammed Salim v. CIT [2008] 300 ITR 302 (SC); [2008] 11 SCC 573 and of this court in Rathi and Co. v. Union of India [2004] 267 ITR 295 (Gauhati); [2004] 3 GLR 160 (Gauhati). 6. On due consideration we are of the view that no ground is made out to interfere with the impugned order of transfer. 7. Section 127 of the Act enables; inter alia, the Commissioner from whose jurisdiction the case is to be transferred, with the consent of the Commissioner to whose jurisdiction the case is to be transferred to pass an order of transfer after giving a reasonable opportunity of being heard in the matter to the assessee. In the present case, reasonable opportunity of being heard was provided. Show-cause notice was given for personal hearing and, vide letter dated October 18, 2012, it was stated that case of the petitioners related to Commonwealth games cases which were being monitored by the CVC. The impugned order clearly shows that the petitioners had made investment by way of share capital and unsecured loans with the Brahmaputra group of companies whose cases are being investigated and are related to the Commonwealth games. In view of the nexus of the petitioners with the said company, for co-ordinated and effective investigation centralization of assessment was necessary. 8. Undoubtedly, transfer of assessment may cause inconvenience and monetary loss to the assessee and the power to transfer is not mere administrative power but quasi-judicial powers as observed in the judgments relied upon on behalf of the petitioners but in public interest such transfer is statutorily permissible with the object of co-ordinated and effective investigation. 8. Undoubtedly, transfer of assessment may cause inconvenience and monetary loss to the assessee and the power to transfer is not mere administrative power but quasi-judicial powers as observed in the judgments relied upon on behalf of the petitioners but in public interest such transfer is statutorily permissible with the object of co-ordinated and effective investigation. It is not necessary that in the show-cause notice or in the order of transfer any deficiencies in the assessment of the assessee are to be pointed out. The grounds for transfer should have nexus with the object of co-ordinated and effective investigation calling for centralization of assessment. Once such grounds exist, there is no ground to interfere with the transfer. 9. In the present case, it cannot be held that the ground for transfer is nonexistent or mala fide. There is material showing investment of the petitioners with the Brahmaputra group of companies in whose cases investigation is being carried out at New Delhi. 10. In view of the above, we do not find any ground to interfere with the impugned order. 11. The petition is dismissed. It is made clear that after the assessment in the case of the Brahmaputra group of companies is complete, the Department will be free to consider the prayer of the petitioners for transfer of their assessment back to Guwahati.