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1997 Supreme(Mad) 1526
High Court of Judicature at Madras
THE HONOURABLE MR. JUSTICE S. PADMANABHAN
General Exporters
Versus
Commissioner of Income Tax
W.P. No. 17332 of 1997 and W.M.P. No. 27432 of 1997
Decided On : 19-12-1997
Deokinandan, Commissioner. K. M. L. Majele, Assessee.
The need for coordinated investigation is a valid ground for transfer of a case under section 127 of the Income Tax Act, 1961.
Headnote:
INCOME TAX - TRANSFER OF CASE - SECTION 127 - COORDINATED INVESTIGATION - VALID GROUND FOR TRANSFER - INCONVENIENCE TO ASSESSEE NOT A BAR - WRIT PETITION DISMISSED.
Fact of the Case:
The petitioner challenged the order of the Commissioner of Income Tax (CIT) transferring its case from Chennai to New Delhi for coordinated investigation with other connected cases. The petitioner argued that the transfer was invalid as it was not made by the competent authority, that the reasons for the transfer were not valid, and that it would cause irreparable loss and inconvenience to the petitioner.
Finding of the Court:
The court held that the CIT was the competent authority to order the transfer under section 127 of the Income Tax Act, 1961. The court also held that the reasons for the transfer, namely, the need for coordinated investigation with other connected cases, were valid. The court further held that the inconvenience to the petitioner was not a bar to the transfer. The court dismissed the writ petition.
Issues: 1. Whether the CIT was the competent authority to order the transfer under section 127 of the Income Tax Act, 1961. 2. Whether the reasons for the transfer were valid. 3. Whether the inconvenience to the petitioner was a bar to the transfer.
Ratio Decidendi: 1. The court held that the CIT was the competent authority to order the transfer under section 127 of the Income Tax Act, 1961, as the section empowers the Director General, Chief Commissioner, or Commissioner to order the transfer of a case. 2. The court held that the reasons for the transfer, namely, the need for coordinated investigation with other connected cases, were valid. The court noted that the search and seizure operation conducted at the petitioner's premises revealed that the petitioner had substantial business dealings with other persons who were being assessed in New Delhi. The court also noted that the petitioner's partners were also being assessed in New Delhi. 3. The court held that the inconvenience to the petitioner was not a bar to the transfer. The court noted that the petitioner's partners did not reside in Chennai and that the petitioner had not shown that it would suffer any irreparable loss or inconvenience as a result of the transfer.
Final Decision: The court dismissed the writ petition.
1. The petitioner prays for the issue of a writ of certiorari calling for the records comprised in the proceedings of the first respondent dated 14-10-1997 in Order No. 66/III/97-98 (1127/III/Judn./97-98) and quashing the same.
2. Heard the learned counsel for the petitioner and the learned senior counsel for the respondents. With the consent of either side, the writ petition itself was taken up for final disposal.
3. No counter has been filed by the respondents, as there is no factual dispute and the counsels for either side confined themselves to the legal contentions alone.
.4. On the earlier occasion, the petitioner filed W.P. No. 9731 of 1997 on the file of this Court to call for and quash the order of transfer dated 10-6-1997 passed by the first respondent. This Court, by order dated 11-9-1997, allowed the writ petition and quashed the impugned proceedings dated 10-6-1997 and directed the respondents to pass fresh orders in terms of section 127 of the Income-tax Act, 1961 (the Act) by complying with the requirements of the said provision. Further, the earlier order of transfer was quashed by this Court following the judgment of the Supreme Court in Ajanda Industries v. CBDT 1976 AIR(SC) 457 and Vijayasanthi Investments (P.) Ltd. v. Chief CIT as in the show-cause notice, no reasons have been set out for the transfer, no reasons have been communicated to the petitioner and there has been violation of the principles of natural justice as well as the mandatory requirements of sub-section (2) of section 127.
5. Subsequently, the first respondent issued a notice under section 127(1), read with section 127(2)(a) on 22-9-1997 proposing to transfer the case of the petitioner from the file of Assistant Commissioner, City Circle VII (Div.), Chennai, to the file of the Assistant Commissioner, Central Circle VIII, New Delhi, for the three reasons detailed in the said notice and the petitioner had been called upon to state its objections.
6. The petitioner was also called upon to attend the hearing on 30-9-1997 before the first respondent. On 10-10-1997, the petitioner submitted its objections in detail. At the request of the petitioner, the hearing was adjourned to 13-10-1997 and permission to inspect the file was also granted by the first respondent. The file was inspected by the petitioners authorised representative on 7-10-1997.
7. The first respondent had listed the matter for 13-10-1997 for affording personal hearing to the petitioner, but the petitioner had not availed the said opportunity. Instead, the petitioner had submitted its objections dated 10-10-1997. The objections submitted by the petitioner had received elaborate consideration in the hands of the first respondent and the said objections have been over-ruled. The first respondent by the impugned proceedings dated 14-10-1997 transferred the petitioners file to the file of the Assistant Commissioner, Central Circle VIII, New Delhi.
8. Being aggrieved, the present writ petition has been filed.
.9. Mr. Mohan Parasaran, the learned counsel for the petitioner, while realising the legal position and while admitting that it is the subjective satisfaction of the first respondent, did not address arguments on merits. It is to be pointed out that this Court is not exercising appellate jurisdiction with respect to the impugned proceedings passed by the first respondent dated 14-10-1997 but it could only exercise power of judicial review. On merits, this Court will not at all be justified in interfering with the orders passed by the first respondent, as it is the subjective satisfaction of the first respondent which matters, and with respect to the conclusions arrived at by the first respondent, unless reasons are perverse, or arbitrary or suffer from an error apparent on the face of the record, this Court will not be justified in interfering with the impugned proceedings passed by the first respondent after careful consideration.
10. On merits, the learned co
