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2017 Supreme(Mad) 3140
IN THE HIGH COURT OF JUDICATURE AT MADRAS
T.S. SIVAGNANAM, J.
M/s. Advantage Strategic Consulting Private Limited - Petitioner
Versus
The Principal Commissioner of Income Tax, Chennai & Another - Respondents
W.P. No. 35408 of 2016 & W.M.P. No. 30475 to 30478 of 2016
Decided On : 05-12-2017
Advocate Appeared:
For the Petitioner:Nalini Chidambaram, Senior Counsel for M/s. C. Uma, Advocate.
For the Respondents: G. Rajagopalan, Additional Solicitor General assisted by A.P. Srinivas, Standing Counsel.
Section 127(3) of the Income Tax Act, 1961, excludes the requirement to provide an opportunity to the assessee and to record reasons for transfer when the transferee and transferor officers are within the same city.
Headnote:
Income Tax Act - Transfer of Cases - Section 127
Fact of the Case:
The petitioner, a company engaged in consultancy business, challenged a notification transferring its cases from one assessing officer to another under Section 127 of the Income Tax Act, 1961. The petitioner contended that the transfer was ultra vires, lacked natural justice, and was based on extraneous considerations.
Finding of the Court:
The Court found that the transfer was valid as there was agreement between the two Principal Commissioners, and the reasons for transfer were recorded. The Court rejected the petitioner's arguments and dismissed the writ petition.
Issues: Validity of transfer under Section 127 of the Income Tax Act, 1961, lack of natural justice, and extraneous considerations.
Ratio Decidendi: The Court held that when the transferee and transferor officers are within the same city, no opportunity needs to be given to the assessee, and reasons for transfer need not be recorded, as per Section 127(3) of the Act. The Court also found that there was agreement between the two Principal Commissioners, and the reasons for transfer were recorded.
Final Decision: The writ petition was dismissed, and the Court found no grounds for interference. No costs were awarded to the petitioner.
1. The petitioner has filed three Writ Petitions, viz., i) W.P.No.35408 of 2016, ii) W.P.No.2544 of 2017 and iii) W.P.No.11843 of 2017, one of which being W.P.No.35408 of 2016, was heard and is disposed of by this order.
2. i) In W.P.No.35408 of 2016, the petitioner seeks to quash the Notification dated 24.06.2016, issued by the first respondent, as ultra vires under Section 127 of the Income Tax Act, 1961, vitiated by extraneous considerations and in violation of principles of natural justice. ii) In W.P.No.2544 of 2017, the petitioner has challenged the notice issued by the first respondent, dated 31.03.2016, under Section 148 of the Income Tax Act, 1961 and the consequential notice, dated 19.12.2016, issued by the second respondent under Section 142 (1) of the Income Tax Act, 1961, and to quash the same. In the third Writ Petition, W.P.No.10896 of 2017, the challenge is to the order passed by the first respondent, dated 31.03.2017, under Section 263 of the Income Tax Act, 1961 for the assessment year 2012-13, on the ground that, it has been passed in gross violation of principles of natural justice, vitiated by legal malafides, lacking in bonafides, abuse of authority, wrongful exercise of discretion under Section 263 of the Income Tax Act, 1961 and to quash the same.
3. Mrs. Nalini Chidambaram, the learned Senior Counsel appearing for the petitioner submitted that, W.P.No.35408 of 2016 may be taken up for consideration at the first instance, as the result in this Writ Petition would have direct impact on the other two Writ Petitions (W.P.Nos.2544 of 2017 and W.P.No.10896 of 2017). Therefore, W.P.No.35408 of 2016 is taken up for disposal.
4. The petitioner is a Company, registered under the Indian Companies Act, stated to be engaged in the business of consultancy. The petitioner falls within the jurisdiction of the Deputy Commissioner of Income Tax, Central Circle-2(1), Chennai (DCIT), for the purpose of assessment. The Writ Petition has been filed, challenging a proceedings of the first respondent/The Principal Commissioner of Income Tax, Chennai-1, dated 24.06.2016, which is a notification issued, in exercise of his powers under Section 127 (2) of the Income Tax Act, 1961 (Act). By virtue of the impugned notification, cases of the petitioner have been transferred from the DCIT, Corporate Circle-1(1) Chennai to DCIT Central Circle-2(1), Chennai.
5. The facts, which are necessary for the disposal of the Writ Petition are as follows:
5.1 The Enforcement Directorate conducted search operations in the office premises of the petitioner/Company and the residences of its Directors under Section 37 of the Foreign Exchange Management Act, 1999 (FEMA) on 01.12.2015. Simultaneously, the Income Tax Department conducted a survey in the office premises of the petitioner and the residences of its Directors in exercise of the powers under Section 133(A) of the Act. While the matters were at that stage, the impugned notification has been passed by the first respondent/Principal Commissioner of Income Tax -1, transferring the petitioner's cases to a different Officer, who is within the City of Chennai.
5.2 In the subject column of the impugned notification, it is stated as "Centralization of Search and Seizure cases - in the group cases of Shri. A.M. Arun, M/s. Vasan Health Care (P) Ltd., - Notification - Reg". The reference column in the notification reads as "Letter of the DGIT (Inv.) (i/c), Chennai to the CCIT-1, Chennai in F.No. 2003/2016-17, dated 30.05.2016".
5.3 The learned Senior Counsel for the petitioner would contend that, the impugned notification suffers from errors apparent, as it has been issued under Section 127(2) of the Act, without giving the petitioner, reasonable opportunity of being heard in the matter and without recording the reasons.
5.4 It is submitted that, if the petitioner had been given an opportunity, they have valid reasons to object to the transfer, as they are in no way connected with the Search and Seizure
