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2006 Supreme(All) 588
ALLAHABAD HIGH COURT
A.K. Yog and Prakash Krishna, JJ.
Trimurti Fragrances P.Ltd.
Versus
Commissioner of Income-tax
Civil Miscellaneous Writ Petition 355 of 2005
Decided On : 23 February 2006
Civil Miscellaneous Writ Petition 355 Of 2005
D.Awasthi, R.S.AGRAWAL, Ravi Kant, Shantbhu Chopra,
The main legal point established in the judgment is the need for coordinated investigation in cases involving closely related parties and cross transactions under the Income-tax Act.
Headnote:
Transfer of Case - Income Tax - Section 132(1), Section 127(2)(a) - The court discussed the provisions of Section 127(2)(a) of the Income-tax Act and emphasized the need for coordinated investigation in cases involving closely related parties and cross transactions. The court held that the order of transfer consolidating the cases was not unreasonable or arbitrary, and there was sufficient compliance with principles of natural justice. The impugned order of transfer did not suffer from any manifest error warranting interference by the court.
Fact of the Case:
A search and seizure operation was conducted under Section 132(1) of the Income-tax Act at the premises of the petitioners. The Commissioner of Income-tax issued a notice under Section 127(2)(a) transferring the case from Kanpur to New Delhi. The petitioner contended that the order of transfer was arbitrary and lacked reasons, and that the Commissioner of Income-tax was under an obligation to afford a reasonable opportunity of hearing and to record reasons for the decision.
Finding of the Court:
The court found that the impugned order of transfer did not suffer from any manifest error warranting interference. The court held that there was sufficient compliance with principles of natural justice and that the order of transfer consolidating the cases was not unreasonable or arbitrary.
Issues: The issues involved the validity of the order of transfer under Section 127(2)(a) of the Income-tax Act, compliance with principles of natural justice, and the reasonableness of the transfer in the context of coordinated investigation.
Ratio Decidendi: The court emphasized the need for coordinated investigation in cases involving closely related parties and cross transactions. The court held that the impugned order of transfer did not suffer from any manifest error warranting interference, and there was sufficient compliance with principles of natural justice.
Final Decision: The writ petition was dismissed, and the impugned order of transfer under Section 127 did not suffer from any manifest error warranting interference by the court.
( 1 ) HEARD Shri Ravi Kant, senior advocate, and Shri R. S. Agrawal, advocate, on behalf of the petitioner, and Shri Shambhu Chopra, advocate, and D. Awasthi, advocate for the respondents.
( 2 ) FOR convenience, we may note the salient facts of the case in order to appreciate the dispute between the parties and the legal issues to be decided by this Court. M/s. Trimurti Fragrances P. Ltd. (called "the petitioner"), is the firm operating from Kanpur, and assessed at Kanpur and engaged in manufacturing and selling tobacco production, popularly known as gutkha under brand name of "shikhar Gutkha". There are other firms and individuals who are also dealing with the said brand-product and operating from Kanpur. Pradeep Kurnar Agrawal, who is one of the partners of M/s. Vijay Kumar Pradeep Kumar (petitioner of Writ Petition No. 756 of 2005)admittedly has its factory/office and residence at Delhi. The said Pradeep Kumar is also a director in M/s. Trimurti Fragrances P. Limited, the petitioner in the present case.
( 3 ) A search and seizure operation under Section 132 (1), Income-tax Act (for short "the Act"), was conducted both at Kanpur and Delhi on July 2, 2003, at the sites belonging to the petitioners of the group of writ petitions, (viz. , (1) W. P. No. 755/2005 : Virendra Kumar Jain v. CIT; W. P. No. 756 of 2005 Vijay Kumar Pradeep Kumar v. CIT [2006] 283 ITR 541 (All); (2) W. P. No. 55 of 2006 R. K. Agarwal v. CIT; W. P. No. 56 of 2005; N. K. Agarwal v. CIT and W. P. No. 57 of 2006; Y. K. Agarwal v. CIT), (2006)201 CTR520 (All), [2006]283 itr532 (All) ). The admitted facts on record have been noted by us in our judgment dated february 16, 2006 in Civil Miscellaneous Writ Petition No. 428 of 2004; Vijaykumar Gauri shankar v. CIT [2006] 283 ITR 524 (All) and Civil Miscellaneous Writ Petition No. 1808 of 2004 : Sanjay Kapoor v. CIT. The aforesaid Pradeep Kumar Agrawal and others owning and managing the business of the petitioners are closely related to each other, there are inter se transactions and even handsome cash in crores was recovered from the premises of Pradeep kumar Agrawal, which according to him belonged to his father, Murlidhar Agrawal.
( 4 ) THE Commissioner of Income-tax II, Kanpur issued notice under Section 127 (2) (a) of the Act dated February 16, 2004 (annexure I to the writ petition) addressed to the petitioner, the relevant extract of which reads : a search and seizure operation under Section 132 (1) of the Income-tax Act was conducted in m/s. Shikhar Gutka group of cases on July 2, 2003. In connection with the centralisation of your case from the Additional Commissioner of income-tax, Range-6, Kanpur, to the Additional Commissioner of Income-tax-Central Circle-9, new Delhi, under the Additional Commissioner of Income-tax, Central Range-4, New Delhi, you are requested to attend before the learned Commissioner of Income-tax-II, Kanpur, along with your explanation, if any, on February 20, 2004 at 11. 30 a. m.
( 5 ) THE director of the petitioner-company, Pradeep Kumar, submitted his reply dated February 20, 2004, stating that seizure and search operation, conducted at business offices/factories and residences situate in Kanpur and Delhi belonged to his brother and nephew (both living at kanpur) and himself (Pradeep Kumar); that he had also established a factory at Delhi, that he had shifted temporarily to Delhi with the head office at Kanpur, that all of them were assessed at kanpur ; that their income-tax counsel was at Kanpur, that it was not practically feasible to shift the staff and attend day to day proceedings of the Department at Delhi. In the said reply, details of 17 assessees were given including the names of the petitioner of this writ petition and group of writ petitions (details earlier ).
( 6 ) THE Commissioner of Income-tax-II, Kanpur, by means of the impugned order dated February 22, 2005/annexure 3 to the writ petition transferred the case of the petitioner from the Assessing
