JUDGMENT In CIT v. Orissa Cement Ltd. [2001] 252 ITR 878, Delhi High Court declined to answer reference for reason that in opinion of court, no question of law arose and findings recorded by Tribunal were findings of fact. In CIT v. Radico Khaitan Ltd. [2005] 274 ITR 354 Allahabad High Court, while rejecting plea of Revenue and relying upon findings recorded by Tribunal to effect that there were sufficient funds available with assessee-company in form of capital share, share application money, reserve and surplus other than borrowed money for diverting sum of Rs. 17.19 lakhs, held that it cannot be said that amount of loan advanced to sister concern was out of borrowed funds and order of Tribunal allowing deduction of interest was upheld. same view was followed by Allahabad High Court in CIT v. Prem Heavy Engineering Works P. Ltd. [2006] 285 ITR 554. In CIT v. Britannia Industries Ltd., [2006] 280 ITR 525, Calcutta High Court, while upholding concurrent finding of fact recorded by Commissioner of Income-tax (Appeals) and Tribunal that interest free advance in that case was for purpose of business and not for any extraneous consideration or otherwise, observed that advance was given from mixed account where entire sale proceeds were deposited and there were sufficient funds for making advance payment was thus made out of assessee s own funds and borrowed capital was not siphoned out. Accordingly, order of Tribunal allowing deduction was upheld. Relying upon principle of nexus between borrowings and withdrawal made by partner of assessee-firm, in R. D. Joshi and Co. v. CIT [2001] 251 ITR 332, Madhya Pradesh High Court held that deduction was allowable. Respectfully disagreeing with views expressed by Delhi High Court in CIT v. Tin Box Co. [2003] 260 ITR 637 and CIT v. Orissa Cement Ltd. [2001] 252 ITR 878 (Delhi) Allahabad High Court in CIT v. Radico Khaitan Ltd. [2005] 274 ITR 354 and CIT v. Prem Heavy Engineering Works P. Ltd. [2006] 285 ITR 554 (All), Calcutta High Court in CIT v. Britannia Industries Ltd. [2006] 280 ITR 525 and Madhya Pradesh High Court in R. D. Joshi and Co. v. CIT [2001] 251 ITR 332, we do not subscribe to observation in judgments to effect that if amount is advanced from mixed account or share capital or sale proceeds or profits, etc., same would not be termed as diversion of borrowed capital or that Revenue had not been able to establish nexus of funds advanced to sister concerns with borrowed funds. Once it is judgment of court was delivered by Pradeep Kant J. This is bunch of writ petitions filed by different assessees belonging to Sahara group, consisting of several companies, firms and individuals, challenging order passed under section 127(2) of Income-tax Act, 1961, transferring cases of Sahara group from their respective Assessing Officers at Lucknow to Assistant Commissioner of Income-tax, Central Circle-6, New Delhi. Though orders in respect of all assessees have been passed individually and separately, which have been challenged in writ petitions filed by them, since ground of transfer and questions of fact and law, which have been raised and require determination, are one and same, we have proceeded to decide petitions by one common order, with consent of parties counsel. Writ Petition No. 5395 (MB) of 2005, M/s. Sahara Airlines Ltd. v. Director General of Income-tax (Inv.) is being taken as leading petition. pleadings exchanged in one or more writ petitions shall form basis of challenge and defence in all writ petitions. In all there are 48 assessees, out of which, six are individual assessees at Lucknow and rest of assesses are companies, firms or individuals. Out of these 48 assessees, 31 companies including six individual assessees are assessed at Lucknow, two are assessed at Kolkata, nine at Mumbai, five at New Delhi and one at Pune. Twelve companies and six individuals are being assessed at present by Assistant Commissioner of Income-tax, Central Circle at Lucknow and rest of assessees at Lucknow are being assessed by respective Assessing Officers of their Circle. notice under section 127(2) of Act has been issued in all cases and date of notice is June 20, 2005. notice has been issued and served upon petitioners saying that Sahara group consists of several companies, firms and individuals, which are presently assessed to tax at various places, including at Lucknow, Delhi and Kolkata. group has over period of time diversified its business activities across cities and towns of country. There is, however, inter- lacing and interconnection of funds and of business activities amongst various entities of group. Sahara group had earlier filed application before Chief Commissioner of Income-tax (Central) North, New Delhi for transfer of cases being assessed in Central Circle, Lucknow on ground that administrative/control offices of most of cases in this group have shifted to Delhi and that it is fact that presently most of offices of group concerns including those of M/s. Sahara Airlines Ltd. and of Sahara India (Firm) are located in Delhi and many of companies are also assessed to tax at New Delhi and, therefore, Commissioner of Income-tax (Central), Kanpur, was of opinion that for co-ordinated investigation and assessment, cases of Sahara group should be centralized in New Delhi for which assessee was being afforded opportunity of being heard by attending office personally or through its authorised representative on particular date. petitioner submitted its reply to aforesaid notice on July 5, 2005 and again on July 11, 2005. In reply to recital made in notice, it was denied that most of offices of group including those of Sahara Airlines Limited and of Sahara India (Firm) are located in Delhi, for reason that registered office as well as command office of assessee is situated at Lucknow and it is only branch office which is situated at New Delhi. Exception was also taken to reliance being placed upon application for transfer moved by petitioner in year 1996, which application, according to petitioner could not have been taken into consideration as on transfer of cases in pursuance of aforesaid application of 1996 to New Delhi vide order dated December 9, 1996, making it effective from May 1, 1997, petitioner requested that cases of petitioner may be assessed at Lucknow, which prayer was accepted by Central Board of Direct Taxes, which cancelled earlier order of transfer vide order dated April 29, 1997. It was further pleaded that cases of group were transferred to Central Circle at Lucknow in year 1991 and despite more than 14 years having lapsed since group cases were centralized, despite request for decentralization of cases at Lucknow, cases have not been so far decentralized and now out of blue, it is proposed that cases of assessee-petitioner be transferred to Central Circle, New Delhi. reply also indicated that assessee would be facing lot of inconvenience as entire activities of assessee are centralized at Lucknow, which is command office of assessee and all books of account and movement of staff from Lucknow to New Delhi time and again just for compliance of income-tax proceedings would involve not only precious man hours, loss of time but also hampers day-to-day running of business of assessee and that proposed action may have been justified had there been no competent authority at Lucknow but cases at Lucknow are being presently assessed in Central Circle itself and, therefore, there cannot be any reason for transfer. observation regarding inter-lacing and inter-connection of funds and business activities amongst various entities of group, in notice was found to be sweeping observation by petitioners and was not specifically denied or accepted. In view of equally competent officers being available at Lucknow and assessment at Lucknow being made by Central Circle, it was requested that proposal for transfer be dropped. Again on July 11, 2005, additional reply was submitted reiterating same stand that registered office of assessee-company as well as its administrative/control office are situated in Lucknow, in respect of companies which are proposed to be transferred to New Delhi. principal place of business is Lucknow, and administrative control in respect of group companies is exercised at Lucknow and directors/partners are also placed at Lucknow. companies which are being assessed at Delhi are (i) M/s. Sahara India Corporation Limited; (ii) M/s. Sahara India Investment Corporation Limited; (iii) M/s. Sahara India International Corporation Limited; (iv) M/s. Sahara India Electricals Limited; and (v) M/s. Sain Processing and Weaving Mills P. Limited. All these companies are said to be dormant companies in which either no business is being carried on or they are investment companies having their registered/administrative office at New Delhi and that it was not case where principal place of business of major concerns of group is situated at New Delhi, but it is only reverse inasmuch as companies which are being assessed at Lucknow have their principal place of business at Lucknow only. reason for filing application for transfer of cases from Lucknow to New Delhi in year 1996 and subsequent reason for cancellation of transfer order, on own difficulty of Department was also mentioned. Anxiety was also shown as to what purpose would be achieved by shifting centralization of cases from Lucknow to Delhi inasmuch as cases are already centralized in Central Circle - I, Lucknow, which means that co-ordinated enquiry is already being conducted at Lucknow and by shifting centralization to New Delhi, no useful purpose can be achieved. observation made in notice regarding inter-lacing and interconnection of funds and business activities amongst various entities was again said to be sweeping observation, and thus was avoided from being categorically replied. (i) After considering reply of petitioners, impugned order of transfer was passed on July 29, 2005. order of transfer passed under section 127(2) of Act takes into consideration various objections raised by petitioners and holds that Sahara group consists of several companies, firms and individuals, which are presently assessed to tax at various places, including at Lucknow, Delhi and Kolkata. After centralization of some of cases of group at Lucknow in 1991, group has, over period of time, diversified its business activities, which are now spread across cities and towns of country. There is interlacing and inter-connection of funds and of business activities amongst various entities of group. In aforesaid reply, assessee denied that there is any inter-lacing and inter-connection of funds and of busi ness activities amongst entities of group on ground that various entities of group are separate having separate nature of business and being separately assessed to tax. This claim of assessee was, however, not found acceptable. few examples of inter-lacing of funds and close connection amongst various entities of group were also enclosed as annexure to aforesaid order. order further said that since different entities of Sahara group are presently being assessed at various places including at Lucknow, Delhi and Kolkata, it is considered necessary for purposes of co-ordinated investigation and assessment that all cases are centralized at one place. plea of assessee that cases being assessed at Delhi are all dormant cases was not found to be correct and for that purpose substantial income/loss has been shown in order itself for assessment years 2003- 04 and 2004-05. Commissioner also found that there is interlacing of funds and close connection of cases assessed at Delhi with other cases of group and few examples of same were enclosed as annexure. Therefore, for purposes of co-ordinated investigation and assessment, it was necessary that cases of group which are being assessed at various places be centralized at one place with single Assessing Officer. plea taken by assessee that there is no difficulty in co-ordinated investigation, as some cases of group are already centralized in Central Circle at Lucknow was also not accepted. Commissioner, while considering objections of petitioners against proposed transfer, having found that they were not sufficient to drop proposal also considered and held that though transfer of case of assessee from Lucknow to New Delhi may cause some inconvenience to assessee, as per submissions made in written replies, such inconvenience that may be caused to assessee, cannot override need of Revenue for better investigation of case, after relying upon various judgments of various courts. main thrust of attack to impugned orders is as follows: (i) Commissioner, while taking proceedings for passing order under section 127(2), acts as quasi-judicial authority and his decision cannot be treated as purely administrative action, which would necessarily require objective consideration of issues and laying down of reasons, which are germane to question involved, namely, transfer of cases from one place to another. (ii) requirement of affording opportunity of hearing means effective opportunity and not merely eye-wash and that recording of reasons would also necessarily mean that validity of same and reasonableness thereof, can be subjected to judicial scrutiny. (iii) There was no justification for transferring cases from Lucknow to New Delhi as group of cases was already being assessed with Central Circle at Lucknow right from year 1991 and, therefore, transfer of all cases from Lucknow is arbitrary action (out of 31 assessees/petitioners at Lucknow, only 18 are being assessed with Central Circle, including six individuals from year 1991/1993 and rest of assessees at Lucknow are being separately assessed at different circles even in Lucknow). (iv) application moved by petitioners in year 1996 for transfer of cases from Lucknow to New Delhi under given circumstances, at that time, could not have been made basis of transfer in year 2005, ignoring subsequent events and developments. (v) Inter-lacing and inter-connection of funds and business activities of different entities and companies are mere business transactions and well known in business world and, therefore, this ground in itself could not be reason for transferring cases. (vi) It was for best co-ordinated investigation and assessment that petitioners were being assessed in Central Circle at Lucknow (18 in number, out of 48) and, therefore, if for same reasons all assessees were to be assessed by one Assessing Officer, then it would have been reasonable to transfer cases from Delhi to Lucknow instead of transferring Lucknow cases to New Delhi and that petitioners were ready for cases being transferred from Delhi to Lucknow and getting all cases assessed under one single authority under Central Circle at Lucknow for which they have no objection; and (vii) That office having entire control of group is situated at Lucknow and that all policy decisions are taken at Lucknow. head and brain of group is situated at Lucknow and, therefore, it is principal place of business of entire group, which is basis for determining jurisdiction under section 124 and thus there was no justifiable reason for transfer of cases. It may be put on record that after order of transfer was passed, petitioners moved application to Director General of Income-tax (Inv.)- North, Lucknow, for intervention and directions for recall/reconsideration/modification of order passed under section 127(2) of Income-tax Act by Commissioner of Income-tax (Central), Kanpur transferring case of assessee from Central Circle-I, Lucknow to Central Circle-VI, New Delhi, but it appears that Director General has found it not proper to intervene in matter. Section 127 of Act, which reads as under, prescribes two prerequisite conditions for exercising power of transfer of case from one Assessing Officer to another Assessing Officer in circumstances given therein, namely, opportunity of hearing to assessee and recording of reasons for transfer. 127.(1) Director General or Chief Commissioner or Commissioner may, after giving assessee reasonable opportunity of being heard in 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) also subordinate to him. (2) Where Assessing Officer or Assessing Officers from whom case is to be transferred and Assessing Officer or Assessing Officers to whom case is to be transferred are not subordinate to same Director General or Chief Commissioner or Commissioner, (a) where Directors General or Chief Commissioners or Commissioners to whom such Assessing Officers are subordinate are in agreement, then Director General or Chief Commissioner or Commissioner from whose jurisdiction case is to be transferred may, after giving assessee reasonable opportunity of being heard in matter, wherever it is possible to do so, and after recording his reasons for doing so, pass order; (b) where Directors General or Chief Commissioners or Commissioners aforesaid are not in agreement, order transferring case may, similarly, be passed by Board or any such Director General or Chief Commissioner or Commissioner as Board may, by notification in 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 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 offices of all such officers are situated in same city, locality or place. (4) transfer of case under sub-section (1) or sub-section (2) may be made at any stage of proceedings, and shall not render necessary reissue of any notice already issued by Assessing Officer or Assessing Officers from whom case is transferred. It cannot be disputed that if statute requires affording of opportunity of hearing before order is passed to person to whom order relates, it would be effective opportunity, which is required to be given. effective hearing, which is required to be given would mean that assessee must know ground for proposed transfer/proposed action and opportunity to rebut same and to establish that grounds for such transfer are not tenable under law or for any other reason, as may be admissible under law, such ground would not be sufficient to pass order of transfer. In doing so, material which is being sought to be relied upon and facts, which have led to formation of opinion for proposed transfer, have to be broadly and briefly informed to assessee. On knowing aforesaid ground and facts and circumstances of case, assessee would have right to object by filing written representation/ objections and thereafter authority concerned, after affording opportunity of personal hearing, would pass order either accepting objections or pleas raised by assessee, or giving his own reasons for not accepting same. latter exercise would be incorporated and reduced into writing, which would meet requirement of recording of reasons in order. reasons, so recorded, have to be relevant and germane to issues raised which can be supported by documentary evidence or such evidence, as may be available, but if reasons are absurd or non- existent, mere recording or statement of reasons would not be sufficient to hold order valid for compliance with requirement of recording reasons. But sufficiency or adequacy of material for recording such reasons, may not be factor to raise plea of quantitative insufficiency of material, so as to make reasons recorded arbitrary or bad. In regard to opportunity being afforded to petitioners, it is apparent and there is no serious dispute also that notices as required to be issued to petitioners giving grounds for proposed transfer and affording opportunity of hearing, were issued and served, to which petitioners responded not only by filing objections but also additional objections and they were also afforded personal hearing before passing of order. However, attempt has been made to impress that full opportunity could not be said to have been afforded as observation in matter of inter-lacing and inter- connection of funds and business activities of different entities of group, was only sweeping observation in notice but in passing order, list of few such companies/assessees has been annexed as annexure to support aforesaid ground but names of such companies/assessees were not disclosed to petitioners in notice. aforesaid plea of petitioners is to be seen in light of contents of notice issued under section 127(2) and case of petitioners, which has been taken in writ petition. In notice, it has been specifically incorporated that there is inter-lacing and inter-connection of funds and of business activities amongst various entities of group. petitioners chose not to deny it by specifically making any such averment in their objections but felt satisfied by saying that observation is sweeping and that various entities of group have separate business and are separately assessed before Department, despite fact that they had filed two sets of objections. Separate business and separate assessment of group companies was not answer to plea of inter-lacing and inter-connection of funds. petitioners, instead of specifically denying that there was any interlacing and inter-connection of funds or business activities with different entities of group, chose to give evasive reply and avoided plea and, therefore, for establishing aforesaid fact, if Commissioner, from own record of assessee, has shown material on basis of which such opinion was formed by him, that too, after affording opportunity of personal hearing, it cannot be said that petitioners were deprived of any opportunity or reasonable opportunity to meet ground. Commissioner, after hearing petitioners, while considering objections, for establishing factum of inter-lacing and inter-connection of funds and business activities of different entities of group, named few companies giving their details from own balance-sheets of assessee companies. naming of these companies and showing investment made in unquoted equity shares of various sister concerns, details of which were obtained from own balance-sheets of companies and also that companies had entered into joint ventures with sister concerns for joint development of housing projects, that too from own record of company, would not mean that petitioners were not afforded any opportunity to rebut entries of balance-sheet or details of such joint venture projects with sister concerns and profit sharing ratio shown therein. few of joint ventures which are quoted therein, are Sahara States, Hyderabad with co-ventures (i) Sahara India Commercial Corporation Ltd. assessed at Kolkata; (ii) Sahara India Corporation Ltd. assessed at Delhi; and (iii) Sain Processing and Weaving Mills Ltd. assessed at Delhi and also Sahara States, Bhopal with co-ventures (i) Sahara India Commercial Corporation Ltd.; (ii) Sahara Airlines Ltd.; and (iii) Sahara India International Corporation Ltd. From above details, it implies that Sahara India Financial Corporation Ltd. holds balance 7.5% shares in both these joint venture projects. details also show on examination of balance-sheet of M/s. Sahara India (Firm) for assessment year 2003-04 following transactions. (i) firm has shown receipt of Rs. 250.45 crores as reimbursement from M/s. Sahara India Financial Corporation Ltd. and has shown to have paid rent and utility charges of Rs. 3.57 crores and lease rent of Rs. 5.33 crores to M/s. Sahara India Financial Corporation Ltd. (ii) firm has shown receipt of Rs. 442.53 crores as commission and service charges from M/s. Sahara India Commercial Corporation Ltd. Kolkata. (iii) firm has shown to have received Rs. 20.81 crores as service charges from M/s. Sahara Airlines Ltd. firm has shown to have paid Rs. 9.80 crores against air freight and cargo charges and Rs. 5.17 crores against computer lease rent to M/s. Sahara Airlines Ltd. (iv) firm has shown to have received Rs. 3.73 crores under head service charges from M/s. Sahara India International Corporation Ltd. It may be added that M/s. Sahara India (Firm) has its zonal offices at Gorakhpur, Lucknow, Varanasi, Bokaro, Bhopal, Patna, Baroda, Jaipur and Hyderabad and also offices at Kolkata, Noida, Delhi and Mumbai. Sri J. B. Roy, one of its partners, resides at New Delhi. products division of M/s. Sahara India (Firm) has its offices at Lucknow, Noida, Kolkata, Pondicherry, Daman, Ahmedabad, Mumbai, Chennai, Bhopal and Jaipur. M/s. Sahara Airlines Ltd. has shown to have taken loan of Rs. 417.04 crores from M/s. Sahara India Commercial Corporation Ltd. in assessment year 2004-05. On other hand, this company has given loans amounting to Rs. 13.71 crores and advances of Rs. 69.07 crores. balance-sheet also shows that company has given loan of Rs. 3.80 crores to M/s. Sahara India Ltd. and has made following investment: (i) It has invested Rs. 22.81 crores with M/s. Sahara T. V. Ltd., Mauritius. (ii) It has invested in shares of M/s. Sahara India Corporation Ltd. by subscribing to 4,61,89,800 shares of Rs. 10 each. (iii) It has invested in shares of M/s Sahara India Commercial Corporation Ltd. (Overseas), Mauritius by subscribing to 1,500 shares, whose book value is shown at Rs. 6.99 lakhs. It may be added that main business activities of M/s. Sahara Airlines Ltd. are carried out at Delhi (Ambadeep Building, Kasturba Gandhi Road). During financial year 1999-2000 corresponding to assessment year 2000-01, M/s. Sahara India Financial Ltd. gave sum of Rs. 239.40 crores to M/s. Sahara India Commercial Corporation Ltd., Kolkata, on account of loan for Amby Valley which is located near Lonawala. During course of assessment for assessment year 1999-2000 of M/s. Sahara India (Firm), it was noticed that M/s. Sahara India Commercial Corporation Ltd. has mobilized funds through M/s. Sahara India (Firm) as under: Rs. (i) Optionally convertible debentures (Sahara 10) 20,83,54,000 (ii) Optionally convertible debentures (Sahara 14) 3,30,03,07,000 (iii) Equity shares of Rs. 10 each at premium of Rs. 90 per share 36,42,47,000 (iv) Preference shares 16,83,000 3,87,45,91,000 above examples were given to illustrate inter-lacing and interconnection of funds amongst different entities of Sahara group. During course of arguments, Sri Rakesh Dwivedi, learned senior advocate, did admit that inter-lacing and inter-connection of funds and business activities is part of business and no exception can be taken thereto, as each and every entry stands explained or would be explained, as required. Sri Dewan, who initially submitted that inter-lacing is nothing but interborrowing of funds amongst entities of group or taking loan, which is permissible under law, however, adopted same stand as was taken by Sri permissible under law, however, adopted same stand as was taken by Sri Rakesh Dwivedi and said that inter-lacing and inter-connection of funds and business activities is common phenomenon in group of companies and that assessments are being separately made of each assessee of company and they are being separately assessed, therefore, there cannot be any objection to that as law permits to do so. In light of aforesaid stand of petitioners, not much remains to hold that due opportunity was not afforded to petitioners, while considering question of inter-lacing and inter-connection of funds and business activities of different entities of Sahara group. It may be different matter that inter-borrowing or inter-loaning of funds or making investment in sister concern or inter-lacing of funds may be permissible under law and no exception can be taken in such activities, which may be common in practice in business world but admissibility and permissibility of such activities or inter-connection or inter-lacing of funds, cannot be ground for rejecting reasons given in impugned order of transfer. In assessment proceedings, if it is found that all such activities are permissible and entries are properly explained and that tax has been duly assessed and income has rightly been shown, probably there cannot be any objection to such activities but such conditions/activities are undoubtedly relevant for getting assessment made by one single officer. If Commissioner has found and as it is admitted, may not be specifically, but apparently, that there is inter-lacing and inter-connection of funds and business activities amongst different entities in group, view taken by Commissioner that such assessment should be made by single officer, cannot be faulted. ground of transfer cannot be ground for rejection of entries in records nor would be ground for making assessment in particular manner. Thus there appears to be no enforceable grievance of not affording reasonable opportunity in this court, to petitioners before passing impugned order. In case of Mahabir Prasad Santosh Kumar v. State of U. P., AIR 1970 SC 1302, it has been held by apex court that (page 1304) Recording of reasons in support of decision on disputed claim by quasi-judicial authority ensures that decision is reached according to law and is not result of caprice, whim or fancy or reached on grounds of policy or expediency. party to dispute is ordinarily entitled to know grounds on which authority has rejected his claim . In case of Power Controls v. CIT [2000] 241 ITR 807 (Delhi) and in particular para. 19 of report, court observed that (page 814) ... though it may neither be possible nor desirable to confront assessee with entire material on record necessitating transfer of case to particular Assessing Officer for co-ordinated investigation but in order to provide reasonable and proper opportunity to him to make effective representation, as contemplated in section 127(2), some basic summary of facts, giving some broad idea of reason for transfer of case must be indicated in show-cause notice itself . Their Lordships in aforesaid case clarified in para. 22 of report that (page 816) ... we (their Lordships) are not holding for moment that administrative convenience and/or co-ordinated investigation cannot be valid ground for transferring cases belonging to particular group to single Assessing Officer. It would be good ground for transfer but requirement of law, which has to be observed before transferring assessee s case from one officer to another, is that assessee must be apprised of basic and broad facts, which, in opinion of authorities concerned, necessitate co-ordinated investigation by single Assessing Officer, to enable assessee to put forth his view point on issue so that considered decision is taken to prevent unnecessary harassment to assessee and at same time object of transfer is achieved, which of course is prime consideration in such like matters. In Pannalal Binjraj v. Union of India [1957] 31 ITR 565 (SC); [1957] SCR 233, 263, court observed that (page 590) .. If reasons for making order are reduced however briefly to writing it will also help assessee in appreciating circumstances which make it necessary or desirable for Commissioner of Income-tax or Central Board of Revenue, as case may be, to transfer his case under section 5(7A) of Act and it will also help court in determining bona fides of order as passed if and when same is challenged in court as mala fide or discriminatory . This was case under section 5(7A) of Indian Income-tax Act, 1922. court also took notice of fact that Central Board of Revenue or Commissioner of Income-tax, as case may be, instructed Income- tax Officers concerned to minimise inconvenience caused to assessees and even proceed to their respective residence or places of business in order to examine accounts and evidence. In spite of denials of assessees in affidavits which they filed in rejoinder, their Lordships presumed that such facilities will continue to be afforded to them in future and inconvenience and harassment which would otherwise be caused to them will be avoided. humane and considerate administration of relevant provisions of Income- tax Act would go long way in allaying apprehensions of assessees and if that is done in true spirit, no assessee will be in position to charge Revenue with administering provisions of Act with evil eye and unequal hand . Next, it has been vehemently urged from side of petitioners that order impugned is being sought to be defended by giving explanation in counter affidavit, though such explanation or reasons do not find mention in order itself. Reliance has also been placed upon case of Commissioner of Police v. Gordhandas Bhanji, AIR 1952 SC 16 in support of plea that public order, publicly made, in exercise of statutory authority cannot be construed in light of explanation subsequently given by officer making order of what he meant, or of what was in his mind, or what he intended to do. Public orders made by public authorities are meant to have public effect and are intended to affect action and conduct of those to whom they are addressed and must be construed objectively with reference to language used in order itself. In case of Hindustan Petroleum Corporation Ltd. v. Darius Shapur Chenai [2005] 7 SCC 627, Supreme Court observed that (page 639) ... When order is passed by statutory authority, same must be supported either on reasons stated therein or on grounds available therefor in record. statutory authority cannot be permitted to support its order relying on or on basis of statements made in affidavit de hors order or for that matter de hors records . Reliance has also been placed upon case of Mohinder Singh Gill v. Chief Election Commissioner reported in [1978] 1 SCC 405 for aforesaid proposition. petitioners plea that order has been sought to be improved and supplemented by reasons given in counter affidavit, apparently does not stand supported by averments made in counter affidavit when compared with reasons recorded in order for transfer. counter affidavit only explains reasons given in impugned order. It has been own case of petitioners that directors and partners have shifted to Delhi and that Sri J. B. Roy has shifted his residence to New Delhi. aforesaid position is not being rebutted and rather is admitted in para. 24 of rejoinder affidavit. This fact was very well mentioned in application dated October 17, 1996, and if proposed notice and impugned order both give reference to said application, it cannot be said that this plea was not in show-cause notice or in order itself. In respect to details of companies and firms being given in order, for purpose of showing glimpse of inter-lacing and interconnection of funds and business activities amongst sister concerns, regarding which there was specific plea in notice, as has already been recorded by us, it does not in anyway adversely affect merits of order and for reasons given in earlier part of judgment that would also not be case to hold that this is additional reason given by Commissioner, which is otherwise sought to be improved upon by making assertion in counter affidavit. consolidation of cases at Delhi would not mean that any new ground has been raised in counter affidavit but, in fact, when all assessment cases are to be assessed under one single officer, it can, without straining language, be termed as consolidation of cases for purpose of making appropriate assessment of tax and collection thereof. This phrase consolidation of cases does not give any additional impetus to order impugned but only explains circumstance for transfer of cases, which is otherwise inherently present in order itself. plea that transfer of cases is in administrative convenience and Delhi is having better infrastructure, as urged by counsel for respondents, though has been raised in arguments does not find place in counter affidavit in specific terms. But it is clear that order for transferring cases to one single officer at particular place has been passed for co-ordinated investigation and assessment and, therefore, such place would be chosen by Commissioner only if it is administratively convenient and there is required infrastructure for purpose. reasons thus flow from order as well as from record, as has been held in case of Hindustan Petroleum Corporation Ltd. [2005] 7 SCC 627. In regard to plea that order suffers from acute unreasonableness as it takes into consideration, application dated October 17, 1996, moved by petitioners themselves for transfer of cases from Lucknow to New Delhi, following facts are essential in understanding issue and also to find out that whether reference to aforesaid application was wholly irrelevant, which has effect of vitiating order and, if not, extent to which said reference has swayed order. Eleven companies were being assessed under one officer in Central Circle, Lucknow since year 1991 and thereafter seven more assessees including one company and six individuals were brought under same officer some time in year 1993. Thus in all 18 petitioners were and are being assessed by Assistant Commissioner of Income-tax, Central Circle, Lucknow. Request for transfer of cases to New Delhi from Lucknow was for first time made on October 21, 1994, then on November 9, 1994 and January 17, 1996 but having failed to get cases transferred from Lucknow to New Delhi, last application dated October 17, 1996, was moved by group giving reference to all these earlier applications. It was case of group that administrative/control office of main group companies/firms was shifted to Delhi and that directors/partners, who were controlling day-to-day affairs of different companies had also shifted their residence from Lucknow to Delhi, and affairs of firms/companies were being controlled from Delhi and all records/ accounts were also being maintained at Delhi. It was also mentioned in application that Sahara India Airlines Limited is one of large companies of group, which is engaged in business of air taxi operator on domestic sector in country which has totally independent activities, not related to group, which is otherwise engaged mainly in para- banking business in India. All operations of said company are managed/looked after and operated from New Delhi. On November 3, 1996 Sahara India Financial Corporation Limited resolved to shift registered office of company from Lucknow to Noida in National Capital Region, New Delhi. transfer order was passed on November 20, 1996 transferring all cases of assessment from Lucknow to New Delhi including 18 Sahara companies/assessees making it effective with effect from December 9, 1996. However, by means of order dated December 9, 1996, Central Board of Direct Taxes made order of transfer effective with effect from May 1, 1997, instead of December 9, 1996, and thus modified order dated November 20, 1996 to that extent. Necessary forms were filed with Registrar of Companies notifying change in its registered office changing same from Lucknow to Noida. After aforesaid order of transfer passed on own request of petitioners, which was passed on practical difficulties, which were being faced by petitioners, petitioners appear to have moved application on April 19, 1997, that in case Department is having difficulty in transferring cases to Delhi, Sahara group would have no objection, if they were to be assessed at Lucknow. order of transfer dated November 20, 1996, passed by Central Board of Direct Taxes was cancelled vide order dated April 29, 1997, and cases were again transferred to Lucknow. On May 18, 1997, registered office of company, Sahara India Financial Corporation Ltd., was also resolved to be transferred from Noida to Lucknow, for which necessary formalities were done with Registrar of Companies. It has been specifically pleaded and contended by Sri Anil Dewan that earlier order of transfer was cancelled, because of difficulty being faced by Department in dealing with cases at New Delhi, on request so made by petitioners. fact that transfer order dated November 20, 1996, was cancelled because of difficulties being faced by Department has been refuted by respondents nor such mention finds place in order of cancellation of transfer but taking plea as correct that said transfer order was cancelled by Department, because of its own difficulty in carrying on assessment at New Delhi, same would mean that petitioners were neither unwilling nor were facing any inconvenience or difficulty in being assessed at New Delhi, despite 18 assessees of group already being assessed by one single officer at Lucknow, therefore, if cases are now being transferred to New Delhi, there cannot be possible objection on ground that earlier transfer was cancelled on request of petitioner and, therefore, contents of said application could not have been taken into consideration. perusal of aforesaid application of year 1996 would reveal that it was moved by all then assessees (Sahara group) because of diversification of business activities of Sahara group and its business transactions in New Delhi. Mere transfer and retransfer of registered office of one company or other, from Lucknow to Noida and Noida to Lucknow was hardly of any significance for purpose of assessment being made either at Lucknow or New Delhi. application in its contents was not confined to any one particular company or its change of administrative and controlling office but in fact, it related to entire group, pleading that all companies/firms had initially started their operations from Lucknow but now Lucknow is one of several main branches of group companies and, therefore, this could not be bar for determining jurisdiction in their case at New Delhi. main business activity of group was said to be para-banking and not that of air taxi. In regard to business activities, as enumerated in application, at Delhi, coupled with admitted fact that offices of group are situated throughout country and that five group companies were being assessed at Delhi and that activities of group have diversified and spread across country with significant presence in New Delhi, Commissioner, if in background of own case of petitioners, made reference to aforesaid application dated October 17, 1996, while proceeding to consider place for making co-ordinated assessment for purpose of just and correct assessment and collection of tax, it cannot be said that he was mainly swayed by said fact or that it was wholly irrelevant consideration. conduct of petitioners shows that they themselves were not sure as to whether they should be assessed at Lucknow or at Delhi and, therefore, Commissioner was fully justified to provide place for assessment under one officer at his own discretion after taking into account various factors necessary for purpose. It is not order nor case of Department that since petitioners had moved application in year 1996 for transfer of cases, therefore, on that application, cases are being transferred, rather relevance of said application has been limited to extent of making reference to facts given in order with respect to various activities of Sahara group of companies at New Delhi and request of petitioners themselves regarding request for transfer of cases from Lucknow to New Delhi. It is also relevant to mention that as per own pleading of petitioners, which has been strenuously pressed, cancellation of transfer order dated November 20, 1996, passed on request of Sahara group on its application dated October 17, 1996, was passed not because of any difficulty or inconvenience of petitioners (Sahara group), nor such inconvenience was ever pleaded for cancellation of earlier transfer order and if that be so, reference to aforesaid application can be of no exception. fact remains that at time when group moved application for first time for transfer of cases from Lucknow to New Delhi on October 21, 1994, and then again on November 9, 1994, and January 17, 1996, and lastly on October 17, 1996, same position as it exists today, namely, 18 companies/assessees of group were being assessed under one single officer at Central Circle-I, Lucknow, but despite aforesaid group assessment being made of part of group companies/assessees, prayer was made for transfer of all cases to New Delhi. order of transfer, therefore, while making reference to application dated October 17, 1996, does not take into consideration any such fact, which is wholly irrelevant nor can it be termed extraneous consideration nor has it swayed order away from merits of claim of either parties. Moreover, order not being solely passed on factum of moving application in year 1996 for transfer of cases by petitioners but on reasons independent thereof, namely, inter-lacing and inter-connection of funds and business activities with sister concerns and necessity to have assessment made at one place under one officer, which reasons are in themselves sufficient to sustain order. order cannot thus be held to be arbitrary or bad on this count. next argument which has been stressed with full force is that there could not be any reason, much less justifiable reason for transferring cases from Lucknow to New Delhi, particularly when 18 out of 31 assessees including companies, firms and individuals are being assessed under one officer in Central Circle-I, Lucknow, namely, Assistant Commissioner of Income-tax right from year 1991 in some cases and from year 1993 and, therefore, even if for any good reason all cases are to be assessed by one single officer, that could have been done by transfer of cases from New Delhi to Lucknow, but order does not show any such reason as to why such order cannot be passed nor it discloses reasons for making order of transfer vice versa. While elaborating aforesaid argument, it has also been stated that petitioners would have no objection if all cases are transferred from New Delhi to Lucknow, Central Circle, fact which has been specifically stated in writ petition also. corollary to aforesaid statement is that reasons for transfer of cases to New Delhi are absolutely arbitrary, perverse and do not get support from various documents which have been relied upon by Commissioner, besides being factually incorrect. Before proceeding to test reasons and their alleged arbitrariness or illegality, it would be appropriate to put record straight and see case of petitioners, which they have taken in reply to notice issued against proposed transfer of cases from Lucknow to New Delhi and whether such plea of concession for transferring cases from New Delhi to Lucknow was ever taken before Commissioner. In their replies dated July 5, 2005, and July 11, 2005, petitioners did not appear to have made any such statement that all cases be transferred and centralized at Lucknow. reply dated July 5, 2005, disputed observations made in proposed notice that administrative/controlling offices of most of cases of group concerns, including those of M/s. Sahara Airlines Ltd. and of Sahara India (Firm) are located in Delhi and many of companies are also assessed to tax at New Delhi which also challenged notice on ground that it has relied upon application dated October 17, 1996, moved by petitioners, and raised grievance that despite request for decentralization of cases at Lucknow, cases were not decentralized but suddenly this transfer has been proposed. reply only made challenge to proposed transfer and it did not say that all cases from New Delhi may be transferred to Lucknow. Similarly in additional reply, same pleas were reiterated. bare reading of aforesaid two replies would indicate that petitioners in their reply have very cautiously stated that group is continuously being assessed to tax in same range in Central Circle, Lucknow, and that no purpose would be achieved by shifting centralization of cases from Lucknow to Delhi, which means that co-ordinated enquiry is already being conducted at Lucknow. While making said reply, petitioners avoided to mention that there were only 12 companies/firms and 6 individuals, whose cases were centralized and even remaining 13 companies/assessees were being differently assessed at Lucknow itself and of course 5 companies, were being assessed at Delhi, apart from companies which were being assessed at different places at Kolkata, Mumbai and Pune. reply gives impression as if all companies of group are being assessed in Central Circle-I, Lucknow and for that matter petitioners reiterated that proposed transfer be dropped. In fact, petitioners very well knew that it is not transfer of cases of only 18 assessees, who were being assessed by single officer in Central Circle, Lucknow but it includes all assessees at Lucknow as well as New Delhi, who are being separately assessed, and of course, cases from Kolkata were also to be transferred to New Delhi. plea that petitioners were willing to have all cases transferred at Lucknow specifically in letter to Director General of Income-tax (Inv.) North, Lucknow on August 18, 2005, is in following terms. If at all it is proposed to centralized all cases same may be centralized at Lucknow where assessee has paraphernalia and man-power to co-operate with Department in assessment proceedings. This letter, besides being addressed to Director General, who had not passed order for transfer, was written after impugned order was passed on July 29, 2005. stand of petitioners before Commissioner was that proposed transfer is bad and is not justified nor is legal, which is based on factually incorrect information, ignoring centralization of cases at Lucknow and competence of Central Circle, where group of companies is being assessed under single officer and, therefore, proposal of transfer be dropped. All pleas raised in reply were in fact, challenges to proposed transfer and not for suggesting that cases from New Delhi be transferred to Lucknow and if it is done so, petitioners would have no objection. reply, in fact, made grievance of not decentralizing cases of petitioners (18 in number) which were being assessed by single officer since 1991 or 1993, reflecting element of discomfort in not decentralizing cases. argument, therefore, that Commissioner did not consider aforesaid plea of petitioner of transferring all cases from New Delhi to Lucknow, thus cannot be said to have been raised before Commissioner. subsequent raising of aforesaid proposal before another authority who had no jurisdiction to review or recall order of Commissioner under Act and thereafter making clear statement to that effect in writ petition, would not render impugned order bad on this ground. said plea also ignores fact, that it is not only cases at Lucknow which were to be transferred to Delhi but also those of Kolkata. It may be appropriate to mention that Commissioner was not required to give reasons for not transferring cases to Lucknow, but he was to record reasons for transferring cases out of Lucknow, which he has done. It can also not be presumed that Commissioner, while proposing and choosing venue, would not have considered, as to which place would be more appropriate for purpose and had he come to conclusion that cases be transferred to some other place, he could have done so. Challenging transfer of cases for co-ordinated and effective investigation, detailed arguments were made from side of petitioners to suggest that this could not have been ground in present case for transfer but later on, aforesaid argument was confined only to plea that there was no valid reason for transferring cases to New Delhi when group of companies was already being assessed at Central Circle under single officer at Lucknow and that if any transfer was to be made, then cases should be transferred from New Delhi to Lucknow under same circle. Sri Anil Dewan, learned counsel for petitioners could not dispute and rather candidly submitted, that when there are several companies/ firms/individuals/assessees in group then they can be directed to be assessed under one single officer in consideration of exigencies of effective and proper assessment to income-tax and consequent tax collection. In fact, he reiterated stand that petitioners would have no objection if all cases are transferred to Lucknow and assailed reasons for transferring cases to New Delhi. In group where several companies, firms, institutions and individuals are assessees and having common directors and partners etc., in one or other company or firm and where there are inter-corporate transactions and borrowings and where inter-corporate loans are provided and where there is element of inter-lacing of funds and intermixing of activities with other entities, it is necessary for correct, proper and just assessment of tax and for collection thereof, to get assessment made under one single officer. This would not only be convenient to Department in making assessment of tax but would also be beneficial to assessees while participating in assessment proceedings. best co-ordinated investigation and assessment would require that all cases are considered by officer, who can have his access to record of all assessees and proper investigation could be made. This will also be less time consuming and more transparent and apparent. In view of clear stand of petitioners that there cannot be any objection to cases being assessed by single officer for co-ordinated and effective investigation, it requires no further discussion to hold that ground for transfer of cases to one single officer cannot be said to be illegal, arbitrary or bad in law. We would like to put on record passage from judgment in case of General Exporters v. CIT [2000] 241 ITR 845 (Mad), wherein court considering judgments passed by various High Courts, has held that facilitating of investigation or co-ordinate investigation is substantial ground for transfer of case, which reads as under (page 854): In Jharkhand Mukti Morcha v. CIT [1997] 225 ITR 284, Ranchi Bench of Patna High Court, after referring to Sameer Leasing Co. Ltd. v. Chairman, CBDT [1990] 185 ITR 129 (Delhi); V. K. Steel Industries P. Ltd. v. Asst. CIT [1991] 187 ITR 403 (AP) and Vijayasanthi Investments P. Ltd. v. Chief CIT [1991] 187 ITR 405 (AP), preferred to follow decision reported in Assam Surgical Co. v. CBDT [1984] 145 ITR 400 (Gauhati) and Bhatia Minerals v. CIT [1993] 200 ITR 591 (All), as against view of Andhra Pradesh High Court in Vijayasanthi Investments P. Ltd. v. Chief CIT [1991] 187 ITR 405 and further held thus (page 295): Apart from Delhi and Allahabad High Courts, Gauhati High Court in case of Assam Surgical Co. v. CBDT [1984] 145 ITR 400, Rajasthan High Court in case of Shri Rishikul Vidyapeeth v. Union of India [1982] 136 ITR 139 and Calcutta High Court in case of Dwarka Prosad Agarwalla v. Director of Inspection [1982] 137 ITR 456, have held that facility of investigation or co-ordinated investigation is substantial ground for transfer from one officer to another officer . only question that remains to be answered is regarding transfer of cases from Lucknow to New Delhi. It has been submitted on behalf of petitioners that since principal place of business of group, namely, Sahara group, consisting of companies, firms and individuals is at Lucknow, therefore, keeping in mind provisions of section 124 of Act, which defines jurisdiction of officer for purpose of assessment, cases could not have been directed to be transferred to New Delhi. In support of this plea, it has been urged that principal place of business of company would mean, where policy decisions are taken, directives are issued and control is effected, namely, where head and brain of company is situated. Since controlling office and command office of group is at Lucknow, therefore, Lucknow would be principal place of business for purpose of determining jurisdiction. In response, it has been submitted that principal place of business for purpose of section 124 would mean, where business activities and operations of company are being undertaken and not merely where headquarters or registered office is situated. It has further been argued that in any case considerations for passing order under section 127(2) are entirely different than requirement of section 124, which provision, in effect, would not be attracted when considering applicability of section 127(2). determination of jurisdiction under section 124 and under section 127(2) has different connotations and different purpose. Considerations, therefore, also differ and there cannot be valid defence for assessee for challenging order passed under section 127(2) on ground that assessment should be made at place where assessees/group companies are having their principal place of business. Section 127(2) does not restrict exercise of discretion of transfer of cases to any such limitation nor is its exercise to be guided by principal place of business of group companies/assessees. It would be sufficient if there are several assessees in group and they are having their business transactions and activities at different places, which require consolidation or assessment proceedings to be conducted at one place under single officer; such cases can be transferred to any one particular place, which is found to be appropriate by authority. Of course, if order is absolutely arbitrary transferring cases to particular place, where assessee is having no business activities or where no fruitful purpose would be served in transferring cases, plea can be raised that such order is not in consonance with provisions of Act but burden of proof would lie upon assessee to plead and prove same. Mere inadequacy or insufficiency of material for reasons recorded to contrary, would in itself be not ground for faulting order. Section 124(1), which reads as under, prescribes jurisdiction of Assessing Officer in respect of assessee on given principles and grounds mentioned therein, whereas section 127 is exception to aforesaid provision of section 124. 124.(1) Where by virtue of any direction or order issued under sub-section (1) or sub-section (2) of section 120, Assessing Officer has been vested with jurisdiction over any area, within limits of such area, he shall have jurisdiction (a) in respect of any person carrying on business or profession, if place at which he carries on his business or profession is situate within area, or where his business or profession is carried on in more places than one, if principal place of his business or profession is situate within area, and (b) in respect of any other person residing within area. Section 127 confers power to transfer cases of assessee on discretion of authority competent that it is necessary to do so in interests of Revenue and for proper assessment of tax and collection thereof. said discretion is not guided nor is controlled by provisions of section 124. Section 124 is provision defining jurisdiction in normal circumstances, whereas section 127 can be attracted only when it is felt by Commissioner or Central Board of Direct Taxes or authority competent that it is proper or appropriate to exercise power under said provision in interests of Revenue and for proper adjudication of tax liability or collection thereof. Thus, as sequel to aforesaid principle, it follows that transfer of cases can be ordered for facilitating task of effective investigation and for best and co-ordinated assessment. discretion to pass such order has to be exercised keeping in mind inbuilt restraint that such action should not be taken arbitrarily or for any extraneous reason or with ulterior motive but only with view to get correct assessment of tax done, wherein by and large, factors, which may be taken into account, are that business of assessee group is scattered and its activities are not confined at one particular place but at different places and it is necessary to have assessment under one single authority, who may require access to all records, which if seen together and cross-checked, may clear out and give correct picture of income, on which assessment of tax is to be made or accounts are maintained by different assessees of group where there are intertransactions of money, inter-lacing of funds and of business activities with sister concerns, which would also require consolidation of all such cases and records in all cases to be available to Assessing Officer or in given case, conduct of assessees would not permit assessment to be carried on at particular place where normally it is to be made and so on and so forth. There cannot be any straight-jacket formula or any straight guidelines, under which discretion of transfer of cases can be exercised. Each and every case will depend on its own facts and reasons for transfer may be apparent from order of transfer. question as to whether exercise of power under section 127(2) is administrative in nature or it is quasi-judicial has also been seriously argued by parties, stand of Revenue being that it is administrative exercise of power, whereas assessees counsel submitted that it is quasi-judicial function of authority. function of authority. requirement of giving opportunity to assessee before passing order of transfer of cases from one place to another under section 127(2), coupled with requirement of recording of reasons for passing such order, cannot put said power into exclusive administrative domain of authority but it symbolizes its quasi-judicial function. However, distinction and requirement of following principles of natural justice and recording of reasons for passing order in proceedings either administrative or quasi- judicial have been reduced into very thin margin, in effect, making such distinction non-existent. Any order, even if it is administrative, has to meet test of article 14 of Constitution and should be supported by reasons, which are not absurd or arbitrary. order of transfer of cases under section 127(2) may cause some inconvenience to assessee and, therefore, any such order has to be passed after hearing and by giving reasons. aforesaid requirement does fulfil necessary ingredients of principles of natural justice, which have also been incorporated in aforesaid provision. Thus nature of authority, which is exercised under section 127(2) is not of much significance i.e. whether it is taken as administrative exercise of power or quasijudicial exercise of power. In case of Ajantha Industries v. CBDT [1976] 102 ITR 281 (SC); [1976] 1 SCC 1001, apex court was dealing with case, wherein reasons were not communicated and it was said that failure to communicate reasons for passing order under section 127 makes order bad. apex court in aforesaid case observed as under (page 286): When law requires reasons to be recorded in particular order affecting prejudicially interests of any person, who can challenge order in court, it ceases to be mere administrative order and vice of violation of principles of natural justice on account of omission to communicate reasons is not expiated. infirmities as found by apex court in aforesaid case do not exist in present case, as reasons in this case were duly communicated for passing order under section 127(2). In Benz Corporation v. ITO [1998] 232 ITR 807, Kerala High Court held that ... Chief Commissioner of Income-tax had filed counter affidavit stating certain facts and circumstances which were not disclosed in any of communications. Chief Commissioner of Income-tax could not supplement notification with averments made in counter-affidavit and that power of transfer of assessment files from one authority to another is conferred on Commissioner of Income-tax under section 127(1) of Income-tax Act, 1961. power is quasi-judicial one. Such power has to be exercised in fair and reasonable manner and not in arbitrary and mechanical way. passing of reasoned order is one of requirements of fairness in action . In context of present order, petitioners have assailed same saying that it is absolutely arbitrary order and reasons given therein are no reasons in eyes of law. argument has been developed by asserting that five companies assessed at Delhi are dormant companies, whereas main business of group is being carried out at Lucknow in companies having larger turnover of income. This is being refuted by Revenue by giving certain details of turnovers and business activities, their area of operation, and by pleading that order of transfer itself shows that main entities of group are having their business in Delhi, apart from inter-lacing of funds and business activities amongst sister concerns, and various transactions of money shown in said order. It has also been submitted in reply, that assessees of group are assessed at different places, namely, 18 assessees in Lucknow are grouped together and are being assessed by Assistant Commissioner of Income-tax, Central Circle-I, Lucknow but there are 13 companies being still assessed separately. Besides, 5 companies are assessed at New Delhi, 2 in Kolkata, 5 in Mumbai and 2 in Pune and, therefore, if order of transfer of cases to Delhi is passed, it cannot be said that order is arbitrary or it lacks bona fides or that transfer has been made at place where group is having no business activities or is not carrying on any business or business operations over there. case of G. Mohandas v. CIT [2000] 244 ITR 32 (Mad), on which reliance has been placed by learned counsel for petitioners was case where on request of petitioner/assessee, cases of establishment were transferred from Kerala to Chennai as they proposed to shift their entire business activities to Chennai but later on report of Assistant Commissioner of Income-tax, cases were retransferred from Chennai to Kerala. court while considering power to transfer cases did observe that while doing so, convenience of assessee cannot stand in way but further held that said power should not be exercised arbitrarily or on flimsy grounds, nor for extraneous or irrelevant considerations. court further held that said requirements can easily be assessed from reasons given in order as it is mandatory on part of officer to give such reasons under section 127 of Income-tax Act. order of transfer (retransfer) was quashed by High Court considering submissions of learned counsel for petitioner that most of assessments have been completed after transfer in Chennai office, and assessees have already transferred registered office to Chennai and they are gradually closing down business at Trivandrum. Further, transfer of registered office of Kerala Hotels P. Ltd. was approved by Company Law Board and certificate of incorporation with respect to company at Chennai was also produced. Also petitioner permanently shifted their residence to Chennai. details of property purchased in Tamil Nadu were also given and it was pleaded before court that property in Kerala cannot be sold out immediately but it will take some time and they shall sell them during course of period. aforesaid case is of no assistance to petitioners as it was based on facts of aforesaid case, wherein assessee closed their business at Kerala, whereas in instant case, no such plea had been raised of closing down business at New Delhi of all companies. It may be brought on record that on plea being raised by learned counsel for petitioners Sri Anil Dewan that no notice has been issued for transferring cases pending at Pune and Mumbai to New Delhi and, therefore, this reason of centralization of cases or consolidation thereof at Delhi, is not true, Sri Gopal Subramaniam appearing for respondents categorically stated that notices for transfer of cases from Pune and Mumbai to New Delhi are also ready for despatch but since in meantime interim order has been also ready for despatch but since in meantime interim order has been passed in this case at Lucknow and on parity of said order, proceedings for transfer of cases to New Delhi have been stayed by Calcutta High Court also, therefore, notices could not be issued as yet. We may not take judicial notice in strict sense of aforesaid fact of proposed issuance of notice for transfer of cases from Pune and Mumbai to New Delhi but in view of argument of petitioners themselves about non- issuance of such notice, information given by Sri Gopal Subramaniam may also be relevant factor for transferring cases to New Delhi, more so when order in question takes note of fact that assessees under Sahara group are being assessed at various places apart from Lucknow, Kolkata and Delhi, as it makes mention that they are presently assessed at various places including Lucknow, Delhi and Kolkata. Sri Gopal Subramaniam has submitted that since offices of several group entities are located at Delhi and some of group entities are also being assessed to tax at Delhi while others are assessed elsewhere at Kolkata, Pune and Mumbai, centralization of assessment cases at New Delhi cannot be attributed any malice or motive. He also reiterated that principal business of group is mobilization of deposits, which is now spread over in all major cities of country; housing projects of Sahara group are being developed in 217 cities of country with investment running into several lakh crores of rupees which is being handled by M/s. Sahara India Commercial Corporation Limited, assessed at Kolkata; airlines business of group was being handled by M/s. Sahara Airlines Ltd. at New Delhi. Sahara group has also made inroads in media business and has started 24-hour TV channels, besides producing films and business activities pertaining to media business are being looked after by group company at Mumbai and all activities pertaining to media business are concentrated outside Lucknow. Under circumstances when business activities of Sahara Group and its offices are spread throughout country and there is interlacing/inter- connection of funds and business activities amongst various entities of group, choice of venue looking to business activities of group by making overall assessment, order passed by Commissioner cannot be held to be unjustified or unreasonable. choice of place where cases are to be transferred is fully within domain of transferring authority. assessee can have no choice to ask for particular officer or particular place for assessment to be made when power under section 127(2) is to be exercised. It is sufficient that place where cases are being transferred has sufficient links with business activities of group assessees and that comparative volume of business at particular place, may not be very material. assessee though can raise plea against transfer to particular place in case it is found that there is no business activity at all at proposed place of transfer of group companies/firms/individual assessees but even if business activities are carried on with comparatively lesser amount of investment or volume of business is less, it would not be reasonable to hold that order of transfer of cases to such place suffers from any arbitrariness. Even assuming that cases pending at New Delhi or Kolkata could have been transferred to Lucknow, where part of group companies/ assessees are being assessed under one single officer, order cannot be interfered with on this ground as cases could have been transferred to Delhi also and if Commissioner finds, in his discretion, that transfer of cases to New Delhi would be proper, looking to facts and circumstances of case, where administrative exigencies can be adequately/ comprehensively addressed, such discretion cannot be interfered with. It was for Commissioner to decide place where assessment of tax with respect to group companies, firms and individuals is to be made. It is also to be taken note of, that when application for transfer of all cases from Lucknow to New Delhi was made on October 21, 1994, November 9, 1994, January 17, 1996 and lastly October 17, 1996, on which application cases were transferred to New Delhi, eighteen assessees of group were already being assessed by single officer, namely, Assistant Commissioner of Income-tax, Central Circle-I, Lucknow, but even then petitioners themselves made request for transfer of all cases from Lucknow to New Delhi, which may also be relevant factor for transferring cases from Lucknow to New Delhi. It is being urged by learned counsel for petitioners that transfer of cases from Lucknow to New Delhi is not mere inconvenience but is harassment, which according to him is repeated inconvenience being caused to assessee. In Pannalal Binjraj s case [1957] 31 ITR 565 (SC) this argument of inconvenience, however, was held to be not conclusive. court in said case observed that (page 587) There is no fundamental right in assessee to be assessed in particular area or locality. Pannalal Binjraj s case [1957] 31 ITR 565 (SC) also says that question as to whether one or other of authorities will proceed to assess particular assessee has got to be determined not only having regard to convenience of assessee but also exigencies of tax collection and that (page 580) ... In order to assess tax payable by assessee more conveniently and efficiently it may be necessary to have him assessed by Income-tax Officer of area other than one in which he resides or carries on business. It may be that nature and volume of his business operations are such as require investigation into his affairs in place other than one where he resides or carries on business or that he is so connected with various other individuals or organizations in way of his earning his income as to render such extra-territorial investigation necessary before he may be properly assessed. These are but instances of various situations which may arise wherein it may be thought necessary by income-tax authorities to transfer his case from Income-tax Officer of area in which he resides or carries on business to another Incometax Officer whether functioning in same State or beyond it . On considering case of Dayaldas Kushiram v. CIT [1940] 8 ITR 139 (Bom); ILR 1940 Bom 650, court observed that (page 581 of 31 ITR): ... in effect this section does not give right to assessee to have his assessment at particular place but determines Income-tax Officer who is to have power to assess him . We are not impressed by aforesaid plea as transfer of cases has been effected for best co-ordinated assessment and investigation and for proper adjudication of tax and collection thereof in light of circumstances and reasons recorded in order and, therefore, mere inconvenience to assessee cannot be ground for holding order bad, which has been passed wholly in accordance with provisions of Act. During period when judgment was reserved, application was moved on July 20, 2006, for rehearing of case on ground that recently on January 19, 2006, Sahara Airlines has been transferred to M/s. Jet Airlines Ltd. and thus one of main entities at Delhi is no more in existence and, therefore, order which is mainly based upon business activities of said company cannot be sustained and is liable to be set aside. Learned counsel, however, arguing on said application made it clear that petitioners do not want rehearing of cases but only wish to put on record subsequent event. In response, learned counsel for Revenue has urged that order of transfer has been passed not on ground of Sahara Airlines being controlled and being operated from Delhi but considering entire scenario of Sahara group of companies, firms and individuals situated at various places and their diversified business activities, and other reasons recorded in order. M/s. Sahara Airlines Ltd. was being assessed at Lucknow but admittedly five group companies were being and are being assessed at New Delhi, besides several companies being assessed elsewhere, viz. Kolkata, Pune and Mumbai. Further it was own case of petitioners, which reflects from their application dated October 17, 1996, for transfer of cases, that main business of group was para-banking and not business of air-taxi, which was totally independent activity of M/s. Sahara Airlines and, therefore, even if there has been transfer of Sahara Airlines to some other airlines, it would hardly be ground for holding order bad or illegal. This court, taking into consideration arguments raised, passed following order on said application: Sri Wasiquddin Ahmad learned counsel for petitioner has very candidly submitted that he has moved this application for rehearing of writ petition only to bring to notice of this court subsequent developments which have taken place after hearing of writ petition was concluded and not for rehearing petition. Sri Pradeep Agarwal says that no case for rehearing matter is made out and further says that subsequent development cannot be guiding factor for considering validity of impugned order in writ petitions. Place this application on record of case. order will be passed thereon at time of final order/disposal of writ petition. In light of aforesaid submissions made by respondents and own case of petitioners, regarding independent nature of business activities of M/s. Sahara Airlines and also in view of statement given by learned counsel for petitioners that he only wanted to bring subsequent development to notice of court, it will not be necessary for us to consider plea of subsequent event aforesaid any further, nor would it make order bad requiring interference by us. validity of order impugned is to be tested in light of facts and circumstances as it existed on day of passing of order. Any subsequent development or event cannot make order bad nor can it be set aside on that ground, unless such event has effect of nullifying order. It would be different matter in given case that any subsequent development or change or subsequent event, if relevant, may give opportunity to aggrieved person, for approaching authority concerned for consideration of such event. authority, in turn, would be at liberty to consider said prayer as per rules and as per requirement of facts and circumstances of case, if so warranted, as per his own discretion. We, thus, for reasons stated above, do not find any arbitrariness or illegality in impugned order of transfer. petitions have no force and are hereby dismissed. *** SAHARA AIRLINES LTD. & ORS. v. DIRECTOR GENERAL OF INCOME TAX (INVESTIGATION) & ORS.