BEFORE MADURAI BENCH OF MADRAS HIGH COURT DATED : 20.03.2015 CORAM HONOURABLE MR.JUSTICE A.SELVAM and HONOURABLE MR.JUSTICE T.MATHIVANAN W.A(MD)No.98 of 2010 1.The Commissioner of Income Tax-I, Office of Commissioner of Income Tax, No.2, V.P.Rathinasamy Nadar Road, Bibikulam, Madurai 625 002. 2.Income Tax Officer-Ward-I(I), Nagercoil, Tamil Nadu. 3.Deputy Commissioner of Income Tax, Central Circle, Trivandaram, Kerala State. .. Appellants/ Respondents Vs. Noorul Islam Educational Trust represented by its Chairman Mr.A.P.Majeed Khan, No.10/47, Haji Manzil, Thuckalay, Kanyakumari District. .. Respondent/ Petitioner 2 Writ Appeal filed under Clause 15 of Letters Patent against order dated 11.12.2009 passed in W.P(MD)No.60 of 2009 by learned Single Judge. For Appellant : Mr.R.Krishnamoorthy Sr. Standing Counsel for Income Tax For Respondent : Mr.K.Vamanan JUDGMENT (Judgment of Court was delivered by A.SELVAM,J.) Challenge in this Writ Appeal is to order passed in W.P(MD)No.60 of 2009 dated 11.12.2009 by learned Single Judge of this Court. 2.The respondent herein as petitioner has filed W.P(MD)No.60 of 2009 under Article 226 of Constitution of India praying to issue Writ of Certiorarified Mandamus calling for records in respect of order passed in 3 C.No.464/50/91-92/CIT-1, dated 16.12.2008 by first respondent and quash same. 3.The main averments made in petition are that petitioner viz., Noorul Islam Educational Trust has been running so many educational institutions in Thuckalay, Kanyakumari District. It is being run by Committee of Trustees. petitioner is having separate income tax account. first respondent has transferred case of petitioner from file of second respondent to file of third respondent. reason assigned by first respondent for making such transfer is not valid. first respondent ought to have transferred case of petitioner to any Assistant Commissioner of Income Tax within Tamil Nadu. first respondent ought to have considered necessity of 4 retaining assessment of petitioner in Tamil Nadu. first respondent without considering contentions putforth on side of petitioner has erroneously passed impugned order dated 16.12.2008 and thereby made such transfer. Under said circumstances, present writ petition has been filed for getting relief sought for therein. 4.In counter filed on side of respondents, it is averred that as per Section 127(2)(a) of Income Tax Act, 1961, first respondent after observing due formalities is having power to transfer cases from one place to another. Under said circumstances for reasons assigned in impugned order, first respondent has made such transfer and reasons given in petition are not genuine and therefore present writ petition deserves to be dismissed. 5 5.On basis of divergent contentions raised on either side, learned Single Judge has allowed W.P(MD)No.60 of 2009 by way of holding that transfer in question is not justified and ultimately quashed order dated 16.12.2008 passed by first respondent. order passed by learned Single Judge is being challenged in present Writ Appeal. 6.The short point which comes up for consideration in present Writ Appeal is as to whether order of transfer dated 16.12.2008 made by first appellant/first respondent is valid as per law or same is liable to be quashed? 7.The entire order of transfer has been made only on basis of provision of Section 127 of 6 Income Tax Act, 1961 and same reads as follows: Power to transfer cases: (1)The Director General or Chief Commissioner or Commissioner may, after giving assesee 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 7 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 8 notification in Official Gazette, authorise 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)The transfer of case under sub- section(1) or sub-section(2) may be made at any stage of proceedings, and shall not render necessary re-issue of any notice already issued by Assessing Officer or Assessing Officers from whom case is transferred. 9 Explanation.- In Section 120 and this section, word case , in relation to any person whose name is specified in any order or direction issued thereunder, means all proceedings under this Act in respect of any year which may be pending on date of such order or direction or which may have been completed on or before such date, and includes also all proceedings under this Act which may be commenced after date of such order or direction in respect of any year . 8.A mere reading of provision of said Section would clearly go to show that Directors General, or Chief Commissioners or Commissioners are having power to transfer cases from one place to another after giving reasonable opportunity to assessee. Further it is made clear that if transfer is made from file of one Assistant 10 Commissioner to another Assistant Commissioner within same locality or place, reasonable opportunity to assessee need not be given. 9.In instant case, impugned transfer has been made from file of second respondent to file of third respondent. only condition made in Section 127(2)(a) is that such transfer should be made after giving reasonable opportunity to concerned assessee. Further Section 127 does not speak about any reason. Therefore it is pellucid that first respondent/first appellant is having unfettered power of transfer under said Section. With these legal backdrops, Court has to analyze as to whether impugned order dated 16.12.2008 is liable to be quashed? 10.The learned Senior Standing Counsel for 11 Income Tax appearing for appellants/ respondents has contended with great vehemence that Chairman of respondent is having some institutions in Kerala State and same are within purview of third respondent and further undisclosed income of Rs.70,17,400/- is detected in his case and only for having coordinate enquiry and investigation both in Noorul Islam Group cases as well as individual case, after observing all formalities mentioned in Section 127(2)(a) of Income Tax Act, 1961, first respondent has passed impugned order and learned Single Judge without considering fact that said Section is nothing, but machinery to collect income tax, has erroneously allowed W.P(MD)No.60 of 2009 and therefore order passed by learned Single Judge is liable to be set aside. 11.In order to sustain order passed by 12 learned Single Judge, learned counsel appearing for respondent/petitioner has also equally contended that respondent/petitioner is having various educational institutions in and around Thuckalay, Kanyakumari District and even though Chairman of trust is having separate institutions in Kerala, income tax cases are different and no circumstance arises to make such transfer from file of second respondent to file of third respondent and under said circumstances learned Single Judge has allowed W.P(MD)No.60 of 2009 after holding that transfer is not justified and therefore order passed by learned Single Judge does not call for any interference. 12.As pointed out earlier, order in question has to be passed by first respondent/first appellant only by way of invoking provision of Section 127(2)(a) of 13 Income Tax Act, 1961. As per said provision, first respondent/first appellant is having power of transfer after giving reasonable opportunity to particular assessee. Further entire Section 127 does not say any specific reason. 13.The contentions putforth on side of appellants/respondents are that Chairman of petitioner/respondent in individual capacity is owning several institutions in Kerala State and during search Rs.70,17,400/- of undisclosed income has been detected and only for having coordinate enquiry and investigation, transfer in question has been made. 14.The admitted facts of respondent/ petitioner is that respondent/petitioner is having several educational institutions in and 14 around Thuckalay, Kanyakumari District. It is also admitted fact that Chairman of trust by name A.P.Majeed Khan in individual capacity is having several similar institutions in Kerala State. With regard to detection of undisclosed income of Rs.70,17,400/-, no objection has been raised on side of respondent/petitioner. 15.As pointed out earlier, only point now winched to fore is as to whether first respondent is having power of transfer and in that way impugned order passed by first respondent is valid in law or same is liable to be quashed? 16.The learned Senior Standing Counsel for Income Tax appearing for appellants/ respondents has relied upon decision reported 15 in K.P.Mohammed Salim v. Commissioner of Income Tax [(2008)300 ITR 302 (SC)], wherein Hon'ble Supreme Court has had occasion to decide power mentioned in Section 127 and also purpose for which said provision is in existence. In paragraph No.14 of decision referred to supra, it is stated like thus: order of transfer is passed for purpose of assessment of income. It serves larger purpose. Such order has to be passed in public interest . In paragraph No.17, it is observed that power of transfer is in effect provides for machinery provision. It must be given its full effect. It must be construed in manner so as to make it workable. Even Section 127 of Act is machinery provision, it should be construed to effectuate charging section so as to allow authorities concerned to do so in manner 16 wherefor statute was enacted. 17.From conjoint reading of observation made by Hon'ble Supreme Court, it is made clear that transfer is nothing, but machinery for purpose of collecting income tax. Further Section 127 is machinery provision. 18.It has already been stated in so many places that Section 127 of said Act does not specify any reason(s) for making transfer and further nobody can say that first respondent/ first appellant is not having such kind of power. 19.The specific contention putforth on side of appellants/respondents is that for having coordinate enquiry and investigation in respect of cases of Noorul Islam Group and in 17 individual capacity of A.P.Majeed Khan, transfer in question has been made. 20.It is not contention of respondent/petitioner that its Chairman in individual capacity is not running separate educational institutions. Further in order in question, it has been clearly stated that undisclosed income of Rs.70,17,400/- has been detected from his case. 21.The main objection raised on side of respondent/petitioner is that institutions being run in individual capacity by said A.P.Majeed Khan, are not having connection with institutions, being run by respondent trust. 22.It is true that respondent/petitioner 18 is having separate educational institutions in and around Thuckalay, Kanyakumari District. It is also true that Chairman of respondent/ petitioner is running several educational institutions in Kerala in his individual capacity. But no-one can say that said A.P.Majeed Khan is not getting income from institutions which are being run by trust as well as from institutions which are being run by him in his individual capacity. Under said circumstances for making effective assessment and also for having coordinate enquiry and investigation, such transfer is must and same would not create any prejudice to respondent/petitioner. 23.The learned Single Judge without considering powers mentioned in Section 127(2)(a) of said Act and also without 19 considering that no reason need be given in transfer, has erroneously quashed impugned order dated 16.12.2008. 24.As pointed out earlier, entire proceeding has been made as per provision of Section 127(2)(a) of said Act and same is nothing, but machinery provision. only object of appellants/respondents is to have effective income tax enquiry. Since Section 127(2)(a) is nothing, but machinery provision and since no serious allegations have been levelled against appellants/respondents, this Court is of considered view that first respondent/first appellant is having power of transfer even without assigning any reason and therefore order passed by first appellant/first respondent is perfectly valid in law and same need not be quashed. 20 learned Single Judge has simply observed that such transfer is not factually justifiable and consequently allowed writ petition. In view of discussion made earlier, this Court has received considerable force in contention putforth on side of appellants/ respondents and therefore impugned order passed in W.P(MD)No.60 of 2009 by learned Single Judge is liable to be quashed. 25.In fine, this Writ Appeal is allowed without costs and order passed in W.P(MD)No. 60 of 2009 dated 11.12.2009 is set aside and W.P(MD)No.60 of 2009 is dismissed without costs. [A.S.,J.] [T.M.,J.] Index : Yes 20.03.2015 Internet : Yes smn To 21 1.The Commissioner of Income Tax-I, Office of Commissioner of Income Tax, No.2, V.P.Rathinasamy Nadar Road, Bibikulam, Madurai 625 002. 2.The Income Tax Officer-Ward-I(I), Nagercoil, Tamilnadu. 3.The Deputy Commissioner of Income Tax, Central Circle, Trivandaram, Kerala State. 22 A.SELVAM,J. and T.MATHIVANAN,J. smn JUDGMENT MADE IN W.A(MD)No.98 of 2010 20.03.2015 Commissioner of Income-tax-I, Madurai / Income-tax Officer-Ward-I(I), Nagercoil / Deputy Commissioner of Income-tax, Central Circle, Trivandrum v. Noorul Islam Educational Trust