Nilesh Natwarlal Sheth v. Assistant Commissioner of Income-tax & 2
[Citation -2017-LL-0424-84]

Citation 2017-LL-0424-84
Appellant Name Nilesh Natwarlal Sheth
Respondent Name Assistant Commissioner of Income-tax & 2
Court HIGH COURT OF GUJARAT AT AHMEDABAD
Relevant Act Income-tax
Date of Order 24/04/2017
Judgment View Judgment
Keyword Tags opportunity of being heard • reassessment proceedings • business or profession • administrative order • public interest • question of law • share trading • audit report • book profits • share broker • tax evasion
Bot Summary: Making above submissions and relying upon the decision of the Hon ble Supreme Court in the case of Kashiram Aggarwalla and in the case of K.P. Mohammed Salim vs. Commissioner of Income Tax, Cochin reported in 2008 ITR 302 and the decision of this Court in the case of Shree Ram Vessel Scrap Pvt. Ltd. vs. Commissioner of Income Tax VI reported in 2013 ITR 255 and the object and purpose for which the case of the petitioner was transferred from one office to another office and in the same city, has requested to dismiss the present petition. In the aforesaid decision, considering the provisions of section 127 of the IT Act, it is observed that when the case is transferred from one Officer to another Officer in the same city / station, neither any opportunity is required to be given nor the same can be set aside for the want of reasons recorded in the order of transfer. Where, as in the present proceedings, assessment cases pending against the appellant before an officer in one ward are transferred to an officer in another ward in the same place, there is hardly any occasion for mentioning any reasons as such, because such transfers are invariably made on grounds of administrative convenience, and that shows that on principle in such cases neither can the notice be said to be necessary, nor would it be necessary to record any reasons for the transfer. The said section had provided that the Commissioner of Income tax may transfer any case from one Income tax Officer subordinate to him to another, and the Central Board of Revenue may transfer any case from any one Income tax Officer to another. 7.4 Now, so far as the reliance placed upon the decisions of the learned Counsel appearing on behalf of the petitioner referred to hereinabove more particularly the decision in the case of Ajantha Industries and Pannalal Binjraj are concerned, aforesaid decisions shall not be applicable to the facts of the case on hand more particulary when in the present case the case has been transferred from one Officer to another Officer in the same city / station and that the procedure as required to be followed under Section 127 of the IT Act has Page 14 of 15 HC-NIC Page 14 of 15 Created On Wed May 17 11:04:18 IST 2017 C/SCA/529/2017 JUDGMENT been followed and that even the reasons are recorded i.e. co ordinated investigation at one Central Office at the locations. As observed hereinabove, even in the present case subsequently the assessment order has been passed by the respondent No.1 to whom the case was transferred vide order of assessment dated 29.12.2016 passed under Section 143(3) read with Section 147 of the IT Act, against which the petitioner assessee has preferred the appeal, which is pending before the learned CIT(A). 7.5 Considering the aforesaid facts and circumstances and in the facts and circumstances of the case, it cannot be said that the impugned order of transfer under Section 127 of the IT Act suffers from any illegality more particularly when the case has been transferred from one Officer to another Officer at same station and neither any prejudice is pleaded nor any prejudice is shown to have been caused to the petitioner.


C/SCA/529/2017 JUDGMENT IN HIGH COURT OF GUJARAT AT AHMEDABAD SPECIAL CIVIL APPLICATION NO. 529 of 2017 For Approval and Signature: HONOURABLE MR.JUSTICE M.R. SHAH Sd/ and HONOURABLE MR.JUSTICE B.N. KARIA Sd/ 1 Whether Reporters of Local Papers may be allowed to see Yes judgment ? 2 To be referred to Reporter or not ? Yes 3 Whether their Lordships wish to see fair copy of No judgment ? 4 Whether this case involves substantial question of law as No to interpretation of Constitution of India or any order made thereunder ? NILESH NATWARLAL SHETH....Petitioner(s) Versus ASSISTANT COMMISSIONER OF INCOME TAX & 2....Respondent(s) Appearance: MR SN SOPARKAR, SR. ADVOCATE with MR BS SOPARKAR, ADVOCATE for Petitioner MR PRANAV G DESAI, ADVOCATE for Respondent(s) No. 3 MRS MAUNA M BHATT, ADVOCATE for Respondent(s) No. 1 NOTICE SERVED BY DS for Respondent(s) No. 2 CORAM: HONOURABLE MR.JUSTICE M.R. SHAH and HONOURABLE MR.JUSTICE B.N. KARIA Date : 24/04/2017 CAV JUDGMENT (PER : HONOURABLE MR.JUSTICE M.R. SHAH) [1.0] By way of this petition under Article 226 of Constitution of India, as such petitioner has prayed for appropriate writ, direction and order to quash and set aside impugned transfer order under Section 127 of Income Tax Act, 1961 (hereinafter referred to as IT Act ) passed by respondent No.3 herein and consequential Page 1 of 15 HC-NIC Page 1 of 15 Created On Wed May 17 11:04:18 IST 2017 C/SCA/529/2017 JUDGMENT notices / proceedings by respondent No.1 (Annexure to petition). However, subsequently, Assessing Officer, before whom case was transferred, had passed assessment order under Section 143(3) read with Section 147 of IT Act on 29.12.2016. Therefore, petitioner by way of draft amendment has sought to amend petition challenging assessment order under Section 143(3) read with Section 147 of IT Act also. By way of draft amendment petitioner has also sought to challenge order dated 20.10.2016 (Annexure R1) passed by Principal Director of Income Tax (Investigation) granting approval of proposal madd by DGIT (Investigation), Ahmedabad and to transfer case under Section 127 of IT Act. [1.1] Having heard learned Counsel appearing on behalf of respective parties and considering fact that in original petition what is challenged is order of transfer of proceedings from one Assessing Officer to another Assessing Officer, passed in exercise of powers under Section 127 of IT Act and by permitting petitioner to challenge subsequent assessment order passed under Section 143(3) read with Section 147 of IT Act, entire cause of action and even grounds is likely to be changed and therefore, draft amendment insofar as challenge to order of assessment dated 29.12.2016 passed under Section 143(3) read with Section 147 of IT Act is hereby rejected. However, liberty is reserved in favour of petitioner to challenge same before appropriate Court / Forum. Draft amendment is allowed insofar as permitting petitioner to challenge order dated 20.10.2016 (Annexure R1 to petition) under Section 127 of IT Act. [2.0] Facts leading to present Special Civil Application in nut shell are as under: Page 2 of 15 HC-NIC Page 2 of 15 Created On Wed May 17 11:04:18 IST 2017 C/SCA/529/2017 JUDGMENT [2.1] That petitioner originally filed return of income on 18.09.2009 declaring total income of Rs.22,55,150/ for AY 2009 10. That petitioner was served with notice dated 30.03.2016 under Section 148 of IT Act by which Assessing Officer sought to reopen assessment for AY 2009 10 alleging inter alia that income chargeable to tax has escaped assessment within meaning of section 147 of IT Act. That petitioner asked Assessing Officer respondent No.2 herein Assistant Commissioner of Income Tax, Circle 1(2), Rajkot to furnish reasons recorded to reopen assessment. It is case on behalf of petitioner that despite repeated requests respondent No.2 Assistant Commissioner of Income Tax, Circle 1(2), Rajkot did not furnish reasons recorded. However, thereafter, by letter dated 11.11.2016 respondent No.1 Assistant Commissioner of Income Tax, Central Circle 2, Rajkot asked petitioner to file return of income and audit report under Section 142(1) of IT Act. It is case on behalf of petitioner that thereafter petitioner replied vide letter dated 15.11.2016 stating that he has not received any notice, reasons or order under Section 127 of IT Act regarding transfer of his case from respondent No.2 Assistant Commissioner of Income Tax, Circle (2), Rajkot to respondent No.1 Assistant Commissioner of Income Tax, Central Circle 2, Rajkot and therefore, respondent No.1 has no jurisdiction. That petitioner also stated that return as originally filed may be considered as return furnished under Section 148 of IT Act and further asked for reasons of reopening same. [2.2] It appears that thereafter respondent No.1 Assistant Commissioner of Income Tax, Central Circle 2, Rajkot vide letter dated 16.11.2016 communicated petitioner that case of petitioner has been transferred under Section 127 of IT Act vide order under Section 127(2)(a) read with Section 127(3) of IT Act. It is case on behalf of petitioner that thereafter petitioner wrote to Page 3 of 15 HC-NIC Page 3 of 15 Created On Wed May 17 11:04:18 IST 2017 C/SCA/529/2017 JUDGMENT respondent No.3 Principal Commissioner of Income Tax 1, Rajkot to supply him copy of transfer order. That thereafter respondent No.1 supplied reasons recorded to reopen assessment vide letter dated 14.12.2016. That petitioner raised objections against reasons recorded to reopen assessment vide objections dated 19.12.2016. That vide communication / order dated 20.12.2016, respondent No.1 Assistant Commissioner of Income Tax, Central Circle 2, rejected objections raised by petitioner. That thereafter petitioner has preferred present Special Civil Application challenging impugned transfer order under Section 127(2)(a) read with Section 127(3) of IT Act and consequential proceedings vide notice dated 11.11.2016 by which assessment proceedings are transferred from office of respondent No.2 Assistant Commissioner of Income Tax, Circle 2, Rajkot to office of respondent No.1 Assistant Commissioner of Income Tax, Central Circle 2, Rajkot. [3.0] Shri S.N. Soparkar, learned Senior Advocate has appeared on behalf of petitioner assessee, Mrs. Mauna Bhatt, learned Advocate has appeared on behalf of respondent No.1 Assistant Commissioner of Income Tax, Central Circle 2, Rajkot to whom assessment proceedings are transferred and Shri Pranav G. Desai, learned Advocate has appeared on behalf of respondent No.3 Principal Commissioner of Income Tax 1, Rajkot. [4.0] Shri Soparkar, learned Senior Advocate appearing on behalf of petitioner has submitted that impugned order of transfer under Section 127 of IT Act passed by respondent No.3 and consequential notices are absolutely and patently bad, illegal and contrary to law. [4.1] It is further submitted by Shri Soparkar, learned Senior Advocate appearing on behalf of petitioner that no reasons are recorded prior Page 4 of 15 HC-NIC Page 4 of 15 Created On Wed May 17 11:04:18 IST 2017 C/SCA/529/2017 JUDGMENT to issuing transfer order nor same have been communicated. It is submitted that it was incumbent upon respondent No.3 to record reasons for transfering case of petitioner from respondent No.2 to respondent No.1. It is submitted that case of petitioner is also not subjected to any search and/or seizure action under Section 132 of IT Act so as to transfer same to Central Circle. It is submitted that in non communication of reasons recorded and failure to communicate order would vitiate order made under Section 127(2) of IT Act. [4.2] It is further submitted by Shri Soparkar, learned Senior Advocate appearing on behalf of petitioner that as such in present case it is true that transfer of case is from one office to another office in same city, however not witin same Commissionerate. It is submitted that case has been transferred from office of Commissionerate, Rajkot to office under Director of Investigation. It is submitted that therefore impugned order is absolutely bad in law more particularly when no reasons are recorded and/or supplied. [4.3] It is further submitted by Shri Soparkar, learned Senior Advocate appearing on behalf of petitioner that even reasons recorded in order under Section 127(2)(a) read with Section 127(3) of IT Act to transfer case from respondent No.2 to respondent No.1 also are not germane. It is submitted that in reasons recorded it is stated that for co ordinated investigation , however details with respect to other cases are not stated in order. It is submitted that therefore, order of transfer of case of petitioner from respondent No.2 to respondent No.1 suffers from non application of mind. It is submitted that even order of transfer cannot be said to be reasoned order. It is submitted that any reasoned order must reflect application of mind as there is subjective satisfaction. In support of his above submissions, Page 5 of 15 HC-NIC Page 5 of 15 Created On Wed May 17 11:04:18 IST 2017 C/SCA/529/2017 JUDGMENT he has heavily relied upon decision of this Court in case of Anuben Lalabhai Bharwad vs. Principal Commissioner of Income tax 3 reported in (2016) 72 Taxmann.com 178 (Gujarat). Making above submissions and relying upon following decisions, Shri Soparkar, learned Senior Advocate appearing on behalf of petitioner has requested to allow present petition and quash and set aside order of transfer passed under Section 127 of IT Act by which assessment proceedings came to be transferred from office of respondent No.2 to office of respondent No.1. 1. Ajantha Industries vs. Central Board of Direct Taxes (1976) 102 ITR 281 (SC) 2. Anuben Lalabhai Bharwad vs. Principal Commissioner of Income tax 3 (2016) 72 Taxmann.com 178 (Gujarat) 3. Ramswaroop S/o. Parasram Mundra & Ors. vs. Commissioner of Income Tax II, Nagpur 2016 (388) ITR 208 4. Zodiac Developers Pvt. Ltd. vs. Principal Commissioner of Income Tax 2016 (387) ITR 223 5. Hindusthan M I Swaco Ltd. vs. Principal Commissioner of Income tax, Vadodara 3 (2016) 72 taxmann.com 14 (Gujarat) 6. Dr. Hemang Ashvinkumar Baxi vs. Dy. Commissioner of Income tax, Central Circle 2(3) & 1 Special Civil Application No.7047/2010 [5.0] Present petition is vehemently opposed by Shri Pranav G. Desai, learned Advocate appearing on behalf of respondent No.3 and Mrs. Mauna Bhatt, learned Advocate appearing for respondent No.1. [5.1] It is vehemently submitted by Shri Desai, learned Advocate appearing on behalf of respondent No.3 that in present casethe Page 6 of 15 HC-NIC Page 6 of 15 Created On Wed May 17 11:04:18 IST 2017 C/SCA/529/2017 JUDGMENT case has been transferred from one office to another office situated in same city and therefore, considering provision of section 127 of IT Act, neither any opportunity is required to be given nor reasons are required to be assigned. In support of his above submissions, he has heavily relied upon decision of Hon ble Supreme Court in case of Kashiram Aggarwalla vs. Union of India and Ors. reported in 56 ITR 14 (SC). [5.2] It is further submitted that even otherwise in present casethe reasons are recorded i.e. for co ordinated investigation . It is further submitted by Shri Desai, learned Advocate that as such petitioner has not shown any prejudice caused to him and/or likely to be caused to him while transfering case from office of respondent No.2 to office of respondent No.1 which is in same city. [5.3] It is further submitted that even otherwise in present case after order of transfer of case of petitioner from office of respondent No.2 to office of respondent No.1, thereafter petitioner even participated in assessment proceedings before respondent No.1. [5.4] It is further submitted by Shri Desai, learned Advocate appearing on behalf of respondent No.3 that in present case even background of case of petitioner is also required to be considered while considering challenge to impugned order of transfer of case of petitioner from office of respondent No.2 to office of respondent No.1. [5.5] It is submitted that petitioner is share broker who facilitates share trading activities for his clients. Besides, he is also engaged in trade of shares. That Director of Income Tax (Intelligence & Criminal Investigation) carried out thorough investigation in respect of certain Page 7 of 15 HC-NIC Page 7 of 15 Created On Wed May 17 11:04:18 IST 2017 C/SCA/529/2017 JUDGMENT brokers who were indulged in practice of transfering fictitious profit and loss by misusing client cod modification facility in F&O segment on NSE during March 2010, to different client / beneficiaries, according to their requirements to enhance or reduce tax liability. That Directorate obtained client code modification (CCM) data for AY 2009 10 from NSE and mapping was done of such data to ascertain exact amount of fictitious profits / losses in each case. It is submitted that investigation, analysis and verification revealed that one of major tools used for systematic tax evasion is client code modification (CCM). That search in case of Amrapali Group of Ahmedabad was conducted on 26.10.2010. Detailed analysis of client codes modified by ACFL (a group entity involved in broking) was carried out and it was found that CCM was used as tool so as to systematically shift profits and losses. On further analysis of accounts and return of income of persons whose codes were modified, it was found that without exception persons who had booked profits in their books has obtained losses so as to set off their book profits through CCM. profits were found to be systematically shifted to codes of persons who had booked losses and did not pay any substantial taxes on profits gained. That entire analysis of CCM of only one broker led to detection of shifting of losses and result deduction of book profits aggregating to Rs.46.57 Crores. That Amrapali Group accepted income to tune of over Rs.40 Crores before Settlement Commission primarily on account of CCM. That based on findings in Amrapali Group and quantum of taxes evaded by resorting to CCM, Department started collecting all India data of CCM pertaining to FY 2008 09 to 2010 11 from different exchanges. That SEBI also conducted probe into Modification of Client Codes by brokers. That thereafter, DIT (I & CI), Bombay conducted spot verification under Section 131(1A) of IT Act in cases of few brokers. brokers admitted misuse of Client Code Modification and receipt of commission Page 8 of 15 HC-NIC Page 8 of 15 Created On Wed May 17 11:04:18 IST 2017 C/SCA/529/2017 JUDGMENT of 0.5 to 2%. That Investigation Unit of Income Tax Department called for details from different exchanges including agency. That thereafter Income Tax Department [DIT(I & CI)] sought expert opinion from NSE to broadly distinguish genuine CCM and non genuine CCM. That non genuine CCMs were observed while analyzing data of brokers including assessee by I&CI Wing of Income Tax Department. assessee had claimed losses to tune of Rs.2,07,62,482/ for AY 2009 10 by resorting to such non genuine CCM practices. said facts were not disclosed by assessee in his return of income. Therefore, assessment was reopened. That while issuing notice under Section 148 of IT Act, Assessing Officer had attached copy of reasons recorded and therefore, petitioner was well aware of reasons for which his assessment was reopened. [5.6] It is further submitted by Shri Desai, learned Advocate appearing on behalf of respondent No.3 that therefore office of respondent No.3 Principal Director of Income Tax (Investigation) received communication from Director of Investigation, informing that Director General of Income Tax has approved centralization of 234 cases (including case of petitioner) who are beneficiaries of contrived losses through Client Code Modification. As per said communication, case of petitioner was to be centralized with one officer of Central Circle at Rajkot itself. Therefore, case was to be transferred from one office to another office at same station. It is submitted that therefore, case of assessee was being transferred from one office to another office in same station and therefore, there was no requirement to give opportunity to petitioner and seek his objection considering section 127(3) of IT Act. Therefore, respondent No.3 proceeded to transfer case of petitioner as per provisions of law. It is submitted that as such through clerical oversightness, copy of transfer order could not be marked to petitioner. It is Page 9 of 15 HC-NIC Page 9 of 15 Created On Wed May 17 11:04:18 IST 2017 C/SCA/529/2017 JUDGMENT submitted that however no prejudice was meted upon petitioner because, immediate upon passing of order under Section 127 (order of centralization), respondent No.1 intimated to petitioner to file details in connection with his assessment proceedings and therefore, infact he has come to know about centralization of his case through respondent No.1. It is therefore submitted that order of transfer of case of petitioner is absolutely just and proper. Making above submissions and relying upon decision of Hon ble Supreme Court in case of Kashiram Aggarwalla (Supra) and in case of K.P. Mohammed Salim vs. Commissioner of Income Tax, Cochin reported in 2008 (300) ITR 302 and decision of this Court in case of Shree Ram Vessel Scrap Pvt. Ltd. vs. Commissioner of Income Tax VI reported in 2013 (255) ITR 255 and object and purpose for which case of petitioner was transferred from one office to another office and in same city, has requested to dismiss present petition. [6.0] Mrs.Mauna Bhatt, learned Advocate appearing on behalf of respondent No.1 has submitted that as such thereafter petitioner participated in reassessment proceedings before respondent No.1 and thereafter respondent no.1 has passed assessment order under Section 143(3) read with Section 147 of IT Act. It is submitted that order of assessment has been passed on 29.12.2016 and thereafter petitioner has also preferred appeal which is pending before learned CIT(A). Therefore, it is requested to dismiss present petition. [7.0] Heard learned Counsel appearing on behalf of respective parties at length. At outset it is required to be noted that by way of present petition petitioner assessee has challenged impugned order of transfer transfering his case from office of respondent No.2 Assistant Page 10 of 15 HC-NIC Page 10 of 15 Created On Wed May 17 11:04:18 IST 2017 C/SCA/529/2017 JUDGMENT Commissioner of Income Tax, Circle 1(2), Rajkot to office of respondent No.1 Assistant Commissioner of Income Tax, Central Circle 2, Rajkot. [7.1] It is required to be noted that case of petitioner has been transferred under Section 127 of IT Act from one office to another office in same city. Therefore, considering section 127(3) of IT Act opportunity of being heard is not required to be given when case has been transferred from one office to another office in same city. [7.2] It is case on behalf of petitioner that neither any reasons are recorded nor reasons are supplied while passing order under Section 127 of IT Act transfering case of petitioner from office of respondent No.2 to office of respondent No.1. However, as observed hereinabove, case has been transferred from one Officer to another Officer in same city. Therefore, in such situation whether while passing order under Section 127 of IT Act, reasons are required to be recorded or not came to be considered by Hon ble Supreme Court in case of Kashiram Aggarwalla (Supra). In said decision Hon ble Supreme Court also considered its earlier decision in case of Pannalal Binjraj vs. Union of India [(1957) 31 ITR 565]. In aforesaid decision, considering provisions of section 127 of IT Act, it is observed that when case is transferred from one Officer to another Officer in same city / station, neither any opportunity is required to be given nor same can be set aside for want of reasons recorded in order of transfer. It is further observed that order of transfer of case from one Officer to another Officer is purely in nature of administrative order passed for considerations of convenience of department and no possible prejudice can be involved in such transfer. In aforesaid decision Hon ble Supreme Court has observed and held as under: Page 11 of 15 HC-NIC Page 11 of 15 Created On Wed May 17 11:04:18 IST 2017 C/SCA/529/2017 JUDGMENT There is another consideration which is also relevant. Section 124 of Act deals with jurisdiction of Income tax Officers. Section 124(3) provides that within limits of area assigned to him, Income tax Officer shall have jurisdiction (a) in respect of any person carrying on business or profession, if place at which he carries on his business of 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. This provision clearly indicates that where transfer is made under proviso to section 127(1) from one Income tax Officer to another in same locality, it merely means that instead of one Income tax Officer who is competent to deal with case, another Income tax Officer has been asked to deal with it. Such order is purely in nature of administrative order passed for considerations of convenience of department and no possible prejudice can be involved in such transfer. Where, as in present proceedings, assessment cases pending against appellant before officer in one ward are transferred to officer in another ward in same place, there is hardly any occasion for mentioning any reasons as such, because such transfers are invariably made on grounds of administrative convenience, and that shows that on principle in such cases neither can notice be said to be necessary, nor would it be necessary to record any reasons for transfer. provisions contained in section 124(3) of Act deal with same topic which was subject matter of section 64(1) and (2) of earlier Income tax Act, 1922 (XI of 1922). There is, however, this difference between these two provisions that whereas s. 124 fixes jurisdiction, territorial or otherwise, of Income tax Officers, section 64 fixed place where assessee was to be assessed. In this connection, it is also necessary to take into account background of provision contained in section 127. In Pannalal Binjraj v. Union of India, validity of section 5(7A) of earlier Act of 1922 was challenged before this Court. said section had provided that Commissioner of Income tax may transfer any case from one Income tax Officer subordinate to him to another, and Central Board of Revenue may transfer any case from any one Income tax Officer to another. Such transfer may be made at any stage of proceedings, and shall not render necessary areissue of any notice already issued by Income tax Officer from whom case is transferred. argument which was urged before this Court in challenging validity of this provision was that it infringed Page 12 of 15 HC-NIC Page 12 of 15 Created On Wed May 17 11:04:18 IST 2017 C/SCA/529/2017 JUDGMENT citizens fundamental rights conferred by Articles 14 and 19(1)(g) of Constitution. In support of this argument, reliance was placed on fact that section 64(1) and (2) conferred right on assessee to have his tax matter adjudicated upon by respective officers mentioned in said provisions; and since section 5(7A) authorised transfer of assessee s case from one Income tax Officer to another, that involved infringement of his fundamental rights guaranteed by Articles 14 and 19(1)(g) read with section 64(1) & (2). It is necessary to emphasise that section 5(7A) authorised transfer of income tax cases from one officer to another not necessarily within same place. In other words, transfer authorised by section 5(7A) would take case from jurisdiction of officer entitled to try it under section 64(1) & (2) to another officer who may not have jurisdiction to try case under said provision. That, indeed, was basis on which validity of Section 5 (7A) was challenged. This Court, however, repelled plea raised against validity of said section on ground that right conferred on assssee by section 64(1) & (2) was not absolute right and must be subject to primary object of Act itself, namely, assessment and collection of income tax; and it was also held that where exigencies of tax collection ,so required, Commissioner of Incometax or Central Board of Revenue had power to transfer his case under Section 5 (7A) to some other officer outside area where assessee resided or carried on business. That is how section 5(7A) was sustained. Even so, this Court observed in case of Pannalal Binjraj that it would be better if opportunity is given to assessee in cases where powers conferred by section 5(7A) were intended to be exercised, because he would then be able to mention his objections to intended transfer. It is in that connection that this Court further expressed its opinion that if reasons for making transfer "are reduced, however briefly, to writing, it will help assessee in appreciating circumstances which make it necessary or desirable to order such transfer." It is obviously in pursuance of these observations that Legislature has made relevant provisions in section 127(1) of Act. If this background is home in mind, it would be clear that propriety of giving opportunity to assessee and desirability of recording reasons which this Court emphasised, had reference to cases where transfers were intended to be made from Income tax Officer in one place to Income tax Officer in another place; and they obviously had no reference to transfers like present where instead of one officer dealing with case, another officer in same place is asked to deal with it. It is in light of these considerations that we have to construe proviso to Section 127(1). As we have already indicated, construction for which Mr. Jain contends is reasonably possible Page 13 of 15 HC-NIC Page 13 of 15 Created On Wed May 17 11:04:18 IST 2017 C/SCA/529/2017 JUDGMENT construction. In fact, if words used in proviso are literally read, Mr. Jain would be justified in contending that requirement that reasons must be recorded applies even to falling under it. On other hand, if obvious object proviso is taken into account and relevant previous ound is borne in mind, it would also seem reasonable to that in regard to cases falling under proviso, opportneed not be given to assessee, and consequential to record reasons for transfer is also unnecessary, and view is plainly consistent with scheme of provision and true intent of its requirements. We would accordingly hold impugned orders cannot be challenged on ground that Board has not recorded reasons in directing transfer of pending against assessee from one Income tax Officer other in same locality. [7.3] Now, considering impugned order it appears that even reasons are recorded to transfer case of petitioner from respondent No.2 to respondent No.1 i.e. for co ordinated investigation . Proposal was made by DGIT (Investigation), Ahmedabad for centralization of 234 cases of beneficiaries who have taken contrived losses through Client Code Modification at their respective places of assessment (without change of location) with one officer of Central charge of respective station. same came to be accepted and case of petitioner came to be transferred to Centralized office at Rajkot i.e. respondent No.1. All requirements which are required to be followed have been followed. decision seems to have been taken in larger public interest and for co ordinated investigation of similar cases at Central Office athe location. [7.4] Now, so far as reliance placed upon decisions of learned Counsel appearing on behalf of petitioner referred to hereinabove more particularly decision in case of Ajantha Industries (Supra) and Pannalal Binjraj (Supra) are concerned, aforesaid decisions shall not be applicable to facts of case on hand more particulary when in present case case has been transferred from one Officer to another Officer in same city / station and that procedure as required to be followed under Section 127 of IT Act has Page 14 of 15 HC-NIC Page 14 of 15 Created On Wed May 17 11:04:18 IST 2017 C/SCA/529/2017 JUDGMENT been followed and that even reasons are recorded i.e. co ordinated investigation at one Central Office at locations. As observed hereinabove, even in present case subsequently assessment order has been passed by respondent No.1 to whom case was transferred vide order of assessment dated 29.12.2016 passed under Section 143(3) read with Section 147 of IT Act, against which petitioner assessee has preferred appeal, which is pending before learned CIT(A). [7.5] Considering aforesaid facts and circumstances and in facts and circumstances of case, it cannot be said that impugned order of transfer under Section 127 of IT Act suffers from any illegality more particularly when case has been transferred from one Officer to another Officer at same station and neither any prejudice is pleaded nor any prejudice is shown to have been caused to petitioner. [8.0] In view of above and for reasons stated above, present petition fails and same deserves to be dismissed and is, accordingly, dismissed. However, it is clarified that as we have not entered into legality and validity of order of assessment as appeal is pending before learned CIT(A), learned CIT(A) to decide and dispose of appeal on its own merits. Notice is discharged. No costs. Sd/ (M.R. SHAH, J.) Sd/ (B.N. KARIA, J.) Ajay Page 15 of 15 HC-NIC Page 15 of 15 Created On Wed May 17 11:04:18 IST 2017 Nilesh Natwarlal Sheth v. Assistant Commissioner of Income-tax & 2
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