IN HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION WRIT PETITION (L) NO.1944 OF 2017 Rentworks India Private Limited ...Petitioner vs. Principal Commissioner of Income Tax 14, Mumbai and another ...Respondents Mr.Vikram Nankani,Senior a/w Mr.Nishant Thakkar, Mr.Ravi Gandhi, Mr.Manek Kamdar, Mr.Rashmin Jain, Mr.Hiten Chande and Mr.Rishab Ranka i/b Kanga and Co. for Petitioner Mr.Suresh Kumar for respondent CORAM : A.S.OKA, & A.K.MENON,JJ. DATE : OCTOBER 11, 2017 ORAL JUDGMENT: (PER A.S.OKA,J.) 1 On 19th September 2017, notice for final disposal at admission stage was issued. Accordingly, today, we have taken up writ petition for final hearing. Commissioner of Income Tax, Mumbai issued notice dated 18th April 2017 to petitioner taking recourse to sub section 2 of Section 127 of Income Tax Act,1961 (for short `the Income Tax Act'). petitioner assessee was put to notice that there is proposal to transfer case of petitioner to DCIT, Central Circle 2(1), Chennai for proper co ordinated investigation. There was reply filed to said show cause notice by petitioner on 8th May 2017. impugned order was made by Principal Commissioner of Income Tax, Mumbai under sub section ::: Uploaded on - 22/12/2017 ::: Downloaded on - 25/12/2017 10:53:35 ::: 2 oswp1944 2 of section 127 of Income Tax Act by which case of petitioner was transferred to DCIT, Central Circle 2(1) at Chennai. It is this order which is subjected to challenge in this writ petition under Articles 226 and 227 of Constitution of India. 2 first submission of learned senior counsel appearing for petitioner is that show cause notice is vague. second submission is that impugned order is passed in breach of principles of natural justice as contentions which are raised in reply have not been adverted to. Next challenge is on merits of reasons assigned. There is one more important challenge which is based on non compliance of requirements of sub section (2) of Section 127 of Income Tax Act. submission which is supported by specific ground is that condition precedent for show cause notice is that there has to be agreement between first respondent (Principal Commissioner of Income Tax 14, Mumbai) and Principal Commissioner of Income Tax, Circle Chennai as contemplated by sub section (2) of Section 127. In support of his contention, he relied upon various decisions including decision of Apex Court in case of Noorul Islam Educational Trust vs. Commissioner of Income Tax 11. learned counsel for respondent dealing with last submission relied upon clause (o) of paragraph 4 of affidavit in reply of 1 [2016] 388 ITR 489 (SC) ::: Uploaded on - 22/12/2017 ::: Downloaded on - 25/12/2017 10:53:35 ::: 3 oswp1944 Ankit Verma, ACIT HQ (Judicial), Pr.CIT 14,Mumbai. He submitted existence of such agreement will have to be inferred on basis of material on record by necessary implication. He invited out attention to first paragraph of notice dated 18 th April 2017. He submitted that request came from investigation office at Chennai on 1 st December 2015 to Principal Commissioner of Income Tax, Mumbai for transfer of case to Chennai. He submitted that this assertion in notice shows that there is no lack of agreement between two Principal Commissioners. While dealing with this aspect, he relied upon decision of High Court of Judicature at Patna in case of Jharkhand Mukti Morcha vs. Commissioner of Income Tax2. He placed reliance on paragraph 12 of said decision. 3 learned senior counsel for petitioner invited out attention to decision of Division Bench of this Court in case of Ramswaroop vs. Commissioner of Income Tax II, Nagpur3. 4 We have given careful consideration to submissions made across bar. It will be necessary to advert to section 127 of Income Tax Act which reads thus: 127. (1) [Principal Director General] or Director General or [Principal Chief Commissioner or] Chief Commissioner or [Principal Commissioner or] Commissioner may 2 [1997] 95 Taxman 132 (PAT.) 3 [2016] 388 ITR 208 (Bombay) ::: Uploaded on - 22/12/2017 ::: Downloaded on - 25/12/2017 10:53:35 ::: 4 oswp1944 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 [Principal Director General or] Director General or [Principal Chief Commissioner or] Chief Commissioner or [Principal | Commissioner or] Commissioner, (a) where [Principal Directors General or] Directors General or [Principal Chief Commissioners or] Chief Commissioners or [Principal Commissioners or] Commissioners to whom such Assessing Officers are subordinate are in agreement, then [Principal Director General or] Director General or [Principal 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 impossible to do so, and after recording ::: Uploaded on - 22/12/2017 ::: Downloaded on - 25/12/2017 10:53:35 ::: 5 oswp1944 his reasons for doing so, pass order; (b)where [Principal Directors General or] Directors General or [Principal Chief Commissioners or] Chief Commissioners or [Principal Commissioners or] Commissioners aforesaid are not in agreement, order transferring case may, similarly, be passed by Board or any such [Principal Director General or] Director General or [Principal Chief Commissioner or] Chief Commissioner or [Principal Commissioner or] Commissioner as Board may, by 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) 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 ::: Uploaded on - 22/12/2017 ::: Downloaded on - 25/12/2017 10:53:35 ::: 6 oswp1944 transferred. 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 respect of any year.] 5 In present case, there is no dispute that sub section 2 of section 127 is applicable. condition precedent for exercising power under clause (a) of sub section 2 of section 127 for passing order of transfer is agreement which is contemplated by clause (a) of sub section 2 of section 127. In present case, as far as existence of agreement is concerned, submission is crystalised in clause (o) of affidavit in reply. Clause (o) reads thus: (o) With reference to paragraph (15) O,P and Q of writ petition agreement of concerned jurisdictional Pr CITs is by necessary implication. Proceedings u/s 127 (2) were initiated in this jurisdiction upon receipt of reference from office of DGIT (Inv.), Chennai seeking notification of case. This necessarily implies agreement ::: Uploaded on - 22/12/2017 ::: Downloaded on - 25/12/2017 10:53:35 ::: 7 oswp1944 between respective Pr.CITs. It is only in case of lack of agreement that separate procedure is provided in Act. Further as petitioner received notice u/s.143(2) from DCIT Central Cir 2(1), Chennai, which fact also underscores agreement with Pr.CIT Centra 2 Chennai. (underline supplied) 6 law on this aspect is laid down in case of Noorul Islam Educational Trust (supra). Paragraphs 4 and 5 of said decision reads thus: 4 As Income tax/assessment file of appellant assessee has been transferred from one Assessing Officer in Tamil Nadu to another Assessing Officer in Kerala and two Assessing Officers are not subordinate to same Director General or Chief Commissioner or Commissioner of Income Tax under section 127(2) (a) of Act agreement between Director General, Chief Commissioner or Commissioner, as case may be, of two jurisdictions is necessary. 5 counter affidavit filed on behalf of Revenue does not disclose that there was any such agreement. In fact, it has been consistently and repeatedly stated in said counter affidavit that there is no disagreement between two Commissioners. Absence of disagreement cannot tantamount to ::: Uploaded on - 22/12/2017 ::: Downloaded on - 25/12/2017 10:53:35 ::: 8 oswp1944 agreement as visualized under Section 127(2) (2) (a) of Act which contemplates positive state of mind of two jurisdictional Commissioners of Income Tax which is conspicuously absent. (underline supplied) 7 In view of absence of agreement as contemplated by clause (a) of sub section (2) of section 127, Apex Court proceeded to interfere with order of transfer of goods by setting aside same. 8 Apex Court has categorically held that absence of disagreement will not be tantamount to agreement as visualized under section 127(2)(a) which contemplates positive state of mind of two jurisdictional Principal Commissioners of Income Tax. agreement contemplated by clause (a) of sub section (2) of section 127 may not be drawn up agreement. What is necessary is that there has to be agreement which will involve positive state of mind of two jurisdictional Principal Commissioners. Both of them must consent to transfer after application of mind. 9 In present case, it is not even case made out in show cause notice that agreement as contemplated by first part of clause (a) of sub section (2) of section 127 exists. existence of such agreement between two jurisdictional Commissioners is condition precedent for passing ::: Uploaded on - 22/12/2017 ::: Downloaded on - 25/12/2017 10:53:35 ::: 9 oswp1944 order of transfer. Except for request which came from investigation office,Chennai of transferring case, there is no reference whatsoever to any such agreement. Clause (b) of sub section (2) of section 127 provides for consequences when there is no such agreement. When jurisdiction to pass order of transfer under clause (a) of sub section (2) of Section 127 can be exercised only when there is such agreement, fact that such agreement exists ought to have been stated in the show cause notice as same is jurisdictional fact. Apart from failure to mention same in show cause notice, only stand of revenue is that there is agreement by implication. This stand is completely contrary to paragraph 5 of decision of Apex Court in case of Noorul Islam Educational Trust (supra). decision in case of Ramswaroop (supra) will also bind this Court for reasons stated above. 10 Coming to decision in case of Jharkhand Mukti Morcha, relevant facts are in paragraph 12. In said case, specific reliance was placed on document dated 27th November 2016. It is on basis of written document that finding was recorded that there was agreement between Jurisdictional Commissioners of Ranchi and Delhi. In present case, even going by case made out by respondent, no such agreement is spelt out. In absence of any such agreement, first respondent had no jurisdiction to pass order of transfer. As impugned order cannot be sustained on above ground, it is not necessary to to into other challenges. 12 Accordingly, for reasons quoted above, we pass following order : . Impugned order dated 25th May 2017 (Exhibit H to petition) is hereby quashed and set aside. Rule is made absolute on above terms with no order as to costs. (A.K.MENON,J.) (A.S.OKA,J.) RentworksIndiaPrivateLimited v. PrincipalCommissionerofIncome-tax-14,Mumbaiandanother