MRL Posnet Private Limited v. The Principal Commissioner of Income-tax, Chennai-4, Chennai / The Deputy Commissioner of Income-tax, Central Circle-1(1), Bangalore
[Citation -2019-LL-0927-51]

Citation 2019-LL-0927-51
Appellant Name MRL Posnet Private Limited
Respondent Name The Principal Commissioner of Income-tax, Chennai-4, Chennai / The Deputy Commissioner of Income-tax, Central Circle-1(1), Bangalore
Court HIGH COURT OF MADRAS
Relevant Act Income-tax
Date of Order 27/09/2019
Judgment View Judgment
Keyword Tags share purchase agreement • centralization of cases • nature of transaction • assessment of income • transfer of case • co-ordinated investigation
Bot Summary: Earlier similar order of transfer under Section 127 of the Income Tax Act was passed transferring the petitioner's case from ITO, Corporate Ward 4(1), Chennai to DCIT, Central Circle 1, Bangalore. The decision of the Mumbai High Court reported in 2016 ITR 223 (Zodiac Developers Ltd. vs. Pr.CIT relied on is also factually distinguishable, since the facts of the said case would show that the notice and the consequential order of transfer are bereft of any particulars except to state that the transfer is required for the sake of coordinated investigation along with another connected case for administrative convenience. Section 127 of the Income Tax Act, 1961 deals with Powers to transfer cases, which reads as follows: 127.Power to transfer cases: The Principal Director General or Director General or Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner may, after giving the assessee a reasonable opportunity of being heard in the 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 to any other Assessing Officer or Assessing Officers also subordinate to him. If the Assessing Officer, from whom the case is to be transferred and the Assessing Officer, to whom the case is to be transferred, are not subordinate to the same Commissioner, the Commissioner from whose jurisdiction, the case is to be transferred, would pass order after giving the assessee, a reasonable opportunity of being heard and after recording his reasons, if the transferring Commissioner and the Commissioner, within whose jurisdiction the case is transferred, are in agreement for such transfer. While sub clause of 127(2) deals with transfer of cases, when there is an agreement between the two Commissioners, sub clause of Section 127(2) deals with transfer of cases by the Board or any such Officer as the Board may, by notification, authorise in this behalf, where the two Commissioners are not in agreement to transfer the case. Very issuance of the show cause notice followed by passing an order of transfer would, on the face of those proceedings, reflect the agreement of the Chennai Commissioner for transferring the case to the Bangalore Commissioner. Principal Commissioner of Ahmedabad had issued notices to the petitioner on more occasions than one proposing to transfer the assessment, his agreement for such transfer was writ large on the face of the record.


W.P.Nos.6334 and 6336 of 2019 IN HIGH COURT OF JUDICATURE AT MADRAS Reserved On 12.09.2019 Delivered On 27.09.2019 CORAM HONOURABLE MR. JUSTICE K.RAVICHANDRABAABU W.P.Nos.6334 and 6336 of 2019 and W.M.P.No.10771, 7170 and 7172 of 2019 M/s.MRL Posnet Private Limited (Rep. by its Chief Financial Officer Mr.B.Sundar Age-50 years), 8/17, B Block, 1st Floor, Sunnyside, Shafte Mohammed Road, Nungambakkam, Chennai 600 034, PAN: AAECP7679M Petitioner in both W.Ps. Vs 1.The Principal Commissioner of Income Tax, Chennai-4, 301, Wanaparthy Block, Aayakar Bhavan, 121, Mahatma Gandhi Road, Nungambakkam, Chennai 600 034. 2.The Deputy Commissioner of Income Tax, Central Circle-1 (1), 3rd Floor, Central Revenues Building, Queen's Road, Bangalore 560 001. ... Respondents in both W.Ps. Prayer in W.P.No.6334/2019:Writ Petition filed under Article 226 of Constitution of India praying to issue Writ of Certiorari to call for http://www.judis.nic.in1/32 W.P.Nos.6334 and 6336 of 2019 records of first respondent bearing Notification No.10/2018-19 in C.No.27/Centralisation/PCIT-4/2017-18 dated 13.02.2019 and quash same. Prayer in W.P.No.6336/2019:Writ Petition filed under Article 226 of Constitution of India praying to issue Writ of Certiorari to call for records of second respondent bearing F.No.AAECP7679M/DCIT/CC- 1(1)/2018-19 dated 19.02.2019 and quash same. For Petitioner : Mr.Sandeep Bagmar in both W.Ps. For Respondents : Mrs.Hema Muralikrishnan, in both W.Ps. Senior Standing Counsel (I.T.) COMMON ORDER W.P.No.6364 of 2019 is filed challenging notification issued by first respondent dated 13.02.2019, transferring petitioner/assessee's case from ITO Corporate WD(4)(1), Chennai-2 DCIT Central Circle (1), Bangalore under Section 127 of Income Tax Act, 1961 for purpose of coordinated investigation. 2. W.P.No.6336 of 2019 is filed challenging proceedings of second respondent dated 19.02.2019, wherein and whereby, petitioner/assessee was called upon to produce books of accounts and furnish in writing and verified in prescribed manner information called for and on points or matters specified therein. http://www.judis.nic.in2/32 W.P.Nos.6334 and 6336 of 2019 3. Both these writ petitions are filed by one and same assessee. While first writ petition is filed challenging transfer of assessee's case from Chennai to Bangalore, second writ petition is filed against consequential notice issued by Assessing Officer at Bangalore. Therefore, facts and circumstances warranting filing of these two writ petitions are one and same and they are as follows: petitioner is Private Limited Company incorporated under Companies Act, 1956. It is engaged in business of providing point of sale technology infrastructure to banks and consumer service providers. petitioner Company was acquired by Worldline Group, France through its Singapore subsidiary i.e. Worldline IT and Payment Services (Singapore) Pte. Ltd. (Worldline Singapore) in October 2017. Prior to acquisition, one Kishore Kothapalli and Satish P.Chandra were Directors of petitioner Company. They resigned from Directorship of petitioner with effect from 25.10.2017. On 01.02.2018, survey under Section 133A of Income Tax Act, 1961 was conducted at office premises of petitioner at Chennai. During course of survey proceedings, petitioner had produced share purchase agreement dated 29.09.2017, Indemnity escrow agreement dated 29.09.2017 and transaction escrow agreement dated 29.09.2017 to Assistant Director of Income Tax (Inv.) Unit-3, which had http://www.judis.nic.in3/32 W.P.Nos.6334 and 6336 of 2019 been impounded. Pursuant to said survey, show cause notice dated 04.06.2018 was issued by first respondent, asking petitioner as to why centralization of petitioner's case should not be done with Assessing Officer, Bangalore, being second respondent. first respondent in said notice barely stated that there are substantial linkages between petitioner and Satish P Chandra and his Company M/s GTPL, without exactly stating as to what those linkages are. petitioner vide its reply dated 13.06.2018, has specifically stated that said Satish P Chandra, Kishore Kothapalli and M/s.GTPL did not play any part in management of petitioner ever since Worldline Singapore became 100% owner of petitioner. It was specifically submitted that petitioner had no connection with those persons. It was also stated that petitioner's operations were in Chennai along with its registered officer and all its records are also in Chennai. Therefore, petitioner requested that assessments may be completed at present jurisdictional office at Chennai, as it would cause immense hardship, if case is to be transferred to Bangalore. first respondent issued notification dated 26.06.2018, without considering merits of petitioner's reply and without providing any reasons, transferring petitioner's case from Chennai to Bangalore. Pursuant to said transfer order, notice dated 18.07.2018 was also issued by second respondent. Aggrieved against http://www.judis.nic.in4/32 W.P.Nos.6334 and 6336 of 2019 those proceedings, petitioner filed W.P.Nos.19415 and 19416 of 2018. This Court, by order dated 26.06.2018, quashed order of transfer and remitted matter back to first respondent to pass fresh order on merits and in accordance with reasons. In sofaras consequential notice issued by second respondent dated 18.07.2018 is concerned, this Court directed said notice to be kept in abeyance. Pursuant to order of this Court, first respondent passed present impugned order of transfer and consequently, second respondent issued notice under Section 142(1) read with Section 129 of said Act. Hence, these present writ petitions are filed. 4. counter affidavit is filed on behalf of respondents. case of respondents is as follows: petitioner Company became 100% owned Company by Worldline Group only after purchasing shares from one Satish Chandra, Kishore Kothapalli and M/s.Global Tech Park Pvt. Ltd. purpose of centralization of cases is to investigate transactions among various related entities during last six previous years to previous year in which search and survey operations are conducted and to assess income of all persons concerned for assessment years in question. Since transfer of shares had happened in October 2017, which is well within six years prior http://www.judis.nic.in5/32 W.P.Nos.6334 and 6336 of 2019 to previous year, in which survey was conducted, transactions needs to be investigated in order to have clear picture before final assessment of income is made. Therefore, it cannot be said that there was no nexus/linkage. Though nexus/linkage, which may seem to be absent on date of survey, purpose of centralization is not limited to investigate transactions, if there exists nexus/linkage on date of survey only, but of six years prior to year also, in which search and survey happened. Provisions of Section 127 is only for necessitating transfer of petitioner for jurisdictional purpose and not for adjudicating issues involved. Moreover, seized/impounded materials are in possession of DCIT, Central Circle, Bengaluru and actual financial, commercial or other relevant nexus will be known only after coordinated investigation by DCIT, Bengaluru. reasons were communicated to petitioner and speaking order in this regard has been passed on 13.02.2019. No new facts and reasons have been given enlarging scope of show cause notice. As per provisions of Section 127(1) and (2) of Income Tax Act, 1961, Principal Commissioner of Income Tax can transfer any case from one Assessing Officer to any other Assessing Officer, 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, by passing order. In view of http://www.judis.nic.in6/32 W.P.Nos.6334 and 6336 of 2019 above enabling provision, there is no necessity for Principal Commissioner of Income Tax to provide nature of investigation, as it is out of scope of provision. Since seized/impounded materials are also in possession of second respondent, nature of investigation could not be provided. As long as centralization is done in accordance with provisions of Act and for coordinated investigation and assessment, same is to be construed for purpose of safeguarding Revenue and in public interest. inconvenience, if any to petitioner cannot stand in way of public interest as long as none of rights of petitioner like proper opportunity, right to carry on business etc., are affected. Therefore, both impugned proceedings were passed well within law. 5. petitioner filed reply to counter affidavit filed by respondents, wherein it is stated as follows: centralization cannot give unfettered powers to officers to investigate transactions, which are admittedly disclosed and income therefrom is offered to tax. reasons supplied by respondents for transfer did not form part of show cause notice dated 04.06.2018. impugned order was passed under assumption that nexus/linkage may exist in respect of six years prior to year in which search or survey http://www.judis.nic.in7/32 W.P.Nos.6334 and 6336 of 2019 conducted. Therefore, entire action is contrary to provisions of Section 127 of Act. first respondent erroneously exercised powers under Section 127 of Act without recording reasons to justify necessity of coordinated investigation. In absence of any agreement for purpose of transfer under Section 127(2) of Act between authorities of equal rank, any transfer made under this Section is bad in law and illegal. In present case, there is no agreement by first respondent for transfer as requested by Principal Commissioner of Income Tax (Central), Bangalore. very admission of respondent that nature of transaction, which requires verification and investigation, is unknown means that entire exercise is without any basis and without material on record. Therefore, transfer under Section 127 cannot be made merely for facilitating coordinated investigation. 6. Mr.Sandeep Bagmar, learned counsel appearing for petitioner submitted as follows: impugned order is contrary to scope and ambit of 127 (2)(a) of Income Tax Act. There must be agreement between two Commissioners and such agreement must be specifically stated in order of transfer. In this case, no such agreement is referred to or reflected in order of transfer. Thus, it violates mandatory requirement of http://www.judis.nic.in8/32 W.P.Nos.6334 and 6336 of 2019 Section 127(2)(a). On this aspect, following decisions are relied on: i) 2017 (12) SCC 805, Noorul Islam Educational Trust vs. CIT and others; ii) (2011) 332 ITR 97 (Madras), Noorul Islam Educational Trust vs. CIT and others; b) When show cause notice refers as though proposed transfer was for coordinated investigation, impugned order states reasons beyond show cause notice. impugned order assigns reasons on assumptions without material. Even according to respondents, as spelt out in their counter, nexus will be known only after investigation. Therefore, it is evident that as on date, no material, no linkage for transferring case. No material or transaction is brought down, which necessitates for coordinated investigation. While show cause notice is totally silent anything about past six years, impugned order refers same. Therefore, impugned order is beyond scope of show cause notice. In this aspect, following case laws are relied on: i) 1976 (102) ITR 281 (SC); Ajantha Industries vs. CBDT; ii) 2004 (186) CTR 428 (P&H); Rajesh Mahajan vs. CIT; http://www.judis.nic.in9/32 W.P.Nos.6334 and 6336 of 2019 iii) 2016 (387) ITR 223 (Mum); Zodiac Developers (P) Ltd. vs. Pr.CIT; iv) 2015 (234) Taxmann 468, RSG Foods (P) Ltd. vs. Commissioner of Income Tax. 7. Per contra, Mrs.Hema Muralikrishnan, learned Senior Standing Counsel appearing for respondents submitted as follows: a) This is second round of litigation on very same issue of transfer of case. petitioner has not specifically raised question with regard to agreement between two Commissioners either in this writ petition or in earlier writ petition. only objection raised in earlier writ petition was that transfer was made without assigning reasons. Therefore, this Court has set aside order of transfer and remitted matter back to Authority concerned to pass fresh order expressing reasons for transfer. Consequently, reasons for transfer are now communicated. Therefore, learned counsel for petitioner is estopped from raising ground with regard to agreement between two Commissioners, while making his oral submissions. When this ground was not raised in first writ petition, same cannot be raised in second round. Even otherwise, agreement between two Commissioners can be inferred from their conduct. Therefore, it is not http://www.judis.nic.in10/32 W.P.Nos.6334 and 6336 of 2019 necessary to specifically state in order of transfer that agreement was reached between two Commissioners. On this aspect, (2017) 86 Taxmann.com 39 (Guj), Genus Electrotech Ltd. vs. Union of India, is relied on. b) On very same day, survey was conducted at petitioner's premises and GTPL, Bangalore. GTPL held 24.56 shares in petitioner's Company. This 24.56% shares is sold to petitioner's owner in month of October 2017. search was conducted in February 2018. Records were seized. Therefore, financial implication between parties out of such transfer of shares can definitely be inferred. Merely transferring file from one Office to other Office does not cause prejudice to assessee. Mere inconvenience cannot be ground to refuse or reject transfer. Since there was search and survey at GTPL, Bangalore, Assessing Officer, Bangalore, has power to do block assessment. impugned order is not beyond scope of show cause notice. On other hand, it only gave reasons. case laws relied on by learned counsel for petitioner are factually distinguishable and thus, not applicable to facts and circumstances of present case. http://www.judis.nic.in11/32 W.P.Nos.6334 and 6336 of 2019 8. Heard learned counsel for petitioner and learned Senior Standing counsel for respondents and perused materials placed before this Court. 9. petitioner is aggrieved against transfer of case from Chennai to Bangalore. Earlier similar order of transfer under Section 127 of Income Tax Act was passed transferring petitioner's case from ITO, Corporate Ward 4(1), Chennai to DCIT, Central Circle 1 (1), Bangalore. said order dated 26.06.2018 was put to challenge before this Court by petitioner in W.P.No.19415 of 2018. only objection raised therein against transfer was that order impugned therein did not assign specific reasons for transfer except stating that objections raised by assessee cannot be basis for non centralising case and that materials, which were seized and impounded, need to be further investigated. This Court, after hearing both sides, allowed writ petition and set aside said order dated 26.06.2018 and remitted matter back to first respondent to pass fresh order on merits and in accordance with law with reasons within period of two weeks. This Court passed said order only on ground that first respondent has to record his reasons for transferring case, as required under Section 127(1) of Income Tax Act, by specifically observing that reasons stated in http://www.judis.nic.in12/32 W.P.Nos.6334 and 6336 of 2019 show cause notice are only prima facie view of Authority and therefore, subsequent order passed should necessarily state reasons. It is to be noted, at this juncture that except raising above objection, petitioner did not raise any other objections, as has been raised in this writ petition. It is not case of petitioner that question now raised by them with regard to agreement between two Commissioners was not available at time of filing earlier Writ Petition. It is not new event which had come into existence after filing and disposal of earlier Writ Petition. On other hand, this issue was very much available to petitioner even at that time and however, they have not chosen to raise same. It is well settled that when challenge is made against order, all grounds available and legally sustainable should be raised at first instance. Piece meal raising of grounds one after another in successive writ petitions, in respect of very same challenge is not permissible, since such kind of practice, if allowed, would only result in entertaining successive writ petitions on same issue by same party. 10. Keeping above position in mind, let me consider case further. Consequent upon said order made in W.P.No.19415 of 2018 dated 11.12.2018, fresh order dated 13.02.2019 in Notification No.10/2018-2019 was issued by first respondent, which is impugned in http://www.judis.nic.in13/32 W.P.Nos.6334 and 6336 of 2019 this writ petition. Perusal of said detailed order would show that first respondent has considered objections raised by petitioner, dealt with same and thereafter, chosen to pass order of transfer of petitioner's case once again from ITO, Corporate Ward 4(1), Chennai to DCIT, Central Circle 1(1), Bangalore under Section 127 of Income Tax Act, 1961, for purpose of coordinated investigation, which is necessary for proper assessment of income. 11. careful perusal of said order would show that apart from saying that transfer is made for purpose of coordinated investigation, first respondent has observed at paragraph No.9.2 as follows: "...9.2 objections raised above are dealt as under: 1) So far as objection of non-existent nexus/linkage between assessee and others (Mr.Satish Chandra, Mr.Kishore Kothapalli and M/s.Global Tech Park Ltd) on date of survey is concerned fact is that assessee company became 100% owned company by Worldline Group only after purchasing shares from Mr.Satish Chandra, Mr.Kishore Kothapalli and M/s.Global Tech Park Pvt Ltd. before date of survey. acquisition of assessee company by Worldline Group happened in October 2017 by way of transfer of shares by Mr.Satish Chandra, Mr.Kishore Kothapalli and M/s.Global Tech Park Pvt Ltd. purpose of centralization of cases is to http://www.judis.nic.in14/32 W.P.Nos.6334 and 6336 of 2019 investigate transactions among various related entities during last six previous years prior to previous year in which search and survey are conducted in addition to previous year in which search and survey operations are conducted and to assess income of all persons concerned for assessment years in question. Since, transfer of shares happened in October 2017 which is well within 6 years prior to previous year in which survey was conducted, transactions need to be investigated in order to have clear picture before final assessment of income is made in all related cases. Hence, it cannot be said that there was no nexus/linkage as claimed by assessee. In fact there is indeed nexus/linkage which may seem to be absent on date of survey, but as mentioned earlier purpose of centralization is not limited to investigate transactions if there exists nexus/linkage on date of survey only, but of six years prior to year also, in which search and survey happen. Since basis of objection itself is not in conformity with provisions of law, this objection is rejected. 2) So far as objection of no major document found is concerned it must be mentioned here that materials found during search and survey are considered and investigated during assessment proceedings only. In any case this cannot be taken as basis to object centralization, because centralization is done in public interest to safeguard revenue. And while invoking provisions of section 127 i.e. at this stage of order of centralization, consideration of documents and giving 'detail' reasons are not needed as has been held by various courts. http://www.judis.nic.in15/32 W.P.Nos.6334 and 6336 of 2019 3) So far as inconvenience in attending proceedings at Bangalore is concerned, objection is not acceptable because assessee company is supported/assisted by learned counsels. And in any case this cannot be taken as objection by assessee because centralization being administrative process is being done in public interest to safeguard revenue. On all above issues relevant observations of Gujarat High Court in case of Shree Ram Vessel Scrap Pvt. Ltd. Vs. Commissioner of Income Tax-VI (Special Civil Application No.16883, 16886, 16888 & 16896 of 2012) dated 23/01/2013 are worth mentioning which are reproduced as under: "The contention of petitioner that Department should have furnished information with them (as claimed by them in their reply) is not at all sound as Department cannot be compelled or required at initial stage to disclose "material" or "information" as it may "embarrass or prejudice" assessment. legal position is crystal clear and settled by catena of decisions of this Court and apex court on this issue. This Court cannot go into "sufficiency" of reasons." "Undoubtedly, order of transfer of assessment file of assessee to far off place puts assessee in great inconvenience and ought not to be ordered unless necessary in public interest to safeguard revenue by centralisation of cases for co-ordinated investigation. Such order cannot be passed arbitrarily and can be justified only if there are valid reasons. http://www.judis.nic.in16/32 W.P.Nos.6334 and 6336 of 2019 principles of natural justice as well as statutory provision require that reasons must be recorded in writing in order itself and disclosed to assessee to enable assessee to take its remedies against such order. At same time, power conferred for transfer cannot be interfered with having regard to object for which such power is conferred." 12. Perusal of reasons stated at paragraph 9.2 of impugned order undoubtedly indicate that transfer is made not simply by stating that it was made for coordinated investigation and on other hand, above reasons speak for themselves justifying such intended coordinated investigation. As reasons stated at paragraph 9.2 are in respect of factual aspects of matter and that investigation is yet to be completed, any discussion on above reasons and rendering findings on same, as regard to correctness or otherwise of those reasons, will not be proper at this stage, as it would amount to giving finding in respect of those issues even before completion of investigation. Therefore, this Court is of firm view that reasons stated in impugned proceedings are in conformity with show cause notice already issued and therefore, petitioner is not entitled to state that reasons stated are beyond scope of show cause notice. http://www.judis.nic.in17/32 W.P.Nos.6334 and 6336 of 2019 13. learned counsel for petitioner relied on 1976 102 ITR 281 (SC) (Ajantha Industries vs. CBDT). Perusal of facts of said case would show that assessee therein questioned validity of order of transfer passed by Central Board on ground of violation of principles of natural justice, since before passing such order, no reasons were given nor communicated to assessee therein. facts of present case are totally different as discussed supra. Therefore, above decision of Apex Court is not applicable to present case. 14. next decision relied on is reported in 2004 (186) ITR 428 (Rajesh Mahajan vs. CIT) of Punjab and Haryana High Court. Perusal of facts and circumstances of said case would also show that impugned order of transfer therein only stated that transfer of assessment proceedings of assessee therein was made for coordinated investigation. In this case, I have already pointed out that paragraph 9.2 of order of transfer has clearly spelt out certain reasons. Therefore, it is to be noted that in present case, transfer is made not by simply stating for coordinated investigation, but by furnishing reasons as well in support of such investigation. Hence, above decision is also factually distinguishable. http://www.judis.nic.in18/32 W.P.Nos.6334 and 6336 of 2019 15. 2015(234) Taxman 468 (RSG Foods (P) Ltd. vs. Commissioner of Income Tax), again decision of Punjab and Haryana High Court is relied on by petitioner's counsel to contend that mere suspicion cannot be sufficient for taking recourse to action under section 127 of said Act. I do not think that above decision, which is again factually distinguishable, would help petitioner in any manner. In this case, it is evident that impugned order was not made based on mere suspicion. On other hand, such suspicion is based on transactions entered between parties, as is referable to documents seized. No doubt, correctness or otherwise of such suspicion is matter for investigation and therefore, before concluding investigation, it is better to refrain from expressing any view on such suspicion. Accordingly, I find that above case law is also not applicable to present case. 16. decision of Mumbai High Court reported in 2016 (387) ITR 223 (Zodiac Developers (P) Ltd. vs. Pr.CIT relied on is also factually distinguishable, since facts of said case would show that notice and consequential order of transfer are bereft of any particulars except to state that transfer is required for sake of coordinated investigation along with another connected case for administrative convenience. As discussed supra, in this case, facts are different and http://www.judis.nic.in19/32 W.P.Nos.6334 and 6336 of 2019 therefore, above decision is also not applicable to present case. 17. Further contention of petitioner that no material or transaction is brought down which necessitates for coordinated investigation, is also liable to be rejected for reason that petitioner is not entitled to get all those material details in respect of transactions, which are sought to be investigated by way of coordinated investigation even before completion of such investigation. In my considered view, disclosing those materials at this stage, that too, in order of transfer, would certainly affect and hamper investigation process. Therefore, I find that above contention of petitioner also cannot be sustained. 18. Main contention raised by learned counsel for petitioner is that there is no agreement between two Commissioners. In other words, according to him, no agreement as required under Section 127(2)(a) of Act was arrived between Bangalore Commissioner and Chennai Commissioner for transferring file from Chennai to Bangalore. Therefore, he contended that in absence of such agreement, transfer is bad. http://www.judis.nic.in20/32 W.P.Nos.6334 and 6336 of 2019 19. Before answering above issue, it is relevant to note at this juncture that this point was not at all raised specifically by writ petitioner in present writ petition. It is also to be noted that even in earlier writ petition filed in W.P.No.19415 of 2018, this issue was not raised. However learned counsel for petitioner sought to raise this issue first time before this Court orally by contending that it is question of law based on mandatory statutory requirement under Section 127(2)(a) and therefore, this Court can go into such issue and decide. 20. On other hand, it is contention of learned Senior Standing Counsel for respondents that when above issue has not been specifically raised either in earlier writ petition or in present writ petition, learned counsel for petitioner is not entitled to raise same, since there was no opportunity for Revenue to deny such contention in their counter pleadings. I have already observed supra that grounds cannot be raised in piece meal in successive writ petitions in respect of very same challenge. Admittedly, above issue is not raised in affidavit filed in support of writ petition, except to say that impugned order was passed in contrary to relevant provision. However, this Court is not inclined to leave this issue at this stage and on other hand, would like to deal with such issue and answer same as http://www.judis.nic.in21/32 W.P.Nos.6334 and 6336 of 2019 discussed hereunder, since it is raised as question of law. 21. Section 127 of Income Tax Act, 1961 deals with Powers to transfer cases, which reads as follows: "127.Power to transfer cases: (1) [Principal Director General or] Director General or [Principal Chief Commissioner or] Chief Commissioner or [Principal 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 [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 http://www.judis.nic.in22/32 W.P.Nos.6334 and 6336 of 2019 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 Chief Commissioner or] Chief Commissioner 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 possible to do so, and after recording 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- http://www.judis.nic.in23/32 W.P.Nos.6334 and 6336 of 2019 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. 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." 22. Perusal of above provision of law would show that case can be transferred from one Assessing Officer to other Assessing Officer or Assessing Officers, after giving assessee reasonable opportunity of being heard and after recording reasons for transfer. However, if Assessing Officer, from whom case is to be transferred and Assessing Officer, to whom case is to be transferred, are not subordinate to same Commissioner, Commissioner from whose jurisdiction, case is to be transferred, would pass order after giving assessee, reasonable opportunity of being heard and after recording his reasons, if transferring Commissioner and Commissioner, within whose jurisdiction case is transferred, are in agreement for such transfer. careful http://www.judis.nic.in24/32 W.P.Nos.6334 and 6336 of 2019 perusal of Section 127(2)(a) would show that only when those two Commissioners are in agreement, transferring Commissioner would issue notice to assessee and pass orders by giving reasons, that too after giving assessee reasonable opportunity of being heard. Therefore, it is evident that only when there is agreement between two Commissioners, event of issuing show cause notice itself would arise from transferring Commissioner. In other words, very conduct of transferring Commissioner in issuing show cause notice itself is enough for drawing legal inference that both Commissioners are in agreement to transfer case. 23. Further, Section 127(2)(a) of Act does not stipulate anywhere or indicate in any manner as to how or in what manner/format such agreement has to be arrived at or recorded. On other hand, this Court is of considered view that language of above provision of law has been carefully coined to infer presence of such agreement by conduct, once show cause notice is issued by transferring Commissioner to assessee. 24.It is to be noted at this juncture that power to transfer cases within jurisdiction of same Commissioner from one Assessing Officer http://www.judis.nic.in25/32 W.P.Nos.6334 and 6336 of 2019 to another Assessing Officer, if both are subordinate to him, is dealt with under Sub Section (1) of Section 127. In case, where both Assessing Officers are not subordinated to same Commissioner, procedure to transfer is dealt with under sub Section (2) of Section 127, which contains two eventualities. While sub clause (a) of 127(2) deals with transfer of cases, when there is agreement between two Commissioners, sub clause (b) of Section 127(2) deals with transfer of cases by Board or any such Officer as Board may, by notification, authorise in this behalf, where two Commissioners are not in agreement to transfer case. While carefully perusing provision under Section 127(2)(a), it is evident that word "agreement" referred to therein is to be construed as agreement by conduct and not necessarily agreement in writing. above emphasis is made based on word "then" referred to under Section 127(2)(a) after word "agreement". Therefore, it is apparent that only when there is agreement between two Commissioners, then transferring Commissioner has to issue show cause notice and pass orders thereon. If no agreement is reached between two Commissioners, there is no occasion for transferring Commissioner to issue show cause notice at all. Therefore, word "then" assumes significance, only to indicate that issuance of show cause notice itself is enough to draw inference of such statutory compliance viz., existence of agreement http://www.judis.nic.in26/32 W.P.Nos.6334 and 6336 of 2019 between two Commissioners. Only when there is no disagreement between two Commissioners, such disagreement must be reflected in writing, so as to invoke power of Board to transfer as contemplated under Section 127(2)(b). 25. Keeping above statutory position in mind, if facts and circumstances of present case are looked into, it would show that Chennai Commissioner has passed impugned order of transfer, after issuing show cause notice to assessee and after giving them opportunity of being heard as well. Therefore, I find that statutory requirement under Section 127(2)(a) is fully complied with in this case. In other words, very conduct of respective Commissioners would show that there is agreement between them for transfer and therefore, it cannot be contended otherwise, merely because it is not so stated in impugned order. Very issuance of show cause notice followed by passing order of transfer would, on face of those proceedings, reflect agreement of Chennai Commissioner for transferring case to Bangalore Commissioner. 26. At this juncture, it is relevant to quote Division Bench decision of Gujarat High Court reported in (2017) 86 Taxmann.com 37 http://www.judis.nic.in27/32 W.P.Nos.6334 and 6336 of 2019 (Guj), Genus Electrotech Ltd. vs. Union of India, wherein at paragraph No.18, it has been observed as follows: "18. Thus clearly Principal Commissioner of Income- tax, Lucknow, had shown his agreement to case of petitioner being transferred and centralised before ACIT, Central Circle, Moradabad along with other group cases. It is true that no such formal letter has been written by Principal Commissioner of Ahmedabad indicating his agreement. However, record would suggest that previously he had passed order dated 30.12.2015 transferring assessment of petitioner. Before passing this order, he issued notice asking petitioner to remain present. As noted, this order was struck down by judgment dated 18.7.2016. Thereafter, said authority issued fresh notices dated 3.11.2016 and 23.11.2016 calling upon petitioner to participate in hearing and indicating grounds on which he proposed to transfer assessment. After considering opposition of petitioner, said authority passed order which is impugned in present petition. agreement of Principal Commissioner, Ahmedabad, to transfer case, therefore, can be culled out from record. Clause(a) of sub-section(2) of section 127 of Act refers to agreement of two heads of jurisdiction from where as assessment is transferred to where it is being transferred. There is no format in which such agreement must be recorded or conveyed. As noted, additional duty of authority from whose jurisdiction assessment is being http://www.judis.nic.in28/32 W.P.Nos.6334 and 6336 of 2019 transferred is to give reasonable opportunity of being heard to assessee and then to pass order citing reasons. This would necessarily be after he agrees to allowing assessment to be transferred. When therefore, Principal Commissioner of Ahmedabad had issued notices to petitioner on more occasions than one proposing to transfer assessment, his agreement for such transfer was writ large on face of record. Had this been case where authority to whom assessment was being transferred and whose agreement is not found on record, issue would have to be seen in different light. We cannot put requirement of clause(a) to sub-section(2) to section 127 of Act in such straight-jacket formula that even when competent authority grants hearing to assessee and, thereafter, passes reasoned order transferring assessment, his action would fail merely because in writing he did not record his agreement. Contrary to what was canvassed before us, decision of Supreme Court in case of Noorul Islam Educational Trust v. CIT [2016]388 ITR 489/243 Taxman 519/76 taxmann.com 144 does not lay down any such proposition. It was case where affidavit filed on behalf of Revenue did not disclose that there was any agreement as required under section 127(2)(a) of Act. It was merely averred in affidavit that there was no disagreement between two Commissioners. In this background, Supreme Court observed that absence of disagreement cannot tantamount to agreement as visualised under section 127(2)(a) of Act which contemplates positive state of mind of http://www.judis.nic.in29/32 W.P.Nos.6334 and 6336 of 2019 two jurisdictional Commissioners of Income tax which is conspicuously absent in said case. Supreme Court has used expression "positive state of mind" referring to requirement of agreement contained in said provision." 27. Perusal of above findings rendered by Gujarat High Court would support my view expressed supra. 28. No doubt, learned counsel for petitioner heavily relied on decision of Hon'ble Supreme Court reported in (2017) 12 SCC 805, Noorul Islam Educational Trust vs. CIT, wherein Apex Court has observed that absence of disagreement cannot tantamount to agreement. However, perusal of facts and circumstances of said case would show that counter affidavit filed therein on behalf of Revenue did not disclose that there was any such agreement. In this case, as already pointed out, petitioner has not raised point on question of agreement either in present writ petition or in earlier writ petition. Therefore, Revenue cannot be faulted in not meeting out point in counter pleadings. In fact, above decision of Apex Court was considered and discussed by Gujarat High Court in case cited supra and distinguished same. I am in full agreement with above decision of Gujarat High Court, more particularly, when facts and http://www.judis.nic.in30/32 W.P.Nos.6334 and 6336 of 2019 circumstances of present case are totally different and distinguishable from facts and circumstances of Noorul Islam Educational Trust's case. 29. other decision relied on by petitioner's counsel is reported in (2011) 332 ITR 97 (Madras), Noorul Islam Educational Trust vs. CIT and others. It is true that learned Judge found that no material has been placed before him that there was agreement between two Commissioners and therefore, in absence of such agreement, transfer cannot be made. In this case, I have already pointed out that very issuance of show cause notice itself is reflection of agreement arrived by respective Commissioners and therefore, show cause notice is relevant material to arrive at conclusion that there was agreement between Commissioners. In other words, agreement referred to under Section 127(2)(a) is to be inferred based on conduct of concerned officials, since such inference is statutorily permitted as discussed supra. Therefore, I am of view that above decision of this Court would not help petitioner in any manner. 30. No doubt, there may be some inconvenience for assessee to attend enquiry before Assessing Officer, to whom case is http://www.judis.nic.in31/32 W.P.Nos.6334 and 6336 of 2019 transferred. Mere inconvenience or facing certain practical difficulties themselves cannot be ground to refuse transfer of investigation. Certainly, administrative exigencies of Investigating Agency would outweigh practical difficulties or inconvenience of person to be investigated. It should be borne in mind that it is for Investigating Agency to take call and decide as to how and in what manner, investigation has to be proceeded with. Of course, while making such transfer, statutory requirement need to be followed and when such compliance is evident on face of proceedings, it is better that such transfer proceedings are not interfered with at very stage of investigation itself. 31. Considering above stated facts and circumstances, I find that impugned order of transfer and consequential impugned notice do not warrant any interference. Accordingly, these writ petitions fail and same are dismissed. No costs. connected miscellaneous petitions are closed. 27.09.2019 Index :Yes/No Speaking/Non Speaking vri http://www.judis.nic.in32/32 W.P.Nos.6334 and 6336 of 2019 To 1.The Principal Commissioner of Income Tax, Chennai-4, 301, Wanaparthy Block, Aayakar Bhavan, 121, Mahatma Gandhi Road, Nungambakkam, Chennai 600 034. 2.The Deputy Commissioner of Income Tax, Central Circle-1 (1), 3rd Floor, Central Revenues Building, Queen's Road, Bangalore 560 001. http://www.judis.nic.in33/32 W.P.Nos.6334 and 6336 of 2019 K.RAVICHANDRABAABU,J. VRI PRE DELIVERY COMMON ORDER IN W.P.Nos.6334 and 6336 of 2019 and W.M.P.No.10771, 7170 and 7172 of 2019 27.09.2019 http://www.judis.nic.in34/32 MRL Posnet Private Limited v. Principal Commissioner of Income-tax, Chennai-4, Chennai / Deputy Commissioner of Income-tax, Central Circle-1(1), Bangalore
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