Maritime Merchants (P) Ltd. and Another vs Commissioner of Income Tax and Others

Soumitra Pal, J.—The petitioners, Maritime Merchants (P) Ltd. and B.S. Sponge (P) Ltd., being companies incorporated under the Companies Act, 1956, have filed this writ petition challenging the order of transfer dated 21-10-2008 passed u/s 127 of the Income Tax Act, 1961 transferring the case from the jurisdiction of the assessing officer in Kolkata to Ranchi on the ground that though representations were filed objecting to such transfer those have not admittedly been considered and no hearing was granted. It has been submitted that the name of the petitioners appear against serial Nos. 3 and 4 of the schedule of cases transferred. Simple Vinoyog (P) Ltd. whose name also appears against serial No. 2 in the said schedule challenged the selfsame order of transfer by filing a writ petition being Writ Petn. No. 1712 of 2008, Simple Vinoyog (P) Ltd v. CIT and Ors., wherein after hearing the learned advocates for the parties, court by the judgment and order dated 20-11-2008 had quashed the impugned order of transfer. Since in this writ petition challenge is to the selfsame order, appropriate orders may be passed. Submission has been made that after the writ petition was filed the Deputy Commissioner, Central Circle-II, Ranchi had issued a notice u/s 153A of the Income Tax Act, 1961 directing the petitioner to file a true and correct return of the total income for the assessment year 2007-08 relevant to the previous year 2006-07 and for the assessment year 2008-09 relevant to the previous year 2007-08.

Learned advocate appearing on behalf of the revenue submits that the order under challenge is just and proper.

In order to appreciate the issue it is necessary to refer to the order impugned, the relevant portion of which is extracted hereunder:

Order u/s 127 of the Income Tax Act, 1961

Order No. 24 of 2008-09

Consequent to search and seizure operations u/s 132 of the Income Tax Act, 1961 in the B.S. Agarwal group of cases, it had been requested by the CIT (Central), Ranchi that the cases named in Col. (2) of the schedule below be centralized for the purposes of co-ordinated investigation with the assessing officer mentioned in Column 6 of the schedule below.

In the interest of natural justice and in pursuance of requirements of Clause (a) of Sub-section (2) of Section 127, the assessees were provided an opportunity to be heard in the matter of the proposed transfer, by issue of notice dated 26-5-2008.

Each of the assessee raised objections against the transfer on the grounds that neither the directors nor accountants or auditors had any business connection or infrastructure at Ranchi to attend to proceedings of block assessment at offices of the Assistant Commissioner, Central Circle at Ranchi

The said objection was communicated to the Commissioner (Central), Patna for comments and providing material to indicate nexus between/amongst the assessees named in the schedule and the other assessee of the group. The Commissioner (Central) vide his letter dated 26-8-2008, communicated the information and grounds on which centralization was being sought. The said information was communicated to the assessee vide further show-cause notices, each dated 2-9-2008, relevant copy of which is being made part hereof and annexed to the present order as Annexure A. In response, the assessees named at serial Nos. 1 and 2 of the schedule below filed further rejoinders, all on 9-9-2008. In the said rejoinders, the said assessees reiterated the ground of their practical inconvenience in attending to proceedings at Ranchi, and requested for centralization of the other cases at Kolkata. The copy of the relevant rejoinder to each assessee is enclosed as Annexure B. The assessees at serial Nos. 3 and 4 of the schedule below have not fled any rejoinder till date.

The contents of the assessees rejoinder along with enclosures thereto have been perused and considered. However, I do not find substantive merit in the same. Personal inconvenience in attending proceedings cannot override the interest of co-ordinated investigation and it cannot be the prerogative of ah assessee to choose the office or officer with whom their case should be centralized. Since the assessees at serial Nos. 3 and 4 have not filed any reply, it is presumed that they have no justification to support their objections to the proposed transfer of their cases.

Consequently, in exercise of the powers conferred upon me by Sub-sections (1) and (2) of Section 127 of the Income Tax Act, 1961, and all other powers enabling me in this behalf, I, the Commissioner, Kol-I, Kolkata, do hereby transfer the case named in column (2) of the schedule below, from the jurisdiction of the assessing officer named in column (5) to the assessing officer named in column 6 of the said schedule.

Schedule of cases transferred

SI No.

Name of the assessee

Address

PAN

From

To

(1)

(2)

(3)

(4)

(5)

(6)

1.

Singhal Enterprises (P) Ltd.

34A, Metcalfe-Street, Kol-700013

AADCS6988F

Dy. CIT Cir. 3, Kol

Asstt. CIT Central Circle-1, Ranchi

2.

Simple Viniyog (P) Ltd.

AADCS6697M

Income Tax Officer Wd. 2(4), Kol

3.

B.S. Sponge (P) Ltd.

AACCB043HAppellate Asstt. CITCB043H

ITO wd.2(2), Kol

4.

Maritime Merchants (P) Ltd.

AABCM829R

Dy. CIT Cir. 2, Kol

This order will take immediate effect.

Sd/-

Commissioner, Kolkata-I, Kolkata. End: As above.

It appears that the respondent No. 1 in para 3 of the impugned order has observed that each of the assessees had raised objection against the order of transfer. However, in para 5 it has been recorded that the petitioners herein have not filed any reply. I find from the Annexures to the writ petition that pursuant to the notice of the proposed transfer dated 26-5-2008 issued by the respondent No. 1 the petitioners had objected to such proposal which finds mention in the letters dated �1/2-9-2008 issued by the said respondent. Again, on 23-10-2008 the petitioner had furnished a letter objecting to such transfer. However, it is evident from the order impugned that the respondent No. 1 did not consider those written objections which were already on record. Rather it has come to a finding that assessees at serial Nos. 3 and 4, that is, two petitioners- have not filed any reply and, thereafter, it has come to a finding that it is presumed that they have. no justification to support their objections to the proposed transfer of their cases. Since Written objections were admittedly on record, such observation is a total non-application of mind. It is to be noted that filing of written objections is not an empty formality and as objections were filed it was incumbent upon the respondent No. 1 to consider the same and pass appropriate orders and since it was not done, the impugned order cannot be sustained. The issue is also covered by the judgment and order passed in Writ Petn. No. 1712 of 2008, Simple Vinoyog (P) Ltd v. CIT and Ors. (supra) relied on by the petitioner, wherein it has been held "consideration means taking into account and dealing with the materials on record leading to a decision. However, in the instant case, the order impugned is silent how the replies and enclosures on record were considered. Therefore, the logical conclusion would be that the materials on record were not considered at all."

Therefore, for the reasons as indicated, the order impugned dated 21-10-2008 passed u/s 127 of the Act cannot be sustained and thus, is set aside and quashed. Accordingly, all consequential orders are also set aside and quashed. The writ petition is allowed. The respondent No. 1is, however, at liberty to proceed afresh in accordance with law after giving the petitioner an opportunity of hearing on the basis of materials already on records.

Since the respondents were not called upon to file affidavits controverting the allegations made in the writ petition, allegations are deemed not to have been admitted by them.

Let copies of the notices issued by the Deputy Commissioner Central Circle-II, Ranchi be kept with the records

No order as to costs.