Simple Viniyog P. Ltd. vs Commissioner of Income Tax

Soumitra Pal J.

The court : Let affidavit of service filed in court today be kept with the record.

In the writ petition, the petitioner has challenged the order u/s 127 of the Income Tax Act, 1961, dated October 21, 2008, passed by the Commissioner of Income Tax, Kolkata-I, respondent No. 1, transferring the file from Kolkata to Ranchi, on the ground that neither the petitioner was given an opportunity of hearing to present its case nor the order reveals how the written objections dated June 12, 2008, and September 8, 2008, filed pursuant to the show-cause notices dated May 26, 2008, and September 1/2, 2008, were considered.

Relying on the judgment of the hon''ble apex court in Madhya Pradesh Industries Ltd. Vs. Union of India and Others (UOI), , it has been contended on behalf of the respondent that personal hearing is not mandatory and it can be supplemented by written objection. Therefore, as written objections were considered, the order impugned is just and proper.

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

Consequent to the 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 Commissioner of Income Tax (Central), Ranchi that the cases named in column (2) of the schedule below be centralized for the purpose 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 the 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 May 26, 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 Asst. Commissioner of Income Tax, Central Circles at Ranchi.

The said objection was communicated to the Commissioner of Income Tax (Central), Patna, for comments and providing material to indicate the nexus between/amongst the assessees named in the schedule and the other assessees of the group. The Commissioner of Income Tax (Central), vide his letter dated August 26, 2008, communicated the information and grounds on which centralization was being sought. The said information was communicated to the asses-see, vide further show-cause notices, each dated September 2, 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 No. 1 and 2 of the schedule below filed further rejoinders, all on September 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 filed any rejoinder till date.

The contents of the assessees'' rejoinders 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 an assessee to choose the office or officer with whom their case should be centralized. Since the assessees at S1. 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-section (1) and (2) of Section 127 of the Income Tax Act, 1961, and all other powers enabling me in this behalf, I, the Commissioner of Income Tax, 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

------------------------------------------------------------------------------- Sl. Name of the Address PAN From To No. assessee ------------------------------------------------------------------------------- 1 2 3 4 5 6 ------------------------------------------------------------------------------- 1. Singhal 34A, Metcalfe AADCS6988F Deputy CIT Asst. CIT, Enterprises Street, Cir 3, Central Private Ltd. Kokata-700 013 Kolkata Cir. 2, Ranchi 2 Simple Viniyog AADCS6697M ITO Private Wd.2(4), Ltd. Kolkata

3 B.S. Sponge AACCB0433H ITO Private Ltd. Wd.2(2), Kolkata

4 Maritime AABCM8293R Deputy CIT Merchants Cir 2, Kolkata Private Ltd.

This order will take immediate effect.

(Sd.) ... Commissioner of Income Tax, Kolkata I, Kolkata.

(emphasis supplied)

I find from paragraph 5 of the order impugned that respondent No. 1 had "considered" the written objection. In the context of the case, "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. Further, Section 127 of the Act postulates that the assessee should be given a reasonable opportunity of being heard in the matter, wherever it is possible to do so, thus making it imperative for the Revenue to give the assessee an opportunity of being heard. I find the petitioner was not given an opportunity of hearing. No reason has been spelt out for denying such opportunity. Hence, the order is in breach of the provisions contained in Section 127 of the Act. In view of the clear mandate in Section 127, the principles of law in Madhya Pradesh Industries Ltd. Vs. Union of India and Others (UOI), passed in the light of the provisions contained in the Mines and Minerals (Regulation and Development) Act, 1957, are not applicable to the facts of the case. For the reasons as indicated, the order impugned passed u/s 127 of the Act cannot be sustained and is, thus, set aside and quashed. The writ petition is allowed. Respondent No. 1 is directed to proceed afresh in accordance with law after giving the petitioner an opportunity of hearing on the basis of materials already on record.

No order as to costs.

All parties concerned are to act on a signed xerox copy of this order on the usual undertakings.