Gauhati High Court
Smt. Avijeeta Mohanty Casshyap vs Commissioner Of Income Tax And Ors. on 28 June, 2007
Equivalent citations: (2007)212CTR(GAU)546, [2007]293ITR399(GAUHATI)
Author: Ranjan Gogoi
Bench: Ranjan Gogoi
JUDGMENT Ranjan Gogoi, J.
1. The challenge in the present writ petition is against an order dt. 28th Sept., 2001, passed by the CIT, Guwahati, transferring the file of the petitioner to the Dy. CIT, Circle-3(1), Cuttack (Orissa), i.e., respondent No. 3.
2. The relevant facts may be briefly noticed at the outset.
The petitioner is an income-tax assessee under the jurisdiction of the ITO, Ward-1, Nagaon. The petitioner claims to have submitted her up-to-date returns. According to the petitioner, on 28th Oct., 1998, a search and seizure operation was carried out in the house and premises of one Dr. Radha Charan Mohanty and Dr. Sujta Mohanty, who are the parents of the petitioner. The said operation was also carried out in respect of one Dr. Madhumita Mohanty, Dr. Jagat Ballav Jagdev, who is the sister and brother-in-law, respectively, of the petitioner as well as one M/s Women's Clinic and Nursing Home at Cuttack, a partnership firm of the aforesaid relatives of the petitioner. According to the petitioner, it is evident from the assessment orders for the block period in respect of the aforesaid assessees, as enclosed to the writ petition, the said block assessments were completed under the provisions of the Act in the months of October-November, 2000.
3. The petitioner asserts that she received a notice dt. 28th Sept., 1999 issued by the Dy. CIT, Investigation Circle, Cuttack, requiring the petitioner to file her return for the block period. On receipt of the letter, the petitioner by letter dt. 3rd Dec, 1999, informed the aforesaid authority that she was an existing income-tax assessee under respondent No. 2 and further that under the provisions of Section 158BD of the IT Act, 1961 (hereinafter referred to as "the Act"), the facts leading to the notice dt. 28th Sept., 1999, are required to be informed to the ITO having jurisdiction over the petitioner, i.e., respondent No. 2. In response to the petitioner's reply dt. 3rd Dec., 1999, the Dy. CIT, Investigation Circle-1, Cuttack, by his letter dt. 4th Jan., 1999 (to be read as 4th Dec, 2000) informed the petitioner of an earlier order dt. 17th May., 1999, passed by the CIT, Bhubaneswar, assigning the petitioner's case to the said authority, i.e., Dy. CIT, Investigation Circle-1, Cuttack. The petitioner further asserts that as she did not file any return for the block period, as directed, a show-cause notice dt. 4th Sept., 2001, under Section 276CCC of the Act was served on the petitioner. According to the petitioner, though by letter dt. 12th Sept., 2001, she had requested the Dy. CIT, Circle 3(1), Cuttack, to transfer the proceeding to respondent No. 2 at Nagaon, nothing was done in the matter. On the contrary, the said authority by letter dt. 18th Sept., 2001, asked the petitioner to explain certain deposits in her bank account No. 4239 in the Bank of India, Cuttack, and also certain acquisitions of immovable property by the petitioner, details of which were mentioned in the communication dt. 18th Sept., 2001.
Thereafter, according to the petitioner, while the matter was so situated, she received a notice from the CIT, Guwahati, dt. 24th Sept., 2001, requiring her to show cause as to why her case should not be transferred from respondent No. 2 to the Dy. CIT, Circle 3(1), Cuttack, i.e., respondent No. 3. The petitioner claims to have shown cause on 28th Sept., 2001, taking up the plea that no reasons have been mentioned by the CIT, Guwahati, for the proposed transfer of her case to Cuttack so as to enable the petitioner to submit an effective reply. The petitioner, in her reply dt. 28th Sept., 2001, also informed the CIT, Guwahati, that she is not in any way connected in the Dr. R.C. Mohanty group of cases as indicated in the subject-matter of the CIT's communication dt. 24th Sept., 2001, and further that the block proceedings of Dr. R.C. Mohanty and others were completed in October-November, 2000 itself. In the reply submitted by the petitioner, she had also mentioned certain other personal reasons for which her case, according to her, should not be transferred.
Thereafter, on consideration of the reply of the petitioner, by the impugned order dt. 28th Sept., 2001, after reciting that search and seizure operations were conducted on 28th Oct., 1998, in the residential and business premises of Dr. Sujta Mohanty, Dr. R.C. Mohanty and other family members and that a portion of the undisclosed income of the aforesaid persons is attributable to the petitioner, the petitioner was informed that it has become necessary to transfer her case to respondent No. 3, i.e., the Dy. CIT, Circle-3(1), Cuttack for administrative reasons and for co-ordinated and effective investigation in connection with the block assessment proceeding. Challenging the aforesaid order dt. 28th Sept., 2001, the present writ petition has been filed.
4. I have heard Sri R. Goenka, learned Counsel for the petitioner and Sri U. Bhuyan, learned standing counsel, IT Department.
5. The arguments advanced by Sri Goenka, learned Counsel for the petitioner have been short and precise. Learned Counsel has submitted that the power vested under Section 127 of the Act is a quasi-judicial power and though the contours of the said power cannot be entrapped within any set parameters, the reasons for exercise of the power must have a reasonable connection with the object that is sought to be achieved by its exercise. The scrutiny of the Court, therefore, would extend to a determination of the bona fides for the exercise of the power and relevance of the reasons stated for transfer of a particular case from the jurisdiction of one officer in one State to another in a different State. Such reasons, according to Sri Goenka, must necessarily have a reasonable connection to the object of investigation of the affairs of a particular assessee with whom the concerned person, i.e., the person whose case is sought to be transferred, is reasonably connected or transfer of the case of one assessee is required for an effective assessment of both the assessees. Pointing to the facts of the present case, Sri Goenka has submitted that the several orders and notices issued by the Departmental authorities from Cuttack and Bhubaneswar in a situation where the assessee was under the jurisdiction of the ITO at Nagaon, are contrary to the provisions of the Act in the absence of any order of transfer of the case of the petitioner to such authorities, at the point of time, when such notices were issued. Sri Goenka has further submitted that from the facts and the several documents enclosed to the writ petition, it is clear and evident that the reason for the transfer of the case of the petitioner to Cuttack is to facilitate co-ordinated investigation of the block assessment cases of the relatives of the petitioner. Pointing out to the block assessment orders enclosed to the writ petition, Sri Goenka has submitted that as the said assessments were completed even before initiation of the proposal for transfer of the case of the petitioner to Cuttack, the transfer eventually made on the grounds assigned has no reasonable connection with the stated object. The exercise of the power, therefore, is contended by Sri Goenka to be on legally fragile grounds.
6. Sri Goenka, learned Counsel for the petitioner, has further submitted that the block assessment proceedings of the relatives of the petitioner completed in the months of October-November, 2000 were set aside in appeal by orders dt. 30th Jan., 2001. Thereafter, an approach was made to the Income-tax Settlement Commission and under orders passed by the Commission the cases of the relatives of the petitioner had attained finality in law under the provisions of Section 2451 of the Act and the same cannot be reopened. In this regard, Sri Goenka has specifically drawn the attention of the Court to the orders of the Settlement Commission, which have been enclosed to the reply affidavit of the petitioner.
7. Controverting the submissions advanced on behalf of the petitioner, Sri U. Bhuyan, learned Departmental counsel, has vehemently contended that there were enough materials available with the respondents to connect the income of the petitioner assessee to the undisclosed income of her relatives, which was the subject-matter of the block assessment proceedings. In such a situation, according to Sri Bhuyan, the transfer of the case of the petitioner to Cuttack was made on account of bona Me administrative necessities and no fault can be found with the said action of the respondents.
8. The rival submissions advanced on behalf of the parties have received the due and anxious consideration of the Court. As the validity of the order dt. 28th Sept., 2001, passed by the CIT, Guwahati transferring the case of the petitioner to Cuttack, alone, is the subject-matter of challenge made in the writ petition, the Court would be confined to the validity of the said order and no further.
9. The contours of the power of transfer vested by the provision of Section 127 of the Act may now be noticed. It is a quasi-judicial power vested in the high functionaries of the Department to be exercised for administrative compulsions and necessities connected with the smooth investigation of connected cases and to facilitate orderly conduct of assessment proceedings in situations where an assessee though connected with an ongoing assessment proceeding in another case is outside the jurisdiction of the latter assessing authority. The statute itself imposes certain restrictions on the exercise of power; the same would seem to indicate that the legislature had intended the power under Section 127 of the Act to be exercised sparingly and for good and sufficient reasons. The requirement of recording reasons and giving of prior opportunity, as contemplated by the statute, is adequate testimony of the legislative intent in conferring the power of transfer on the specified authorities. In the instant case, from the affidavit filed by the respondents as well as from the notice issued to the petitioner as also the impugned order dt. 28th Sept., 2001, it is manifestly clear that the order transferring the case of the petitioner from Nagaon to Cuttack was passed in order to facilitate co-ordinated and centralized investigation of the block assessment cases of Dr. R.C. Mohanty and others, who are relatives of the petitioner. A finding has been recorded in the impugned order, which is capable of being read as conveying the meaning that a portion of the undisclosed income of the relatives of the petitioner had found its way to the petitioner and, therefore, the case of the petitioner should be transferred to be dealt with along with the cases of her relatives.
10. Read in the above light, the order dt. 28th Sept., 2001, would appear to be perfectly innocuous and justified. However, the petitioner kept on insisting at every stage that the block assessments pertaining to Dr. R.C. Mohanty group of cases had been finalised way back in October-November, 2000 and, therefore, there was no justification for the proposed transfer of the file of the petitioner to Cuttack. The repeated pleas made by the petitioner on the aforesaid score went unheeded and though as a matter of fact the block assessments of Dr. R.C. Mohanty group of cases were completed about a year prior to the order dt. 28th Sept., 2001, yet, for an ostensible centralized investigation pertaining to those concluded assessments, the case of the petitioner was transferred to Cuttack by the impugned order dt. 28th Sept., 2001.
11. The block assessments of the Dr. R.C. Mohanty group of cases, though closed in October-November, 2000, were set aside in appeal on 30th Jan., 2001. On what terms the appeals were allowed have not been made known to the Court. If the said appeals were disposed of with certain directions in terms of which further investigations into the Dr. R.C. Mohanty group of cases were still open, perhaps the Department would still have had a justification to transfer the case of the petitioner in September, 2001. It was, therefore, incumbent on the part of the Department to inform the Court of the precise terms in which the appeals were disposed of. This has not been done. Even if benefit is given to the Department on the aforesaid score, the ultimate picture still does not change. Even if it is to be assumed that in September, 2001, the Department still had a valid reason to transfer the case of the petitioner on account of the appellate orders, what cannot be overlooked is the subsequent developments that had taken place. The block assessments of the Dr. R.C. Mohanty group of cases were disposed of by the Settlement Commission by different orders passed in the year 2007, which orders are available on record. In terms of the aforesaid orders passed by the Settlement Commission, the said cases had attained finality in law by virtue of the provisions contained in Section 245-I of the Act and the same cannot be reopened at this stage. In such a situation, no practical or useful purpose would be served by the transfer of the case of the petitioner to Cuttack in a situation where the main cases with which the case of the petitioner is alleged to be connected, cannot be reopened. On the other hand, if the authorities in Cuttack or in Guwahati still entertain the belief that some undisclosed income of the other assessees had come to the account of the petitioner, which income the petitioner had not reflected in her returns, the Department is not without a remedy. Section 158BD of the Act would adequately take care of such a situation, which provisions can still be invoked by the Department, if otherwise permissible under other provisions of the Act.
12. In view of the above discussions and on the basis of the conclusions reached on the issues raised, the Court is of the view that the impugned order dt. 28th Sept., 2001, should be interfered with. Accordingly, I allow this writ petition and set aside the order dt. 28th Sept., 2001, passed by the CIT, Guwahati subject to the observations contained in the present order.