Madhya Pradesh High Court
Aditya Tripathi vs Principal Commissioner Of Income Tax I on 21 February, 2022
Author: Sheel Nagu
Bench: Sheel Nagu
1 WP-2010-2022
IN THE HIGH COURT OF MADHYA PRADESH AT JABALPUR
BEFORE
HON'BLE SHRI JUSTICE SHEEL NAGU
&
HON'BLE SHRI JUSTICE MANINDER SINGH BHATTI
st
ON THE 21 OF FEBRUARY, 2022
WRIT PETITION No. 2010 of 2022
Between:-
ADITYA TRIPATHI S/O SHRI SHYAM
TRIPATHI, AGED ABOUT 43 YEARS, R/O
HOUSE NO. A-1, PARSH VILLA, NEAR
SHAHPURA POLICE STATION, BAWADIYA
KALA, BHOPAL (MADHYA PRADESH) -462039
.....PETITIONER
(BY SHRI G.N. PUROHIT, SENIOR ADVOCATE WITH SMT UMA
PARASHAR, ADVOCATE AND SHRI ABHIJEET SHRIVASTAVA,
ADVOCATE)
AND
1. PRINCIPAL COMMISSIONER OF INCOME
TAX-I, AYAKAR BHAWAN, 48 ARERA HILLS,
HOSHANGABAD ROAD, BHOPAL (MADHYA
PRADESH) -462011
2. ASSISTANT COMMISSIONER OF INCOME
TAX, CENTRAL CIRCLE-1(2), HYDERABAD
(TELANGANA)
3. PRINCIPAL COMMISSIONER OF INCOME
TAX (CENTRAL), AAYKAR BHAWAN,
OPPOSITE L.B. STADIUM, BASHIR BAGH,
HYDERABAD (TELANGANA) - 500004
....RESPONDENTS
(BY SHRI SANJAY LAL, ADVOCATE)
-------------------------------------------------------------------------------------------
2 WP-2010-2022
This petition coming on for admission this day, JUSTICE SHEEL NAGU
passed the following:
ORDER
The instant petition filed under Article 226 read with Section 227 of the Constitution of India assails the order dated 26.10.2021 (Annexure P/7) passed by respondent No.1 transferring the case of petitioner bearing PAN No.ACJPT2566P pending before the Assessing Officer, DCIT-5(1), Bhopal to ACIT (Central) - 1(2), Hyderabad by invoking powers u/S.127 of the Income Tax Act, 1961 ('IT ACT' for brevity).
2. Learned senior counsel Shri G.N. Purohit along with Smt Uma Parashar and Shri Abhijeet Shrivastava for the petitioner and Shri Sanjay Lal, learned counsel for respondents are heard on the question of admission and so also final disposal.
3. Learned senior counsel for petitioner Shri G.N. Purohit raises following grounds in support of challenge to the aforesaid order (Annexure P/7):
(i) The impugned order (Annexure P/7) was not promptly supplied to petitioner.
(ii) The impugned order (Annexure P/7) was passed without affording reasonable opportunity of being heard in as much as the show cause notice not containing reasons on the basis of which the impugned order was passed.
3 WP-2010-2022
(iii) The reasons shown in the impugned order are irrelevant and not cogent enough to sustain an order of transfer u/S. 127 of the IT Act.
(iv) The impugned order has been passed in violation of the mandatory provisions of Section 127 of the IT Act to the extent that there was no agreement between the transferring and the transferee authority.
4. Learned counsel for the Revenue Shri Sanjay Lal, on the other hand, has filed preliminary submission on behalf of respondents along with certain correspondences between the transferring and the transferee authority in support of his contention that there was agreement between both the authorities before passing of impugned order of transfer. Learned counsel for the Revenue also submits that the show cause notice dated 16.07.2021 (Annexure P/3) was issued thereby affording reasonable opportunity of being heard to petitioner before passing of the impugned order (Annexure P/7) on 26.10.2021 after taking into account the reply preferred by petitioner vide Annexure P/4 dated 26.07.2021.
5. To appreciate rival contentions of learned counsel, it is apt to reproduce Section 127 of the IT Act as follows:
"127. Power to transfer cases.- (1) 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 4 WP-2010-2022 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 the Assessing Officer or Assessing Officers from whom the case is to be transferred and the Assessing Officer or Assessing Officers to whom the case is to be transferred are not subordinate to the same Principal Director General or Director General or Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner,-
(a) where the 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 the Principal Director General or Director General or Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner from whose jurisdiction the case is to be transferred 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, pass the order;
(b) where the Principal Directors General or Directors General or Principal Chief Commissioner or Chief Commissioners or Principal Commissioners or Commissioners aforesaid are not in agreement, the order transferring the case may, similarly, be passed by the Board or any such Principal Director General or Director General or Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner as the Board may, by notification in the Official Gazette, authorise in this behalf.
5 WP-2010-2022 (3) Nothing in sub-section (1) or sub-section (2) shall be deemed to require any such opportunity to be given where the 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 the officers are situated in the same city, locality or place.
(4) The transfer of a case under sub-section (1) or sub-section (2) may be made at any stage of the proceedings, and shall not render necessary the re-
issue of any notice already issued by the Assessing Officers or Assessing Officers from whom the case is transferred.
Explanation.--In section 120 and this section, the 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 the 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 the date of such order or direction in respect of any year."
6. Scrutiny of Section 127 reveals that the powers to transfer cases pending before any Assessing Officer are conferred upon Principal Director General or Director General or Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner to any other Assessing Officer after giving reasonable opportunity of being heard to the assessee, wherever it is possible to do so, and after recording reasons for doing so.
6.1 Sub-section (2) of Section 127 contemplates two kinds of cases. The first being those where transfer takes place between two Assessing Officers, 6 WP-2010-2022 both of whom are not subordinate to the same Principal Director General or Director General or Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner. In such cases (as that of the petitioner) the said superior officers of both the AOs should be in agreement for transfer. Once there is an agreement, then transfer can take place after affording reasonable opportunity of being heard to the assessee by passing a speaking order.
7. Testing the factual matrix attending herein upon anvil of the statutory provisions of Section 127 (2)(a), it is revealed that vide Annexure P/3 dated 16.07.2021 show cause notice u/S. 127 was served upon the petitioner informing about the proposed transfer of the case. The reasons assigned in the show cause notice that the PAN of the petitioner which is presently at Bhopal is proposed to be centralized by the Pr. CIT (Central), Hyderabad and, therefore, if petitioner has any objection then he may say so. The petitioner preferred a reply dated 26.07.2021 (Annexure P/4) primarily raising the objection of inconvenience likely to be caused to him if transfer takes place owing to distance between Bhopal and Hyderabad, ailing health of father and mother of petitioner, who have nobody else to take care of, thereby dissuading petitioner from travelling frequently out of Bhopal and the petitioner has no residential accommodation at Hyderabad and the tax consultant of petitioner/assessee being stationed at Bhopal. 7.1 Pertinently, a close scrutiny of the said reply especially para 2 reveals thus :
7 WP-2010-2022 "2. The business of the assessee is mainly concentrated in an around Madhya Pradesh only. Mainly on the ground of search being conducted by the ADIT Hyderabad, the case of the assesse could not be transferred to ACIT (Central) -1(2)."
(emphasis supplied) The contents of para-2 as reproduced above reveal that petitioner/assessee had come to know that search of the documents/premises of petitioner/assessee was being conducted by ADIT, Hyderabad and the factum of search being the reason behind the proposed transfer.
7.2 Thereafter the impugned order dated 26.10.2021 (Annexure P/7) was passed transferring the case of petitioner from Bhopal to Hyderabad owing to the seriousness of allegations against M/s HES Infra Pvt. Ltd. and M/s Mantena Constructions Pvt. Ltd. with whom petitioner had worked/working as a contractor. The order further assigned reason that the close nexus between M/s Arni Infra, Bhopal (sole proprietorship firm of petitioner/assessee) and the principal contractors M/s HES Infra Pvt. Ltd. and M/s Mantena Constructions Pvt. Ltd. in obtaining and execution of sub- contracts and generation of unaccounted money has compelled transfer of the case so that petitioner/assessee is assessed at Hyderabad together with the principal contractors.
8. The Revenue in their preliminary submission has filed number of letters forming correspondence between Bhopal and Hyderabad Income Tax 8 WP-2010-2022 Authorities. Especially letters dated 07.07.2021, 27.07.2021, 14.09.2021, 08.10.2021, 05.10.2021 and 13.10.2021, which inter alia reveal that the transferring and the transferee authority both not only knew about the transfer of the case of petitioner/assessee but had consented to the same and, therefore, there was an agreement between the two authorities at Bhopal and Hyderabad as regards the impugned transfer.
9. From the aforesaid facts, it is evident as day light that petitioner was though afforded an opportunity of being heard by issuance of the aforesaid show cause notice dated 16.07.2021 (Annexure P/3) but the reason assigned in the show-cause notice for transfer was not the same as assigned in the impugned order of transfer.
9.1 Thus, this Court has to consider as to whether the variance in the reason assigned in the show-cause notice and the impugned order of transfer can be of any assistance to the petitioner or not. 9.2 The clause of reasonable opportunity engrafted in any statutory provision is intended to afford opportunity of being heard to a person against whom an adverse decision is likely to be taken. Meaning thereby that the reasons for proposed transfer of a case are to be informed to the affected person or the affected person should be in the knowledge of the actual reason of the intended transfer.
9.3 In the instant case, the variance of reasons assigned by the Revenue in the show cause notice and the impugned order of transfer ostensibly reveals breach of the reasonable opportunity clause. However, if things are 9 WP-2010-2022 scrutinized minutely, especially contents of para-2 of the reply of petitioner to the show cause notice, it is vivid that petitioner knew about the search being conducted against the principal contractors i.e. M/s HES Infra Pvt. Ltd. and M/s Mantena Constructions Pvt. Ltd. with whom petitioner's firm had close business sub-contracts. Thus, the petitioner was well aware of the fact that the transfer of his case is taking place in public interest to ensure smooth and uninterrupted search operation being conducted by the Revenue which is only possible when records of the principal contractors and the sub-contractor (petitioner) are at the same place. 9.4 Consequently, as a necessary fallout of the aforesaid discussion, the ground of ostensible variance between the reason assigned for transfer in the show-cause notice and the impugned order of transfer does not actually exist in substance and essentiality. The simple reason being that petitioner knew that the case is being transferred for consolidating the records of the principal contractors and the sub-contractor (petitioner) at one place (Hyderabad). The principle of audi alteram partem thus stands complied with by implication.
10. The principles of natural justice cannot be applied mechanically. It is trite law that the principle of natural justice (audi alteram partem) is to be applied in each case depending upon the facts and circumstances and the compelling situations. Public interest is one of those compelling factors which can absolve following of audi alteram partem principle as is the case herein where consolidation of records of principal contractors and sub-
10 WP-2010-2022 contractor at Hyderabad was necessary and in public interest for a proper and lawful search operation.
11. This case is an example of the paramount public interest of facilitating smooth and effective search operation being conducted in larger public interest of ensuring increase in revenue by striking at tax evasion.
12. From the aforesaid discussion, this Court is not impressed with any of the grounds raised by petitioner.
13. The petitioner has relied upon various judgments, viz.; Smt Sarita Jain vs. Commissioner of Income Tax and Ors., (2003) 261 ITR 499 (Del); Rajesh Mahajan & Ors. vs. Commissioner of Income Tax & Ors., (2002) 257 ITR 577 (P&H); General Exporters vs. Commissioner of Income Tax & Anr., (1998) 234 ITR 860 (Mad); Athena Trade Wings (P) Ltd. vs Principal Commissioner of Income Tax & Anr., (2020) 421 ITR 267 (MP); Benz Corporation vs. Income Tax Officer & Ors., (1998) 232 ITR 807 (Ker); Sagarmal Spinning & Weaving Mills Ltd. vs. Central Board of Direct Tax & Ors., (1972) 83 ITR 130 (MP); Manohar Sweets vs Commissioner Of Income Tax, (2009) 221 CTR (MP) 187; Shivjirao vs. Commissioner of Income Tax and Ors., (1986) 158 ITR 162 (MP); Noorul Islam Educational Trust vs. Commissioner of Income Tax & Ors., (2011) 332 ITR 97 (Mad); Commissioner of Income Tax & Ors. vs. Noorul Islam Educational Trust, (2015) 375 ITR 226 (Mad); Noorul Islam Educational Trust vs. Commissioner of Income Tax, (2016) 388 ITR 489 (SC); Ajantha Industries & Ors. vs. Central Board 11 WP-2010-2022 of Direct Taxes & Ors., (1976) 102 ITR 281 (SC); and Divesh Prakashchand Jain vs. Principal Commissioner of Income Tax & Ors., (2021) 5 NYPCTR 1146 (Bom). On perusal of the said judicial verdicts, it is obvious that they turn on their own facts. In none of these judicial pronouncements, the assessee whose case was proposed to be transferred knew about the real cause of transfer and also that there was no public interest involved.
14. Consequently, the writ petition deserves to be and is hereby dismissed.
(SHEEL NAGU) (MANINDER SINGH BHATTI )
JUDGE JUDGE
DV
Digitally signed by
DINESH VERMA
Date: 2022.02.28
15:52:47 +05'30'