Calcutta High Court
Lotus Capital Financial Services Ltd vs Income Tax Officer on 20 March, 2014
Author: Sanjib Banerjee
Bench: Sanjib Banerjee
WP No.147 of 2014
IN THE HIGH COURT AT CALCUTTA
Constitutional Writ Jurisdiction
ORIGINAL SIDE
LOTUS CAPITAL FINANCIAL SERVICES LTD.
Versus
INCOME TAX OFFICER, WARD - 6(2), KOL AND ORS.
BEFORE:
The Hon'ble JUSTICE SANJIB BANERJEE
Date : 20th March, 2014.
Appearance:
Mr. J. P. Khaitan, Sr. Adv.
Mr. Ananda Sen, Adv.
Mr. A. Samanta, Adv.
..for the petitioner
Mr. Prithu Dudheria, Adv.
..for the respondents
The Court : The petitioner challenges the procedure adopted by the respondent authorities in course of passing an order under Section 127(2)(a) of the Income Tax Act, 1961 for transferring the case of the petitioning assessee to another jurisdiction.
A show-cause notice in such regard was issued on January 2, 2014 informing the petitioning assessee that a search and seizure operation under Section 132 of the Act had been conducted in the case of a group of companies based in Delhi and it was necessary that the petitioner's case be clubbed with 2 that of the Delhi group under the administrative charge of a common Commissioner.
The petitioner replied to the notice. By an order dated January 30, 2014, the Commissioner of Income Tax, Kolkata-II has directed the transfer of the petitioner's case to Delhi.
The petitioner refers to the relevant provision and relies on a judgment reported at 233 ITR 377 to suggest that if the show-cause notice does not indicate the grounds warranting the transfer of a case, merely because an assessee has responded to the show-cause notice would not preclude the assessee from challenging the process if reasons that were not furnished earlier are subsequently reflected in the order of transfer.
It is the same expression which is used in Section 127(1) and Section 127(2)(a) of the Act:
"...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..."
Since the reasons are required to be recorded in the order of transfer and since the provision requires reasonable opportunity to be afforded to the assessee to contest the proposal to transfer the case, it follows that the grounds warranting the transfer should be made known to the assessee for the assessee to deal with the same in the reply to the show-cause notice. The expression "reasonable opportunity", in the context of the provision that mandates reasons to be recorded for the transfer, would imply that the prima facie opinion for 3 transfer and the basis therefor should both be disclosed to the assessee before the assessee is called upon to respond to the same.
The show-cause notice in the instant case, of January 2, 2014, only indicated the prima facie opinion for transferring the case from Kolkata to Delhi without suggesting the basis for such prima facie opinion. Notwithstanding the petitioner having responded to the notice, the response may not have addressed the grounds which impelled the authorities to form the prima facie opinion. As a consequence, the reasons finally furnished cannot be upheld since the petitioner had not been afforded any opportunity to deal with the same.
WP No.147 of 2014 is disposed of by setting aside the order impugned dated January 30, 2014 passed by the Commissioner and by requiring such order and the reasons therein to be treated as a show-cause notice for the petitioner to respond thereto within a period of a fortnight from date. Upon receiving the petitioner's response, the Commissioner will be free to decide the matter in accordance with law upon affording the petitioner an opportunity of hearing.
There will be no order as to costs.
Urgent certified website copies of this order, if applied for, be supplied to the parties subject to compliance with all requisite formalities.
(SANJIB BANERJEE, J.) bp.