Bombay High Court
Kesar Enterprises Ltd. vs K.C. Sarangi, Commissioner Of Income ... on 18 December, 2007
Equivalent citations: (2008)216CTR(BOM)227
Author: F.I. Rebello
Bench: F.I. Rebello, R.S. Mohite
JUDGMENT F.I. Rebello, J.
1. The petitioner received a letter dt. 8th Nov., 2006 from the respondent No. 1 that his assessment has to be centralised with the respondent No. 3. The petitioner was informed that under the provisions of Section 127(1) of the IT Act an opportunity was being given to give their say as to whether they have any objection to the proposed transfer. The petitioner replied to the same. Accordingly an order was made for transfer of the case. An application was made styling it as a review of the order dt. 14th March, 2007. A petition came to be filed before this Court being Writ Petn. Lodging No. 1008 of 2007. By order dt. 30th April, 2007 the order of 14th March, 2007 was set aside. However, liberty was given to the respondents to issue proper show-cause notice giving reasons as to why assessee's case should be transferred from Mumbai to New Delhi by following due process, etc., set out thereunder.
2. On 31st July, 2007 notice came to be issued to the petitioner that the CIT-I, Mumbai, proposes to transfer their case to New Delhi for the reasons set out therein. One of the reasons set out was that search action was taken on Radico Khaitan Group. A survey was also conducted on UPDA of which the petitioner was a member. During the search it was found that UPDA acted as a nodal agency to make illegal payments to various public servants and politicians on behalf of the distilleries situated in U.P. and that all the distilleries adopted different methods for generation of these illegal payment amounts and as such it was felt that all the U.P. based distilleries who are members of UPDA be centralised with one AO in the interest of Revenue to carry out pointed and coordinated investigation leading to a logical and meaningful assessment. Various other reasons were cited including that from the seized documents it was seen that the petitioners had one unit which had made illegal payments. The petitioners replied to the same. The documents seized were also made available. A personal hearing was granted. An order thereafter came to be passed on 4th Oct., 2007 under Section 127(2) of the IT Act, 1961 transferring the case from CIT-I, Mumbai to the AO set out thereunder. It was set out that the order would take effect from 4th Oct., 2007. This petition came to be filed on 27th Nov., 2007.
3. At the hearing of the petition it was the contention of the petitioners that the transferring of the petitioner's case from respondent No. 2 to respondent No. 3 w.e.f. 4th Oct., 2007 is unjustified. The respondents filed their reply of one R.N. Iyer. It is pointed out that the petitioner has a distillery at Baheri U.P. That search and seizure actions were conducted under Section 132 of the IT Act at the residence of Shri Miglani, Secretary General of U.P. Distillery Association (UPDA) which resulted in recovery of certain incriminating documents and revealed that payments were made to various distilleries to various public servants for which UPDA has acted as a Nodal agency and the inadmissible expenditure worked out to Rs. 246 crores. Various other reasons have been given including the petitioner having business activities in U.P. In answer the petitioner has filed a rejoinder pointing out that petitioner company is having various divisions in various places and that the trial balances and accounts of the said divisions are consolidated at Mumbai head office.
4. The question is whether this should be a fit case for this Court to exercise its extraordinary jurisdiction. In the instant case subsequent to the order of this Court apart from the notices full opportunity was given to the petitioners. The petitioners participated and were also heard. After hearing by detailed order the proceedings have been transferred setting out the reasons as to why the case had to be transferred.
5. There is neither any violation of principles of natural justice or fair play nor any procedural irregularity. There is material with the respondents to prima facie show inadmissible expenditure by various distilleries in U.P. to various public servants. The petitioners distillery prima facie is also shown as a unit which has made payments between the years 2002-03 to 2005-06 till January. The mere fact that the petitioners subsequently have resigned from membership of UPDA, therefore, by itself is no answer.
6. The question is whether there was material in possession of the respondents based on which the proceedings could have been initiated for transfer. In our opinion there was sufficient material and after complying with the procedural requirements a speaking order has been made. The argument that the order is merely to give effect to a preplanned decision cannot be sustained as subsequent to the order of this Court the petitioners were given an opportunity to meet the case based on which the respondents proposed to transfer the case.
7. In our opinion on the facts and circumstances this would not be a fit case where this Court should invoke its extraordinary jurisdiction. Petition accordingly rejected. Rule discharged. There shall be no order as to costs.