ASHAPURA ENTERPRISE V. THE PRINCIPAL COMMISSIONER OF INCOME TAX-1

SCA/20409/2019

AI Insights

The case involves Ashapura Enterprise, a partnership firm, which challenged the transfer of its income tax assessment case from Gandhidham to Rajkot. The transfer was ordered by the Principal Commissioner of Income Tax to facilitate a coordinated investigation following a survey under Section 133A of the Income Tax Act, 1961. The firm objected to the transfer, citing minimal business transactions with other entities involved and the inconvenience caused by the geographical shift. However, the court upheld the transfer, emphasizing the need for a coordinated investigation due to the substantial incriminating material found during the survey.

• Counselvise Citation: [2021] 140 COUNSELVISE.COM (IT) 749877 (HC-GUJARAT)
• Appeal Type: Others
• Pronouncement Date: 10-03-2021
• Assessment Year: misc
• Other Referred Cases: Shree Ram Vessel Scrap P. Ltd. vs. Commissioner of Income-tax, Aamby Valley Ltd. vs. Commissioner of Income-tax, Vishal Kumar vs. Commissioner of Income-tax, Pannalal Binraj vs. Union of India, Hindustan M. I. Swaco Limited vs. Commissioner of Income-tax
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: M R BHATT; MAUNA BHATT; KARAN SANGHANI
• Assessee Lawyers: TUSHAR HEMANI; VAIBHAVI PARIKH
• Keywords: Centralization of Cases; Coordinated investigation; Impounded material; Survey Action; Transfer of Case
• Section: 133A; 127; 120(4)(b); 2(7A)

Judgement Text

"C/SCA/20409/2019 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/SPECIAL CIVIL APPLICATION NO. 20409 of 2019 With CIVIL APPLICATION (FOR VACATING INTERIM RELIEF) NO. 1 of 2021 In R/SPECIAL CIVIL APPLICATION NO. 20409 of 2019 With R/SPECIAL CIVIL APPLICATION NO. 20410 of 2019 With CIVIL APPLICATION (FOR VACATING INTERIM RELIEF) NO. 1 of 2021 In R/SPECIAL CIVIL APPLICATION NO. 20410 of 2019 With R/SPECIAL CIVIL APPLICATION NO. 20414 of 2019 With CIVIL APPLICATION (FOR VACATING INTERIM RELIEF) NO. 1 of 2021 In R/SPECIAL CIVIL APPLICATION NO. 20414 of 2019 With R/SPECIAL CIVIL APPLICATION NO. 20418 of 2019 With CIVIL APPLICATION (FOR VACATING INTERIM RELIEF) NO. 1 of 2021 In R/SPECIAL CIVIL APPLICATION NO. 20418 of 2019 With R/SPECIAL CIVIL APPLICATION NO. 20427 of 2019 With CIVIL APPLICATION (FOR VACATING INTERIM RELIEF) NO. 1 of 2021 In R/SPECIAL CIVIL APPLICATION NO. 20427 of 2019 With R/SPECIAL CIVIL APPLICATION NO. 20428 of 2019 With CIVIL APPLICATION (FOR VACATING INTERIM RELIEF) NO. 1 of 2021 In R/SPECIAL CIVIL APPLICATION NO. 20428 of 2019 FOR APPROVAL AND SIGNATURE: HONOURABLE MR. JUSTICE J.B.PARDIWALA and HONOURABLE MR. JUSTICE ILESH J. VORA ========================================================== Page 1 of 23 C/SCA/20409/2019 JUDGMENT 1 Whether Reporters of Local Papers may be allowed to see the judgment ? YES 2 To be referred to the Reporter or not ? YES 3 Whether their Lordships wish to see the fair copy of the judgment ? NO 4 Whether this case involves a substantial question of law as to the interpretation of the Constitution of India or any order made thereunder ? NO ========================================================== ASHAPURA ENTERPRISE Versus THE PRINCIPAL COMMISSIONER OF INCOME TAX-1 ========================================================== Appearance: MR TUSHAR HEMANI, ADVOCATE WITH MS VAIBHAVI K PARIKH(3238) for the Petitioner(s) No. 1 MR MR BHATT SENIOR COUNSEL WITH MRS MAUNA M BHATT(174) WITH MR KARAN SANGHANI, ADVOCATE for the Respondent(s) No. 1 ========================================================== CORAM: HONOURABLE MR. JUSTICE J.B.PARDIWALA and HONOURABLE MR. JUSTICE ILESH J. VORA Date : 10/03/2021 COMMON ORAL JUDGMENT (PER : HONOURABLE MR. JUSTICE J.B.PARDIWALA) 1 Since the issues involved in all the captioned writ applications are the same, those were taken up for hearing analogously and are being disposed of by this common judgement and order. 2 For the sake of convenience, the Special Civil Application No.20409 of 2019 is treated as the lead matter. Page 2 of 23 C/SCA/20409/2019 JUDGMENT 3 By this writ application under Article 226 of the Constitution of India, the writ applicant (assessee) has prayed for the following reliefs: “7(a) quash and set aside the impugned order at Annexure “A” to this petition. (b) quash and set­aside all the proceedings initiated consequent to passing of the impugned order under section 127 of the Act; (c) pending admission, hearing and final disposal of this petition, to stay implementation and operation of the order at Annexure “A” to this petition and to also stay all further proceedings in relation to and arising from the transfer of the case records consequent to passing of the impugned order under section 127 of the Act; (d) any other and further relief deemed just and proper be granted in the interest of justice; (e) to provide for the cost of this petition.” 4 The facts giving rise to this writ application may be summarised as under: 4.1 The writ applicant is a partnership firm. A survey action under Section 133A of the Income Tax Act, 1961 (for short, “the Act, 1961”) was carried out by the ADIT (Investigation), Gandhidham on 26th September 2017 at the business premises of one Dahyabhai Bhurabhai Rabari and others including the writ applicant herein. 4.2 Eleven months thereafter, the respondent issued a show cause notice dated 23rd August 2018, whereby it was proposed to centralize the case of the writ applicant along with the other cases with the “DCIT, Central Circle – 2, Rajkot” with a view to facilitate effective investigation and coordinated action. The writ applicant herein was called upon to show cause as to why such order should not be passed. Page 3 of 23 C/SCA/20409/2019 JUDGMENT 4.3 The writ applicant, vide letter dated 28th August 2018, raised the following objections against the proposed transfer of the case from Gandhidham to Rajkot: ➢ “The Petitioner has minimum business transaction with Dahyabhai Bhurabhai Rabari, Prop. of Shree Ganesh Handling Company whose case was proposed for centralization. The Petitioner categorically submitted that it had very minimum business transactions with Shree Ganesh Handling Company. Accordingly, the whole basis for issuing the notice was factually wrong; ➢ The subject matter of the notice dated 23.08.18 referred to “centralization of search cases” Whereas no search action under section 132 of the Act was carried out in the case of the Dahyabhai Bhurabahi Rabari. Rather, “survey action under section 133A of the Act” had been carried out in the case of Dahyabhai Bhurabahí Rabari and few other persons. Thus, the notice was issued under a mistaken belief and hence, no further action was required in relation to such notice; ➢ All the assessees covered under the “survey action” were assessed in the “same range” (I.e.’ “Gandhidham”). Hence, the case of the Petitioner as well as other persons automatically stood centralized with the Assessing Officer based in “Gandhidham”; ➢ The cases were proposed to be transferred to an Assessing Officer of the “Central charge” Who was an officer of the “same rank” and hence, the Assessing Officer based in Gandhidham (who already had common jurisdiction over all the concerned assesse) could very well carry out coordinated investigation; ➢ The Petitioner further proposed that if necessary, cases may be assigned to the “Additional CIT, Gandhidham” who was superior in rank and could achieve the object of centralization; ➢ The proposed action of transferring the cases from Gandhidham to Rajkot was in violation of the CBDT’s instruction No. 8/ 2002 dated 14.08.02; Page 4 of 23 C/SCA/20409/2019 JUDGMENT ➢ The Petitioner had very minimum business transactions with Shree Ganesh Handling. Further, the proposed action of transferring the cases from Gandhidham to Rajkot was without proper application of mind and not in consonance with the requirements of sub­section (2) of section 127 of the Act; ➢ The proposed action of transferring the cases from Gandhidham to Rajkot would result into huge inconvenience and hardships to the Petitioner who is based in “Gandhidham” and his case was proposed to be transferred to “Rajkot”;” 4.4 The respondent, vide order dated 2nd April 2019 passed under Section 120(4)(b) r/w Section 2(7A) r/w Section 127(1) of the Act, transferred the case of the writ applicant from the “ITO, Ward – 1, Gandhidham” to the “Joint Commissioner of Income Tax, Gandhidham Range, Gandhidham” along with the five other assessees with a view to carry out coordinated investigation. 4.5 Later, the respondent issued another notice dated 17th September 2019, calling upon the writ applicant to show cause as to why the case should not be transferred to the “DCIT, Central Circle – 2, Rajkot”. Such notice referred to above was issued stating that ordinarily, the JCIT / Addl. CIT would not undertake the assessment functions as they are in charge of the assessment units. However, to facilitate effective investigation and coordinated action, it was proposed to centralize the case of the writ applicant with the DCIT, Central Circle – 2, Rajkot. 4.6 In the aforesaid context, the writ applicant, vide letter dated 21st September 2019, broadly, raised the following objections against the proposed transfer of the cases to Rajkot: ➢ “The Petitioner is a poor labor contractor working for different main contractors. The income of the Petitioner is hardly around exemption limit. Page 5 of 23 C/SCA/20409/2019 JUDGMENT ➢The case of the Petitioner, along with five other assessees, were transferred to “the JCIT, Gandhidham Range, Gandhidham” vide order dated 02.04.19; ➢All the parties covered under survey action carried out under section 133A of the Act were assessed in Gandhidham and hence, there was no justification in transferring the cases to a far­away station i.e. Rajkot; ➢The Pr. CIT ­ 1, Rajkot, after considering various submission raised by the Petitioner earlier, disagreed with the proposal of centralization of the cases and also conveyed his disagreement in writing to the Pr. CIT (Central), Ahmedabad. Hence, an order transferring the case of the Petitioner and five other assessees to the “JCIT, Gandhidham Range, Gandhidham” was passed under section 120(4)(b) r.w.s. 2(7A) r.w.s. 127(1) of the Act as against the proposal to transfer the case to the “DCIT, Central Circle ­ 2, Rajkot”; ➢Order under section 127(1) of the Act is a quasi­judicial order and hence, the same authority cannot review or recall its own order in absence of any new facts or circumstances; ➢It being a case of disagreement between two Pr. CITs, the matter can be decided only by higher authority in accordance with the provisions of clause (b) of sub­section (2) of section 127 of the Act; ➢There was no justification for transfer of case of the Petitioner to Rajkot; ➢Merely stating that “generally, range heads (JCIT / Addl. CIT) do not undertake assessment functions” cannot be a ground so as to justify the action of transferring the case from Gandhidham to Rajkot especially when five more Assessing Officers are available at the same place; ➢The petitioner had no objection if the cases were transferred to any particular officer in Gandhidham and if found necessary, the JCIT may be asked to issue direction under section 144A of the further ensure that whatever investigation is necessary is carried out;” 4.7 The aforesaid objections came to be overruled by the respondent Page 6 of 23 C/SCA/20409/2019 JUDGMENT and the impugned order dated 21st October 2019 came to be passed under Section 127(2) of the Act. The respondent transferred the case of the writ applicant from “the ITO, Ward – 1, Gandhidham” to “the DCIT, Central Circle – 2, Rajkot”, along with the five other assessees. 5 Being dissatisfied with the impugned order of transfer passed under Section 127(2) of the Act, the writ applicant is here before this Court with the present writ application. ●SUBMISSIONS ON BEHALF OF THE WRIT APPLICANT: 6 Mr. Tushar Hemani, the learned Senior Counsel assisted by Ms. Vaibhavi Parikh, the learned counsel appearing for the writ applicant vehemently submitted that the impugned order transferring the case of the writ applicant from Gandhidham to Rajkot is patently bad, illegal, contrary to law and in gross violation of the fundamental rights guaranteed to the writ applicant under Articles 14 and 19(1)(g) of the Constitution of India. 7 Mr. Hemani would submit that the respondent had already passed the order dated 2nd April 2019 under Section 120(4)(b) r/w Section 2(7A) r/w Section 127(1) of the Act transferring the case to “the JCIT, Gandhidham” and therefore, in the absence of any new fact or material, the respondent could not have once again passed the impugned order under Section 127(2) of the Act transferring the case from Gandhidham to Rajkot. Mr. Hemani would submit that the case on hand is one of total non­application of mind at the end of the respondent while passing the impugned order under Section 127(2) of the Act. He would further submit that there was no justifiable reason for transferring the case of the writ applicant from Gandhidham to Rajkot. Page 7 of 23 C/SCA/20409/2019 JUDGMENT 8 Mr. Hemani requested the Court to take into consideration the following aspects: ➢“The Respondent has heavily relied upon the Board’s guidelines for centralization of cases vide letter “F.No.286/88/2008­IT (Inv. II)” dated 17.09.08 for concluding that it was necessary to centralize the case of the Petitioner and other five assessees. However, the said guidelines are for “centralization of search cases”. It is an admitted position that in the case of the Petitioner, no search action under section 132 of the Act has been carried out. Rather, only survey action under section 133A of the Act has been carried out. Hence, such guidelines are absolutely irrelevant for the case of the Petitioner; ➢In any case, the only reason assigned by the Respondent for invoking jurisdiction under section 127 of the Act is that transfer of case is essential for the purpose of “effective and co­ordinated investigation”. However, the Respondent failed to appreciate that only those cases which are connected with “search under section 132 of the Act” ‘are to be centralized for “effective and co­ordinated investigation”. The case of the Petitioner is not at all connected with any sort of “search under section 132 of the Act”. Rather, it was a case of “survey under section 133A o the Act”. Hence, it is not mandatory to centralize the case of the Petitioner for the purpose of “effective and co­ordinated investigation”. Under such facts and circumstances, it was incumbent upon the Respondent to assign further reasoning for transferring the case of the Petitioner, which has not been done in the present case by the Respondent herein.” 9 Mr. Hemani further submitted that unlike the cases covered under the search action under Section 132 of the Act, the cases covered under the survey action under Section 133A of the Act does not warrant centralization. Mr. Hemani submitted that as a matter of practice, the centralization of connected cases of those assessees, at whose premises “search” action under Section 132 of the Act has been carried out, is essential for effective and coordinated investigation and consequently, the assessment is framed under Section 153A / 153C of the Act, as the case may be. He would submit that however, in a case where survey action under Section 133A of the Act is carried out, the normal assessment proceedings would follow and consequently, the assessment Page 8 of 23 C/SCA/20409/2019 JUDGMENT shall be framed under Section 143(3) or 143(3) read with Section 147 of the Act, as the case may be. He also submitted that such cases, wherein “survey action” under Section 133A of the Act has been carried out, are not to be centralized. 10 Mr. Hemani would submit that indisputably, a “survey action” under Section 133A of the Act has been carried out and hence, the question of “centralization” of the case of the writ applicant along with the other assessees with the “central circle” (i.e. the wing dedicated for search assessments) is absolutely unwarranted. 11 Mr. Hemani submitted that all the six assessees, including the writ applicant herein, were assessed at Gandhidham prior to the passing of the impugned order and hence, if at all the department was of the view that centralization of cases of such six assessees was required for effective and coordinated investigation, the cases of all such assesses (including the writ applicant) could have been assigned to one common Assessing Officer of “equivalent” or “higher” rank at “Gandhidham” itself. He submitted that such an act would also have served the so­ called purpose of the department i.e. effective and coordinated investigation of all the six assessees referred to in the impugned order passed by the respondent. He also submitted that instead, the respondent chose to transfer the case of the writ applicant and five other assessees from “Gandhidham” to the “Rajkot”. He also submitted that such an act is not justifiable in the eye of law and hence, even on that score, the impugned order deserves to be quashed. 12 Mr. Hemani further submitted that a great degree of prejudice or inconvenience would be caused to an assessee if his assessment is lifted from his principal place of business and is put at the disposal of the Assessing Officer based at a far­away place. He would submit that the Page 9 of 23 C/SCA/20409/2019 JUDGMENT power may be exercised in proper cases when sufficient material is there on record so as to justify such an act. He also submitted that it is a settled legal position that the reasons for transfer of case of an assessee must be weighty enough to set­off against such personal inconvenience caused to such assessee. 13 In the last, Mr. Hemani submitted that as regards the reasoning of the respondent in the impugned order as to the “E­proceedings” i.e. assessments to be completed only Income Tax Business Application (ITBA), it is submitted that the Central Board of Direct Taxes (hereinafter referred to as “CBDT” for the sake of brevity), vide instruction No.03/2018 dated 20th August 2018 in relation to E­ assessment, has carved out certain exceptions wherein E­proceedings shall not be mandatory one of which is in relation to assessment which is to be framed under Section 147 of the Ac. It is submitted that the case of the writ applicant is very well covered in the exceptional clause and hence, the contention raised by the respondent is not tenable in the eye of law. As regards the contention of the respondent that the “JCIT, Gandhidham”, vide letter dated 26th August 2019 informed that he is not authorized by the system to undertake the assessment functions, thereby suggesting that the cases may be centralized to the central circle, it is submitted that such a letter cannot be taken as a base for justifying the transfer of the case of the writ applicant. It is submitted that in view of the above referred circular, the letter from the JCIT, Gandhidham loses its significance. He submitted that even on that score, the impugned order deserves to be quashed. 14 In such circumstances referred to above, Mr. Hemani prays that there being merit in his writ application, the same be allowed and the impugned order of transfer be quashed and set aside. Page 10 of 23 C/SCA/20409/2019 JUDGMENT ●SUBMISSIONS ON BEHALF OF THE REVENUE: 15 Mr. M. R. Bhatt, the learned Senior Counsel assisted by Ms. Mauna Bhatt, the learned Senior Standing Counsel appearing for the Revenue, on the other hand, has vehemently opposed this writ application submitting that no error, not to speak of any error of law could be said to have been committed by the respondent in passing the impugned order of transfer. 16 Mr. Bhatt would submit that initially, the show cause notice dated 23rd August 2018 was issued. The said show cause notice proposed centralization of six cases. The writ applicant raised objections. The Chief Commissioner of Income Tax (OSD) passed an order dated 2nd April 2019 “assigning” these six cases to the Joint Commissioner of Income Tax, Gandhidham. Mr. Bhatt would submit that no order of centralization was passed. 17 Mr. Bhatt submitted that later, a detailed show cause notice dated 17th September 2019 came to be issued. In this notice, reference is made to the survey action under Section 133A of the Act carried out in the case of the six writ applicants and a proposal was made to centralize these six cases to the Central Circle, Rajkot. The writ applicant herein filed objections. One of the main objections was that in view of the earlier order passed, the impugned second order for centralization could not have been passed. 18 Mr. Bhatt would submit that the authority considered the aforesaid objection and passed a detailed order under Section 127(2) of the Act. In the impugned order, it has been noted that during the course of survey at the premises of the writ applicant, substantial data was Page 11 of 23 C/SCA/20409/2019 JUDGMENT found and impounded which revealed that the writ applicants, who are contractors and sub­contractors had indulged in huge cash transactions with each other and the same required coordinated and effective investigation. Opportunity of hearing was also granted. In para 4 of the impugned order, reference has been made to the various impounded material to come to a conclusion that there was a need for coordinated and effective investigation. The objections raised by the writ applicant were duly considered in para 6 onwards of the impugned order. Further, a reference has also been made to the incriminating material which demonstrated bogus / accommodation entries / bills provided by the sub­contractors. In para 6.5, it has also been noted that all the income tax assessments were conducted through E­mail and therefore, there was no question of any prejudice being caused to the writ applicant. The aspect of alleged review has been considered in para 6.6 of the order. It is noted that in view of the E­assessment procedure, the assessment can be completed only on the Income Tax Business Application (ITBA) and in the said system, there is no functionality of assessment by the Joint CIT / Additional CIT and he cannot acquire any PAN. Further, notice cannot be issued to the writ applicant in the ITBA by the Joint CIT / Additional CIT. Reference has also been made to the letter addressed by the Joint CIT, Gandhidham stating that he is not authorized by the system to undertake the assessment function and accordingly, suggested that the cases may be centralized to the central circle. In the impugned order, all contentions raised by the writ applicants have been dealt with. 19 Mr. Bhatt would submit that the order passed under Section 127 of the Act is an administrative order. The only requirement is to adhere to the principles of natural justice. He would submit that the objections raised by the writ applicant have been duly dealt with by passing a well­ reasoned and speaking order. Mr. Bhatt would submit that there is no Page 12 of 23 C/SCA/20409/2019 JUDGMENT vested right with the writ applicant to choose the Assessing Officer. He would submit that the impugned order would indicate that the transfer of cases have been made for the purpose of facilitating the effective and coordinated investigation. 20 Mr. Bhatt invited the attention of this Court to the Civil Application filed by the Revenue for vacating the ad­interim relief. Mr. Bhatt submitted that it has been brought on record that the CBDT has issued instructions dated 18th September 2020. Mr. Bhatt pointed out that the copy of the said instructions has been placed on record along with the affidavit­in­reply. Under the said Faceless Assessment Scheme, 2019, more particularly, clause 2(vi) therein, all the cases selected under Section 133A of the Act having impounded material needs to be transferred to the Central charges. According to Mr. Bhatt, in the instant case, indisputably, both the criteria are fulfilled i.e. (i) there was a survey under Section 133A, and (ii) material was impounded during the course of survey. 21 In such circumstances referred to above, Mr. Bhatt prays that there being no merit in the writ application, the same be rejected. ●ANALYSIS: 22 Having heard the learned counsel appearing for the parties and having gone through the materials on record, the only question that falls for our consideration is whether the respondent committed any error in passing the impugned order of transfer under Section 127(2) of the Act. 23 Section 124 of the Act pertains to the jurisdiction of the Assessing Officer. Sub­section (1) of Section 124 reads as under : Page 13 of 23 C/SCA/20409/2019 JUDGMENT “124(1) Where by virtue of any direction or order issued under sub­ section (1) or sub­section (2) of section 120, the Assessing Officer has been vested with jurisdiction over any area, within the limits of such area, he shall have jurisdiction­­ (a) in respect of any person carrying on a business or profession, if the place at which he carries on his business or profession is situate within the area, or where his business or profession is carried on in more places than one, if the principal place of his business or profession is situate within the area, and (b) in respect of any other person residing within the area.” 24 Section 127 of the Act pertains to the power to transfer cases. It reads as under : “127. (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 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; Page 14 of 23 C/SCA/20409/2019 JUDGMENT (b) where the Principal Directors General or Directors General or Principal Chief Commissioners 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. (3) Nothing in sub­section (1) or sub­section (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 offices of all such officers are situated in the same city, locality or place. (4) The transfer of a case under sub­section (1) or subsection (2) may be made at any stage of the proceedings, and shall not render necessary the reissue of any notice already issued by the Assessing Officer 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.” 25 Section 124(1) of the Act lays down the jurisdiction of the Assessing Officer, whereas under sub­section (1) of Section 127 of the Act, it is open to the concerned authority to transfer any case of an assessee from one Assessing Officer subordinate to him to any other Assessing Officer or Officers also subordinate to him. This power is hedged by two requirements which are that such order can be passed only after giving the assessee a reasonable opportunity of being heard and recording his reasons for doing so, wherever possible. As per sub­ section (3) of Section 127 however, the opportunity of hearing would not be necessary where the transfer of a case is from an Assessing Officer to another Assessing Officer and such officers are situated in the same Page 15 of 23 C/SCA/20409/2019 JUDGMENT city, locality or place. Under clause (a) of sub­section (2) of Section 127, where the Assessing Officer or the officers from whom the case is to be transferred and the Assessing Officer or the officers to whom the case is to be transferred are not subordinate to the same Principal Directors General, Director General, Principal Chief Commissioners, Chief Commissioners or Principal Commissioners or Commissioners, the transfer of case would be only when such authorities to whom the Assessing Officers concerned are subordinate are in agreement. In such a case, the Principal Director General, Director General, Principal Chief Commissioner or Chief Commissioner or Commissioner from whose jurisdiction the case is to be transferred would pass an order after giving the assessee a reasonable opportunity of being heard and after recording the reasons wherever it is possible. 26 Section 127 of the Act is founded on three principles. First, is the requirement of transferring the assessment in appropriate cases which would have the element of public interest. Secondly, the assessee cannot choose his Assessing Officer. Section 124 of the Act which lays down the jurisdiction of the Assessing Officers ensures proper administration of assessments giving consistency, transparency and predictability on the question of which Assessing Officer would deal with which assessments. Nevertheless, an assessee cannot choose his Assessing Officer. At the same time, it is also recognised that transferring the assessment of an assessee at a far away place would lead to hardship and cause prejudice. It is in this context that the section requires giving of a reasonable opportunity of being heard to the assessee and to record reasons for transferring the assessment. The Courts have also recognised that transferring an assessment of an assessee at a far away distance would certainly cause inconvenience and prejudice. It is in this respect that Page 16 of 23 C/SCA/20409/2019 JUDGMENT under sub­section (3) of Section 127, the requirement of hearing and recording of reasons for transferring an assessment is not made applicable when the assessment is being transferred from one Assessing Officer to another Assessing Officer, both being situated in the same city, locality or place. The third important element of Section 127 is when an assessment is being transferred from one Assessing Officer to another Assessing Officer, both of whom are not subordinate to the same head, the same could be done only with the agreement of the respective heads and if there is no such agreement, only by the Board or the authority that the Board may authorise in this behalf, by issuing notification in the official Gazette. This last requirement would ensure that there is no discordance between the heads of the two Assessing Officers from where the assessment is transferred to where it is being transferred and in case there is a disagreement, such powers can be exercised only by the Board or an officer so authorised by the Board. While we are on the requirement of agreement between the two authorities, as referred to in clause(a) of sub­section (2) of Section 127, we may also notice that upon such agreement being achieved, it is the authority from whose jurisdiction the case is to be transferred, has to grant a reasonable opportunity of being heard to the assessee and then pass an order recording his reasons. This requirement would have two significant elements. One is that the authority under whose jurisdiction the assessment is being transferred has merely to show his agreement or disagreement, as the case may be. It is the authority from whose jurisdiction the case is being transferred, in addition to agreeing to transfer would have to grant an opportunity of hearing to the assessee and pass a reasoned order. The second element is that his agreement for transfer of the case cannot be equated with the decision to transfer. The decision can be reached only after hearing the assessee. He can form a final opinion that the case is to be transferred only after hearing the Page 17 of 23 C/SCA/20409/2019 JUDGMENT assessee, failing which, his decision would be ex­parte. Without the representation or involvement of the assessee, the requirement of hearing would then be rendered into an empty formality. [See Genus Electrotech Ltd. vs. Union of India and Others, (2018) 402 ITR 221 (Guj.)] 27 We have already noted the reasons for the transfer of assessment. We may refer to a decision rendered by a Coordinate Bench of this Court in the case of Shree Ram Vessel Scrap P. Ltd. vs. Commissioner of Income­tax, reported in (2013) 355 ITR 255 (Guj), wherein this Court had upheld the stance of the Revenue that for effective and coordinative investigation, if otherwise established on the record, the same can be a good ground for transfer of a case. It was observed as under : “20. Section 127 of the Act, as already noticed, pertains to power to transfer cases. Sub­section (1) empowers the Director General, Chief Commissioner or the Commissioner after giving the assessee a reasonable opportunity of being heard wherever it is possible to do so and after recording his reasons, transfer any case from one more or more Assessing Officers subordinate to him to any other Assessing Officer or Assessing Officers also subordinate to him. Likewise, under sub­section (2) of Section 127 after following similar procedural requirements, it is open for the Director General, Chief Commissioner or Commissioner to transfer a case from one Assessing Officer to another who is not subordinate to him in agreement with the authority to whom he may be subordinate. Sub­section (3) of Section 127 provides that nothing contained in sub­section (1) or subsection (2) shall be deemed to require giving of any such opportunity where the transfer is from any Assessing Officer to another and offices of all such officers are situated in the same city, locality or place. Sub­section (4) of Section 127 provides that the transfer of a case under sub­section (1) or sub­section (2) may be made at any stage of the proceedings and shall not render necessary the re­issuance of any notice already issued by the Assessing Officer from whom the case is transferred. 21. Exercise of power under sub­section (1) and subsection (2) of the Act comes with certain procedural requirements namely, of granting a reasonable opportunity of being heard in the matter wherever it is possible to do so, of recording of reasons for passing such order and as provided by Page 18 of 23 C/SCA/20409/2019 JUDGMENT the Supreme Court in Ajanta Industries (supra) communicating such reasons also to the assessee. Subject to fulfillment of such procedural requirements, the authority under Section 127 enjoys considerable discretion while exercising the power contained in sub­section (1) or subsection (2) thereof. Such discretion of course has to be exercised for achieving the public purpose and not for any arbitrary or irrelevant consideration. On the other hand, it can also be seen that transfer of a pending case from one Assessing Officer to another outside of a city, locality or place is likely to cause considerable inconvenience to an assessee. Therefore, even though an assessee may not have a vested right to insist that his assessment be completed only at one place or by a particular Assessing Officer, nevertheless, the reasons for transfer must be weighty enough to offset against such personal inconvenience of an assessee. In exercise of power under Section 127 thus we are concerned with larger public interest on one hand and personal inconvenience on the other. However, as long as such powers are exercised bona fide, for public purpose and in the interest of Revenue, the role of the Court to dissect such reasons and to come to a different conclusion would be extremely limited. It is by now well settled that judicial review against the administrative order in exercise of writ jurisdiction, the Court is concerned with the decision making process and not the final decision itself. Unless the reasons which prompted the competent authority to transfer the case can be stated to be wholly irrelevant or arbitrary, the Court would not interfere with such reasons. Of course an order of such nature can and need to be quashed if it is demonstrated that same is passed either without jurisdiction or is actuated by mala fide either in fact or in law.” 28 In the case of Aamby Valley Ltd. vs. Commissioner of Income­ tax, reported in (2014) 41 taxmann.com 15 (Bombay), a Division Bench of the Bombay High Court held as under : “8. We have considered the submissions. The power to transfer cases under Section 127 of the Act is to be undoubtedly exercised after following the principles of natural justice. However, the discretion of the authority to transfer a case has to be examined on the touchstone of the same not being arbitrary and/or perverse and/or mala fide. If there are reasons in the impugned order which indicates due application of mind to reach a view to transfer a case from one jurisdiction to another, then this Court will not interfere with the discretion of the administrative authority who transfers the case. This discretion is vested by the Act in high ranking officers viz. Commissioner of Income Tax and the necessity to transfer a case from the jurisdiction of one officer to another officer for better administration of the Act could be diverse and impossible to enumerate. It is for the above reason that Section 127 of the Act has not limited the exercise of jurisdiction by Page 19 of 23 C/SCA/20409/2019 JUDGMENT specifying any circumstances before the authority can exercise his powers to transfer the case. One more fact which cannot be lost sight of is that an assessee cannot choose his Assessing Officer and, therefore, if the transfer order does indicate some valid reasons to justify the transfer and such reasons are neither perverse or arbitrary or mala fide this Court would not interfere with the reasonable exercise of discretion.” 29 The Delhi High Court, in the case of Vishal Kumar vs. Commissioner of Income, reported in (2014) 44 taxmann.com 180 (Delhi), held as under : “10. The assessee also has the opportunity to present his case and be subject to a regular assessment, in front of the Assessing Officer to whom jurisdiction has been transferred. No prejudice is caused by the mere fact of a Section 127 order, such that detailed reasons and specific grounds are required to be provided, as the petitioner today argues. Equally, the show­ cause notice dated 9.10.2013 granted the petitioner in this case an opportunity of being heard. No oral representation was made by the petitioner on that date, nor was any request for another date made to the Commissioner. Written objections, however, were preferred, which were considered and disposed off by the impugned notice in this case. The argument, thus, that no chance to effectively represent the case was provided has no merit.” 30 In Pannalal Binraj vs. Union of India, reported in (1957) 31 ITR 565, the Supreme Court observed while upholding the power of transfer that, inconvenience to the assessee or likelihood of misuse of the provision could not be a ground to declare the said provision to be void, but if there was abuse of the power, appropriate remedy could be taken. The relevant observations reads thus : “It follows, therefore, that Section 5(7A) of the Act is not violative of Article 14 of the Constitution and also does not impose any unreasonable restriction on the fundamental right to carry on trade or business enshrined in Article 19(1) (g) of the Constitution. If there is any abuse of power it can be remedied by appropriate action either under Article 226 or under Article 32 of the Constitution and what can be struck down is not the provision contained in Section 5(7A) of the Act but the order passed thereunder which may be mala fide or violative of these fundamental rights. This challenge of the vires of Section 5(7A) of the Act, therefore, fails.” Page 20 of 23 C/SCA/20409/2019 JUDGMENT 31 We may also refer to the instructions issued by the CBDT dated 18th September 2020, more particularly, clause 2(vi) thereof: “All cases selected u/s 133A of the Act (excluding International Taxation) having impounded material will be transferred to the Central Charges vide order u/s 127 of the Act and the cases having no impounded material will be handled by the ReACs. The survey reports shall be uploaded on ITBA by the jurisdictional charges.” 32 We shall also look into the reasons assigned by the respondent in the impugned order: “6.1 The contention of the assessee that the proposal to transfer the case from Gandhidham to Rajkot is not based on any proper ground / in a routine manner, is mis­placed and mis­conceived. Further, the contention that the proposed centralization of the case appears to be based on suspicion is also mis­placed. As contended by the assessee company, it is merely not due to conducting of Survey that the case of the assessees are proposed to be centralized. Mentioning in the show cause notice that the case is proposed to be centralized to facilitate coordinated and effective investigation is not a mere formality. 6.2 It may be mentioned that huge incriminating material was found against the above mentioned two assessees regarding bogus/accommodation entries/ bills etc. provided by the four labour sub­ contractors, proposed to be centralized with the same AO. In the statements recorded during survey and post­survey, the sub­contractors stated that their bank accounts were misused by Shree Ganesh Handling Co. Since the sub­contractors accounts, Books etc were misused, the contractors and sub­contractors assessments should be assessed with the same AO for assessing the real income and arriving at proper concealed/undisclosed income. In view of the above, it is prudent and desirable to be assessed by same AO, being the DCIT, Central Circle­2, Rajkot for coordinated and effective investigation. 6.3 It has not been elaborated by the assessees as to how the proposed centralization is in violation of CBDT Instruction No.8/2002 dtd.14/8/2002. Page 21 of 23 C/SCA/20409/2019 JUDGMENT 6.4 The contention that the proposal for centralization is without proper application of mind, is again mis­placed, mis­conceived and erroneous. The results of the Survey action including the incriminating material found demonstrate that the cases have to be centralized with one AO for effective and coordinated investigation to bringing the correct undisclosed/concealed income to tax. 6.5 The various hardships quoted by the assessee company for the .proposed centralization of the case do not hold any water, for the following reasons:­ Since one year, all IT assessments are conducted through e­mail (known as e­assessments). The returns are filed online for the last so many years. The notices, the questionnaires. The information etc., are all sought through e­mail for which the assessee has to respond only through e­mail and the assessee/the other representative shall not appear before the AO in person. Even the relevant portions of books of accounts/bills/vouchers are to be uploaded on line, if the AO asked for the same. Therefore, the contention of carrying huge records, being located at a different place from that of the AO, location inconvenience etc. raised by the assessee do not hold any water. 6.6 The contention that the order u/s.127 cannot be reviewed/recalled without there being no new facts or circumstances is erroneous and mis­ placed. Having regard to the facts and circumstances of the case. The order for centralization of the cases can be reviewed. Adhering to the principles of natural justice, an Opportunity of being heard was duly given to me assessees. Furthermore, as per the new “e­assessment” procedure, assessments can be completed only on Income Tax Business Application (ITBA) and in this system there is no functionality of assessment to the JCIT / Addl. ClT and he cannot acquire any PAN. Further, notices cannot be issued to the assessees on ITBA by the JCIT / AddI. CIT. Accordingly, JCIT. Gandhidham vide letter dtd. 26/8/2019 submitted that he is not authorized by the System to undertake assessment functions and accordingly suggested that the cases may be centralized to Central Circle. The contention that the disagreement between two Pr.CslT can be decided only by a higher authority is again mis­placed and mis­ conceived since it is not an issue /question of disagreement between two Pr.CslT but, it is only revising / amending the order u/s.127 passed by my predecessor for administrative/operational convenience. Page 22 of 23 C/SCA/20409/2019 JUDGMENT 6.7 As brought out earlier, completion of assessment by the JCIT / AddI. CIT is a thing of the past since the ‘e­assessment’ on ITBA platform does not allow assessment by the Range Head.” 33 Considering the position of law, as discussed above and also the other materials on record, we are of the view that we should not interfere with the impugned order of transfer passed by the respondent in exercise of powers under Section 127(2) of the Act. The power of transfer of cases would have to be exercised in proper cases when sufficient materials on record justify such action. As held by this Court, in the case of Hindustan M. I. Swaco Limited (2016) 72 taxmann.com 14 (Guj), “this is, however, not to suggest that the transfer of cases for effective investigation and coordination can be resorted to only in cases of assessees, who are subjected to search operation. Such requirement may arise in other circumstances also”. 34 In view of the aforesaid, the present writ application and all other connected writ applications fail and are hereby rejected. The interim relief earlier granted stands vacated forthwith. 35 In view of the order passed in the main matters, the connected Civil Applications would also not survive and are disposed of accordingly. (J. B. PARDIWALA, J) (ILESH J. VORA,J) CHANDRESH Page 23 of 23 "