High Court Of Bombay
Aamby Valley Ltd. And Another vs. CIT And Others
Section 127(2), 153
Asst. Year 2010-11
Dr. D. Y. Chandrachud & A. A. Sayed, JJ.
WP No. 2854 of 2012
24th January, 2013
Counsel appeared
Jehangir D. Mistri, Sr. Adv. With Parag Khandhar and Jatin Pore for the Petitioner.: Arvind Pinto for the Respondent
PC.
Rule, by consent returnable forthwith. With the consent of Counsel and at their request the Petition is taken up for hearing and final disposal.
The Petitioners have sought to challenge the validity of an order dated 5 January 2012 issued by the Commissioner of Income Tax-8, Mumbai under Section 127(2) of the Income Tax Act, 1961 by which the case pertaining to the Assessee has been transferred from DCIT-8(1) Mumbai to DCIT, Delhi (Central)-6, New Delhi. On 26 August 2011, a notice was issued by the Deputy Commissioner of Income Tax Circle 8(1) requiring the attendance of the First Petitioner on 13 September 2011 in connection with assessment proceedings for A.Y. 2010-11.
By a notice dated 12 September 2011 the Assessing Officer informed the Petitioner of a proposal to transfer its case from DCIT 8(1) Mumbai to DCIT CC-6, New Delhi and sought the no objection of the Petitioner by 23 September 2011 failing which it was stated that an order under Section 127 (2) would be passed. By a reply dated 22 September 2011 the Petitioner requested the Assessing Officer to furnish reasons for the proposed transfer of the assessment proceedings to New Delhi and sought an opportunity of a personal hearing on its objections which would be submitted before the Respondents. On 23 November 2011 the First Respondent in reply stated that the case of the Petitioner was proposed to be centralised with Sahara Group in view of large scale financial transactions and investments of the assessee with Sahara Group which has been already centralized with the DCIT-6, New Delhi. The centralisation of the case was sought to be effected in order to make co-ordinated enquiries//investigation into such financial transactions.
On 20 December 2011, the Petitioner submitted its objections to the proposed transfer stating inter alia that hardship would be caused in view of the fact that all books of account together with other details such as bills,vouchers, registers and files are maintained in Mumbai where the business activities are carried out.
On 5 January 2012, the First Respondent issued an order under Section 127 (2) stating that all cases belonging to the Sahara Group had been centralised with DCIT -6, New Delhi. Moreover, it was stated that the assessee had financial transactions with other group entities and is learnt to have stakes in an IPL cricket team owned by a group company, Sahara Adventure Sports Pvt. Limited which had also been centralised.
On 18 January 2012, the Assessing Officer in New Delhi issued a notice to the Petitioner requiring it to attend proceedings and to furnish information as listed out in an annexure to the letter. A further notice was issued by the Assessing Officer on 3 February 2012. On 7 February 2012 the assessee informed the Assessing Officer that it proposed to file a writ petition before this Court challenging the legality of the order passed under Section 127 but in order to comply with the order under Section 142 (1), certain documents were being filed.
On 22 February 2012, the Assessing Officer issued a notice under Section 142(1) and called upon the assessee to furnish information in order to complete the assessment under Section 143(3). The assessee sought an extension of time by a letter dated 3 March 2012. On 20 April 2012 and 7 May 2012 the assessee sought an adjournment in order to institute proceedings before this Court.
These proceedings were filed in the registry on 23 October 2012. The assessment for A.Y. 201011 would become barred by limitation on 31 March 2013 under Section 153(1)(a). A Petition was filed before this Court under Article 226 of the Constitution by Sahara Hospitality Ltd.1 in order to challenge a similar order dated 5 January 2012 passed by CIT-8 transferring the proceedings from Mumbai to New Delhi. By a judgment of a Division Bench dated 12 September 2012, that Petition was allowed on the ground that the requirement of furnishing to the assessee a reasonable opportunity of being heard is mandatory under Section 127 and that the word “may” should be read as “shall”. While setting aside the order passed in that case liberty was reserved to the CIT-8 to pass a fresh order after hearing the Petitioner in that case, Sahara Hospitality Limited. The orders of 1 Writ Petition No.596 of 2012 the Division Bench has been relied upon by the Petitioners and a similar order has been sought. Section 127 (1) confers powers, inter alia on the Commissioner “after giving the assessee a reasonable opportunity of being heard in the matter, whenever it is possible to do so, and after recording his reasons for doing so”, to transfer any case from one Assessing Officer subordinate to him to any other Assessing Officer also subordinate to him. Under Sub-section (2) where the Assessing Officer from whom the case is to be transferred and the Assessing Officer to whom the case is to be transferred are not subordinate inter alia to the same Commissioner, the power is inter alia conferred upon the Commissioner from whose jurisdiction the case is to be transferred. In such a case, the Commissioner, the statute provides, “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.” These provisions have been interpreted in the judgment of the Division Bench noted above in the case of Sahara Hospitality Limited. In the present case, admittedly, though reasons were furnished to the assessee and the basis on which the transfer was sought to be effected was indicated, no personal hearing was afforded. The requirement of a personal hearing in the present case is of some significance because the assessee had submitted objections both on the need to transfer the case to New Delhi and on the alleged hardships that would be caused if such a transfer were to be effected. Whether the objections of the assessee were sustainable or otherwise is a separate matter which need not detain us at this stage. In view of the law laid down by the Division Bench in the judgment noted earlier, interpreting the provisions of Section 127, the furnishing of a personal hearing was necessary.
Since no personal hearing was afforded, the issue that now falls for determination is what relief in the present case should be granted to the assessee. The order of transfer was passed on 5 January 2012. As we have noted earlier, the endorsement by the registry in the present case in respect of the date of filing is 23 October 2012. Though the assessee had by its letters dated 7 February 2012, 20 April 2012 and 7 May 2012 requested the Assessing Officer to hold proceedings in abeyance since a Petition was being filed before this Court, no Petition was filed until the last week of October 2012. The Petition was moved before the Court for the first time on 2 January 2013. The assessment proceedings for A.Y. 2010-11 would become time barred by 31 March 2013 in view of the mandate of Section 153(1)(a). The present case does not fall within the ambit of the provisions of Section 153 (3) including clause (ii). The assessee has waited for nearly ten months before instituting the proceedings. Having regard to the fact that the assessment would otherwise become time barred, we are of the view that the ends of justice would require that the final order that the Court would pass should be so modulated to balance the need to comply with the principles of natural justice on the one hand with the necessity of protecting the Revenue on the other. We are not therefore inclined to interfere with the order dated 5 January 2012 to the extent that the case file stands transferred to New Delhi in relation to the assessment proceedings for A.Y. 2010-11. We decline to do so on the ground of the delay on the part of the assessee in moving this Court in relation to the transfer pertaining to proceedings for A.Y. 2010-11 which, as indicated earlier, would become time barred on 31 March 2013. Save and except for the aforesaid, we direct that the CIT-8 Mumbai, the First Respondent, shall proceed to furnish an opportunity of being heard to the assessee and for that purpose treat the impugned order dated 5 January 2012 as a notice calling upon the assessee to show cause as to why the case should not be transferred. We reiterate and clarify by way of abundant caution that this would not affect the transfer of the proceedings so far as it pertains to A.Y. 2010-11 which shall be completed by the Assessing Officer to whom the proceedings have been transferred. The assessee would be at liberty to file a reply, if any, within a period of two weeks before the First Respondent who shall thereupon pass final orders in accordance with law after affording an opportunity of a personal hearing to the assessee within a period of three weeks thereafter. The assessee shall appear before the First Respondent together with an authenticated copy of this order on 7 February 2013.
Rule is made absolute in the aforesaid terms. There shall be no order as to costs.
[Citation : 352 ITR 48]
