High Court Of Patna
Steel Engineering & Processing Works vs. Union Of India & Ors.
B.M. Lal, C.J. & S.K. Singh, J.
Civil Writ Jurisdiction Case No. 11413 of 1997
17th November, 1998
L.K. Bajla, for the Petitioner : L.N. Rastogi, for the Respondents
BY THE COURT :
By this writ petition, the petitioner, Steel Engineering and Processing Works, a partnership firm, having its office at Haziganj, P.S. Chowk, Patna City, District-Patna, through Shri R.K. Bhartiya, seeks a writ in the nature of certiorari for quashing the Notification No. CIT/DSD/JUR-127/Vol. III/1996-97, dt. 6th Dec., 1996 issued by the CIT, Patna, Revenue Building, Gardiner Road, Patna, under s. 127 of the IT Act, 1961 (hereinafter referred to as âthe Actâ) transferring the file of the petitioner from the jurisdiction of the Asstt. CIT, Investigation Circle 1(2), Patna, to the Dy. CIT, Special Range, Ranchi.
2. It is contended that right from its inception, the petitioner is carrying on its entire business of the firm at Patna only. In Ranchi there was stockyard of the firm but that was only for the purpose of storage and delivery of goods, sales, etc., was effected at Patna and for the buyers of Ranchi area deliveries were made from Ranchi stockyard of the firm. On 4th Dec., 1996, the petitioner received a notice from the ITO, according to which, in the interest of the Revenue, the case of the firm was to be transferred from the jurisdiction of the Asstt. CIT, Investigation Circle 1(2), Patna, to the jurisdiction of the Dy. CIT, Special Range, Ranchi, and if the petitioner had any objection to the proposed transfer, the petitioner should appear before the respondent No. 2 on 16th Dec., 1996, or may submit a written reply on that date. To this show-cause notice Shri Ram Swaroop Bhartia objected to the proposed transfer before the respondent No. 2 on 16th Dec., 1996, at Patna stating that the entire business of the firm was being carried on at Patna and all its books of account, etc., were at Patna with the partners of the firm residing at Patna and, hence, it will not be in the interest of the petitioner as also in the interest of the Revenue to transfer the file to Ranchi inasmuch as in the absence of books of account it will not be possible for him to co-operate in the assessment of the firmâs income/loss at Ranchi. It is also submitted that on 5th May, 1997, while the representative of Shri Ram Swaroop Bhartia was in the office of the Dy. CIT, Ranchi, in connection with the assessment of other concerns, a notice dt. 2nd Jan., 1997, was served, according to which, the case was transferred from Patna to Ranchi by order, dt. 6/12th Dec., 1996. In the above background, it is contended that no proper opportunity of being heard was afforded to the petitioner and, thus, the impugned transfer of the case is contrary to the provisions of s. 127 of the Act.
3. Denying the averments made by the petitioner, the Revenue has filed its counter-affidavit and it is contended that the petition as framed and filed suffers from laches. Besides this, on the basis of misrepresentation and suppression of fact, the writ petition is filed. It is contended that on 6th Dec., 1996, the transfer order is made and after a lapse of more than a year the petitioner has filed the writ petition, a copy of which was served on the respondent on 9th Dec., 1997. It is, thus, contended that after a lapse of about one year the petitioner, exercising his right under writ jurisdiction, challenged the order of transfer and, therefore, the petition suffers from laches. It is also contended that the transfer of the case is made at the instance of the petitionerâs request. On 5th Nov., 1996, the petitioner, in course of search, under s. 132 of the Act at Ranchi, had made a statement on oath and thereby requested that the files of his group should be centralised at Ranchi. Therefore, it was at his request that the CIT, Ranchi, requested vide his letter dt. 26th Nov., 1996, to the CIT, Patna, to transfer the file of Ram Swaroop Bhartia group to Ranchi. Therefore, it is contended that the conduct of the petitioner is not appreciable, rather, on the other hand, it is dubious in so much so that on the one hand he is requesting the authority to transfer the file and on the other hand, he is filing writ petition challenging the order of transfer of his case to Ranchi, whereas considering his request the file has been transferred to Ranchi. It is stated that the petitioner has not approached this Court with clean hands. It is also submitted that the petitioner has suppressed certain material facts in as much as he is working partner of the firm, Steel Engineering and Processing Works, Patna City, and was drawing monthly salary of Rs. 1,500 (rupees one thousand and five hundred) as is clear from the partnership deed which is annexed to the writ petition. Paras 11 and 12 of the recitals in the partnership deed show that the petitioner and his son who were partners of the first and the fourth parts as working partners were drawing salary of Rs. 1,500 (rupees one thousand and five hundred) each for looking after the business of the firm. Therefore, it is submitted that even if, according to the petitioner, the business of the firm is closed in 1995 (as per reference of p. 6 para. 16 of the writ petition), the petitioner being the managing working partner is under legal obligation to comply with the notice of the Department and the liability to pay tax is joint and several of all the partners including the petitioner. It is also contended that the petitioner has all along been not co-operating in pursuance of the notice served upon him on flimsy grounds.
It is also contended that after transfer of the case, the Dy. CIT, Ranchi, passed the assessment order under s. 158BC creating a demand of Rs. 24,59,256 (rupees twenty-four lakhs fifty nine thousand two hundred and fifty- six) on 24th Dec., 1997, as the petitioner and all other partners at Patna and Ranchi have not complied with the last notice served on them fixing the date of hearing on 2nd Dec., 1997. As a matter of fact, the petitioner refused to accept the last notice of hearing, dt. 2nd Dec., 1997. It is further contended that the impugned Notification dt. 6th Dec., 1996, under s. 127 of the Act recording the reasons of transfer was duly sent as per memo, dt. 12th Dec., 1996, to the assessee as usual.
4. A rejoinder affidavit has also been filed on behalf of the petitioner denying the counter-affidavit. It is admitted that the statement of R.S. Bhartia was recorded by the respondent-department on 10th Sept., 1996. About the guilt of laches and misrepresentation and suppression of facts, nothing has been stated in the rejoinder affidavit.
5. A reply to the rejoinder has also been filed, wherein it is reiterated that para 2 of the rejoinder is totally incorrect and it is again reiterated that the petitioner is guilty of misrepresentation and suppression of facts. It is also submitted in reply to the rejoinder that the books of account for the period financial years 1985-86 to 1994-95 were seized from the premises of the petitioner and his father at Ranchi and in this regard statement of the petitioner is palpably false. It is also contended that the transfer of case from Patna to Ranchi was known to the petitioner on 5th May, 1997, whereas he has filed the writ petition in December, 1997. It is further submitted that the assessment of the firm has already been completed on 24th March, 1997. It is also stated that it is not that the Department has not served the notice in time but it was the petitioner who refused to accept the notice on 13th Jan., 1997. Therefore, it was returned back and so that presumption in law about valid service of notice is in favour of the Department.
6. The learned counsel Shri Bajla, appearing for the petitioner, submitted that since the provisions of s. 217 of the Act have not been complied with in letter and spirit, therefore, the impugned order deserves to be quashed. In support of his contention, the learned counsel has relied upon a decision in the case of Vijayasanthi Investment (P) Ltd. vs. Chief CIT (1991) 91 CTR (AP) 36 : (1991) 187 ITR 405 (AP) : TC 69R.677 and in the case of Shantilal Hiralal & Co. vs. K.S. Ramamurti, ITO (1984) 42 CTR (Bom) 366 : (1985) 152 ITR 236 (Bom) : TC 69R.675. He also relied upon a decision in the case of Ajantha Industries vs. CBDT 1976 CTR (SC) 79 : (1976) 102 ITR 281 (SC) : TC 69R.638. Laying stress on the decision in the case of Ajantha Industries (supra), the learned counsel for the petitioner has contended that the requirement of recording reasons under s. 127(1) of the IT Act, 1961, for the transfer of a case from one ITO to another is a mandatory direction under the law and non-communication thereof to the assessee is not saved by showing that the reasons exist in the file although not communicated to the assessee. Recording of reasons and disclosure thereof are not a mere idle formality. When law requires reasons to be recorded in a particular order affecting prejudicially the interests of any person, who can challenge the order in Court, it ceases to be a mere administrative order and the vice of violation of the principles of natural justice on account of omission to communicate the reason is not expiated. Hence, it is submitted that the order impugned be quashed.
7. The learned counsel for the Revenue, repudiating the submission of Shri Bajla, the learned counsel for the petitioner, has submitted that the petition deserves to be dismissed outright as it has been filed at a belated stage and by suppressing material facts as also on the ground of misrepresentation of facts. It is also argued that it is the petitioner who suggested for the transfer of his case to Ranchi.
8. On hearing the learned counsel for the parties and on perusing the records and considering the legal aspect of s. 217 of the Act, no doubt this provision is to be adhered to in letter and spirit and all procedural opportunities envisaged under this provision are to be afforded to the assessee. Therefore, the submission made by Shri Bajla and the authority cited by him have no two opinion. But in the facts and circumstances of the instant case, where the assessee-petitioner himself comes forward and states that his account books, etc., are at Ranchi and suggests for transfer and thereby proceeding is initiated under s. 127 of the Act, still the requirement of s. 127 of the Act is to be complied with and failing which the proceedings under s. 127 of the Act is to be vitiated.
9. Law in this regard is well-settled. If the assessee-petitioner does not raise any objection to his case or cases being transferred and, on the other hand, by lapse of time he submits to the jurisdiction of the transferee Court and when after transfer of the case, assessment, etc., was also made and thereafter the assessee-petitioner awakes up and asserts to the right under s. 127 of the Actâhow far will it be justified? Thus, there is no doubt that law is well-settled that in respect of transfer of income-tax cases from one ITO to another ITO, the procedure as laid down under the provisions of s. 127 of the Act is to be followed and opportunities as contemplated thereunder must be afforded to the assessee, failing which, the order of transfer is rendered a nullity. But this is not all. The facts as are emerging from the records of this case cannot be lost sight of, which have been elaborately pleaded and described by the respondent Revenue in its counter-affidavit and also in the reply affidavit to the rejoinder affidavit stating that the proceeding for transfer of the case from Patna to Ranchi was initiated at the instance of the petitioner-assessee himself and it was he, who suggested that the entire records and books of account are at Ranchi and so it will be convenient for him to co-operate with the assessment at Ranchi. Besides laches in approaching the Writ Court, the assessee-petitioner also submitted to the jurisdiction of the transferee authority at Ranchi. This being so, the party once acquiesced in the jurisdiction of the transferee Court, all statutory rights which the assessee gets by virtue of s. 127 of the Act vanish and, therefore, the assessee cannot assert that without affording opportunity as required under s. 127 of the Act the case has been transferred. In this regard see Halsburyâs Law of England, Vol II, 3rd Ed., p. 140, Pr. 165 and also the case in O.A.O.K. Lakshmanan Chettiar vs. Commissioner, Corporation of Madras AIR 1927 Mad 130, which are referred to in the decision in the case of Pannalal Binjraj vs. Union of India (1957) 31 ITR 565 (SC) : TC 69R.243.
10. In the case of Pannalal Binjraj (supra), which is a Constitution Bench decision, the Supreme Court lays down the law to the effect that, “if an assessee has acquiesced in the jurisdiction of the ITO to whom a case has been transferred, he cannot subsequently object to the jurisdiction of the officer and seek to get the order of transfer quashed by invoking the jurisdiction of the Court under Art. 226 of the Constitution”. This being the law in respect of cases where the assessee has acquiesced to the jurisdiction of the transferee Court, the submissions made by Shri Bajla have no application in this case. The writ petition is, therefore, dismissed.
[Citation : 243 ITR 721]