Delhi High Court
Ats Infrastructure Ltd. vs Cit on 27 May, 2009
Author: Vikramajit Sen
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ WP(C)No.9028/2009 & CM No.6542/2009
# ATS INFRASTRUCTURE LTD. ..... Petitioner through
! Mr. C.S. Aggarwal, Sr.
Adv., Mr.Anil Kher, Sr.
Adv. with Mr. Prakash
Kumar, Mr. Kapil Kher
& Mr. S.S. Pandit, Advs.
versus
$ CIT .....Respondent through
Ms. P.L. Bansal with
Ms. Anshul Sharma &
Mr. Sanjeev Rajpal, Advs.
WITH
WP(C)No.9029/2009 & CM No.6543/2009
ATS CONSTRUCTION &
MAINTENANCE (P) LTD ....Petitioner through
Mr. C.S. Aggarwal, Sr.
Adv., Mr.Anil Kher, Sr.
Adv. with Mr. Prakash
Kumar, Mr. Kapil Kher
& Mr. S.S. Pandit, Advs.
versus
CIT .....Respondent through
Ms. P.L. Bansal with
Ms. Anshul Sharma &
Mr. Sanjeev Rajpal, Advs.
WITH
WP(C)No.9037/2009 & CM No.6551/2009
ATS PROMOTERS & BUILDERS(P) LTD. ..... Petitioner through
Mr. C.S. Aggarwal, Sr. Adv.,
Mr.Anil Kher, Sr.Adv. with
Mr. Prakash Kumar,
Mr. Kapil Kher & Mr. S.S.
wp(c)9028/2009 Page 1 of 17
Pandit, Advs.
versus
CIT .....Respondent through
Ms. P.L. Bansal with
Ms. Anshul Sharma &
Mr. Sanjeev Rajpal, Advs.
WITH
WP(C)No.9130/2009 & CM No.6735/2009
ASHWANI TALWAR .....Petitioner through
Mr. C.S. Aggarwal, Sr.
Adv., Mr.Anil Kher, Sr.
Adv. with Mr. Prakash
Kumar, Mr. Kapil Kher
& Mr. S.S. Pandit, Advs.
versus
CIT .....Respondent through
Ms. P.L. Bansal with
Ms. Anshul Sharma &
Mr. Sanjeev Rajpal, Advs.
WITH
WP(C)9131/2009 & CM No.6736/2009
GETAMBER ANAND .....Petitioner through
Mr. C.S. Aggarwal, Sr.
Adv., Mr.Anil Kher, Sr.
Adv. with Mr. Prakash
Kumar, Mr. Kapil Kher
& Mr. S.S. Pandit, Advs.
versus
CIT .....Respondent through
Ms. P.L. Bansal with
Ms. Anshul Sharma &
Mr. Sanjeev Rajpal, Advs.
WITH
wp(c)9028/2009 Page 2 of 17
WP(C)9132/2009 & CM No.6737/2009
ALSTONIA TOWNSHIP P. LTD. ..... Appellant through
Mr. C.S. Aggarwal, Sr. Adv.,
Mr.Anil Kher, Sr. Adv. with
Mr. Prakash Kumar,
Mr. Kapil Kher & Mr. S.S.
Pandit, Advs.
versus
CIT .....Respondent through
Ms. P.L. Bansal with
Ms. Anshul Sharma &
Mr. Sanjeev Rajpal, Advs.
% Date of Hearing : May 21st, 2009
Date of Decision :May 27th, 2009
CORAM:
* HON'BLE MR. JUSTICE VIKRAMAJIT SEN
HON'BLE MR. JUSTICE RAJIV SHAKDHER
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 the Judgment should be reported
in the Digest? Yes
VIKRAMAJIT SEN, J.
1. This is the second salvo of the Petitioners seeking to
invoke extraordinary of this Court under Article 226 of the
Constitution of India. The Petitioners challenge the transfer of
their cases from Delhi to Meerut in terms of the impugned
Order dated 1.4.2009 passed by the Commissioner of Income-
Tax, Delhi-I, New Delhi under Section 127(2) of the Income Tax
Act, 1961 (Act for short), Section 11 of the Wealth Tax Act, 1957
and Section 7 of the Gift Tax Act, 1958. The relevant details
stand clarified in the Table below:-
Sl. Name of the assessee From To
No.
(1) (2) (3) (4)
1 M/s Alstonia Township (P) ITO Ward ACIT, Central
Ltd. 1(3), New Circle, Meerut
PAN AAECA4455A Delhi
2 Shri Ashwani Talwar DCIT, Circle ACIT, Central
PAN AAAPT0920E 2(1), New Circle, Meerut
Delhi
3 Shri Anil Kumar Saha DCIT, Circle ACIT, Central
PAN AMYPS1829D 2(1), New Circle, Meerut
Delhi
4 Shri Geetambar Anand DCIT, Circle ACIT, Central
PAN ACHPA0868K 2(1), New Circle, Meerut
Delhi
5 M/s ATS Infrastructure DCIT, Circle ACIT, Central
Ltd. 2(1), New Circle, Meerut
PAN AADCA0809D Delhi
6 M/s ATS Promoters & ITO Ward ACIT, Central
Builders (P) Ltd. 2(2), New Circle, Meerut
PAN AABCA4298C Delhi
7 M/s ATS Construction & ITO Ward ACIT, Central
Maintenance (P) Ltd. 2(2), New Circle, Meerut
PAN AACCS0562Q Delhi
2. Earlier, seven Writ Petitions had been filed on 5.12.2008
challenging the impugned letter dated 7.10.2008 which had
earlier transferred the subject cases in the same manner as has
been done in the impugned decision dated 1.4.2009. The
springboard for this action was the notice issued by the
Commissioner of Income-tax, Delhi-I, New Delhi by
Communication dated 30.9.2008 which reads thus:-
OFFICE OF THE COMMISSIONER OF INCOME TAX
DELHI-I, NEW DELHI
F.No.CIT-I/ITO Hq-I/Centralisation/08-09/972 Dtd: 30.9.08
The Principal Officer
M/s. ATS Infrastructure Ltd.
K-19, Sec.-18
Noida
Sir,
Sub : Proposal to transfer jurisdiction over your case with ACIT,
Central Circle, Meerut - Show cause notice u/s 127 of I.T.
Act, 1961
A search action was conducted in cases of M/s ATS group
of cases on 15.02.2008 which included your case as well.
2. Considering the intimate connection that you enjoy
with the above group of cases it is necessary that your case
is centralized with the Assessing Officer handling other
cases of the group. Therefore, to ensure proper
investigation in the search assessments of the aforesaid
Group, I propose to pass an order transferring jurisdiction
over your case from DCIT, Cir.-2(1), New Delhi to ACIT,
Central Circle, Meerut.
3. If you have any objection to the said proposal,
please furnish the same to this office at the above given
address within 6th October, 2008 from the receipt of this
letter either personally or through an authorized
representative.
4. Please note that if nothing is heard from you, the
matter will be decided on merits.
Yours faithfully,
( VIJAY SHARMA )
Commissioner of Income Tax,
Delhi-I, New Delhi.
3. The Order that had been previously passed thereon, dated
7.10.2008, did not contain any reasons on which the decision to
transfer the cases was founded and, therefore, it was set aside
by Order of this Court. However, the CIT, Delhi-I, New Delhi
was permitted to pass order under Section 127(2) after granting
a further opportunity of hearing to the Petitioners, making it
clear that the Objections that may be raised by the Petitioners
must be decided by a speaking order.
4. By letter dated 25.3.2009 the Income Tax Officer (Hqrs.I),
New Delhi informed the Chartered Accountants of the
Petitioners that these cases had been fixed for hearing on
30.3.2009 in the Chambers of the CIT, Delhi-I, New Delhi. The
Chartered Accountants, in their letter dated 30.3.2009, raised
several Objections which included, inter alia, the points- (a) that
the proposed action created inconvenience as well as additional
administrative costs to the entire ATS Group. This was
predicated on the decision in Ajantha Industries -vs- CBDT(SC),
102 ITR 281(SC); (b) the Head Office and Registered Office of
the Company is in Delhi and the entire Group is being assessed
in Delhi since its inception; (c) the Respondent's Directors
reside either in Delhi or Noida only. No
establishment/operations of the Group of whatsoever nature
exist in Meerut and (d) that the higher Departmental Authorities
are located in Ghaziabad, Kanpur and Lucknow, apart from
Delhi.
5. We have already reproduced the copy of the Show Cause
Notice dated 30.9.2008, stating the reasons for the proposed
transfer of cases to Meerut, which referred to the intimate
connection between the Group necessitating that the cases be
centralized with the Assessing Officer handling other cases of
the Group. Mr. C.S. Aggarwal, learned Senior Counsel for the
Petitioner, has vehemently argued that since the ATS Group has
no establishments and operations in Meerut and more
specifically that no Assessing Officer at Meerut was handling
any other cases of the Group, the entire action was liable to be
struck down. It seems to us that this argument could have been
taken in the writ petitions previously filed on behalf of the
Group. Avowedly, no fresh notice has been issued and the
Respondents have relied on this very Notice. The previous Order
was quashed only for the reason that it did not articulate the
reasons which had weighed in the mind of the CIT in deciding to
transfer the subject cases from New Delhi to Meerut. Principles
of Order II of the Code of Civil Procedure, 1908 will come into
play so as to preclude the consideration of the present challenge
to the Notice dated 30.9.2008. Furthermore, Objections had
been filed on behalf of the Petitioners prior to the filing of the
earlier writ petitions, and detailed Objections have once again
been filed on 30.3.2009. It is manifestly clear that the
Petitioners were fully aware of several factors other than what
had been spelled out in the said Notice which were present in
the mind of the CIT, Delhi-I, New Delhi. If this were not so, we
may have been left with no option but to rule in favour of the
Petitioners because of the observations made by their Lordships
in Commissioner of Police -vs- Gordhandas Bhanji, AIR 1952 SC
16. Their Lordships had stated that "'public orders' publicly
made, in exercise of a statutory authority cannot be construed in
the light of explanations subsequently given by the officer
making the order of what he meant, or of what was in his mind,
or what he intended to do. Public orders made by public
authorities are meant to have public effect and are intended to
affect the acting and conduct of those to whom they are
addressed and must be construed objectively with reference to
the language used in the order itself. Orders are not like old
wine becoming better as they grow older". We see no reasons
not to extrapolate these observations even to the contents of a
show cause notice. The Supreme Court has held in
Commissioner of Customs -vs- Toyo Engineering India Limited,
(2006) 7 SCC 592 that the Department cannot travel beyond the
contents of its show cause notice, which ratio was applied in CIT
-vs- Contimeters Electricals (P) Ltd., [2009] 178 Taxman
422(Del). Generally speaking, if an order is passed on issues and
grounds not spelt out in the show cause notice, that, in itself,
may be sufficient justification for striking down the order. The
reason is firmly entrenched on the principles of natural justice
and on the audi alteram partem rule in particular [see J.T.
(India) Exports -vs- UOI, [2003] 262 ITR 269 (FB)] was a
member. It is not possible for a party to respond or clarify issues
which have not been articulated, and which remain only in the
mind of the decision making Authority. However, there are
exceptions to this dogma of natural justice which is in effect but
an obverse facet thereof. The exception is that if it is palpably
clear that points which had not been initially penned down in
the Notice were subsequently conveyed by the concerned
authority, who was given adequate opportunity and facility to
respond thereto, the dictates of natural justice would have been
adequately complied with. This is what we find has happened in
the case in hand, as is evident from the gamut of Objections
taken by the Chartered Accountants of the Petitioners in their
letter dated 30.3.2009. The impugned Order, which is in great
detail, is not predicated on any points which are foreign to the
said response dated 30.3.2009 of the Charted Accountants of
the Petitioners. Stated differently, no prejudice, whatsoever, has
been caused to the Petitioners for the failure to spell out in the
said Show Cause Notice all the considerations for ordering the
transfer of the cases. Since a hearing on the entire spectrum of
the points touching upon the reasons for the consolidation and
transfer of the cases has been given, it will lead to prolixity to
consider, beyond making mention of the decisions in Ajantha;
Melco India(P) Ltd. -vs- CIT, [2003] 260 ITR 450; Nitin
Developers and Const -vs- CIT, [2006] 284 ITR 605(Delhi);
Saptagiri Enterprises -vs- CIT, [1991] 189 ITR 705, General
Exports -vs- CIT, [1998] 234 ITR 860 and V.K. Industries Pvt.
Ltd. -vs- ACIT, [1991] 187 ITR 403. Seen in all its hues,
therefore, the challenge to the Notice is ill-founded and devoid
of merit.
6. On a reading of the Objections, as well as keeping in
perspective the arguments addressed before us by Mr. C.S.
Aggarwal, the Petitioners have, in principle, no objection to the
consolidation of the cases or to their subsequent and
consequent transfer. We, therefore, need not deal with the
numerous judgments cited at the Bar by Ms. P.L. Bansal,
learned counsel for the Revenue, setting down the parameters
within which the decision to consolidate and/or transfer the
cases can legitimately be taken.
7. As has already been noted above, the challenge of the
Petitioners is to the transfer of cases to Meerut in particular. It
is contended by Mr. C.S. Aggarwal that business operations of
the ATS Group span the States of Uttar Pradesh, Punjab,
Uttaranchal and Goa and obviously the convenient place for
completing the assessment would be New Delhi where several
Revenue Officers competent to carry out the task are presently
and always posted.
8. It is the case of the Revenue that when a Search was
conducted at the Registered Office of the ATS Group, it was
found that insignificant activity was conducted at the Registered
Office of the Group at Nehru Place, New Delhi. On the contrary,
the business activities of the ATS group were being carried on
predominantly in and around the environs of Noida, where some
of the Directors even resided. This was pointed out to elucidate
that in actual effect no real inconvenience would be caused to
the Petitioners by the transfer of the cases out of Delhi. Mr.
Aggarwal, however, submits that the Group has several offices
spread across the country and it is necessary for it to maintain
camp offices close to wherever any of their activities are on-
going. The fact remains that the ATS Group also has offices in
Uttar Pradesh - Noida; one of its sister companies, Prateek
Resorts and Builders Pvt. Ltd., has its principal office in
Dehradun, Uttaranchal. It is not disputed that the ATS Group
has no office or operations in Meerut. Mr.Aggarwal has also
contended that if the assessments are to be transferred out of
New Delhi the Petitioners would have no objection if the said
cases of the Group are transferred to Ghaziabad since that
would cause least insignifcant inconvenience to them. The point
which has become central, therefore, is whether the Petitioners'
convenience is a preeminent consideration or whether the
Revenue is free, without any restraints, on the choice of where
the transfer of cases after consolidation proceedings is to be
directed.
9. In Pannallal Binjraj -vs- UOI, [1957] 31 ITR 565(SC) the
Constitution Bench had repulsed a siege laid to the vires of
Section 5 of the Indian Income Tax Act, 1922. The Assessee had
one of its branches in Calcutta where the Karta of the HUF
resided and carried on business. The HUF, however, was being
assessed at Patna but the cases were transferred to Calcutta
and subsequently to Circle-VI, New Delhi. Their Lordships
observed thus:-
"Prima facie it would appear that an assessee is
entitled under those provisions to be assessed by the
Income-tax Officer of the particular area where he
resides or carries on business. Even where a question
arises as to the place of assessment such question is
under section 64(3) to be determined by the
Commissioner or the Commissioners concerned if the
question is between places in more States than one or
by the Central Board of Revenue if the latter are not in
agreement and the assessee is given an opportunity of
representing his views before any such question is
determined. This provision also goes to show that the
convenience of the assessee is the main consideration in
determining the place of assessment. Even so the
exigencies of tax collection have got to be considered
and the primary object of the Act, viz., the assessment
of income-tax, has got to be achieved. The hierarchy of
income-tax authorities which is setup under Chapter II
of the Act has been so set up with a view to assess the
proper income-tax payable by the assessee and whether
the one or the other of the authorities will proceed to
assess a particular assessee has got to be determined
not only having regard to the convenience of the
assessee but also the exigencies of tax collection. In
order to assess the tax payable by an assessee more
conveniently and efficiently it may be necessary to have
him assesseed by an Income-tax Officer of an area other
than the one in which he resides or carries on business.
It may be that the nature and volume of his business
operations are such as require investigation into his
affairs in a place other than the one where he resides or
carries on business or that he is so connected with
various other individuals or organisations in the way of
his earning his income as to render such extra
territorial investigation necessary before he may be
properly assessed".
......
"There is no fundamental right in an assessee to be
assessed in a particular area or locality. Even
considered in the context of Section 64(1) and (2) of the
Act this right which is conferred upon the assessee to be
assessed in a particular area or locality is not an
absolute right but a subject to the exigencies of tax
collection."
10. The Division Bench of this Court in Sameer Leasing Co.
Ltd. -vs- Chairman, CBDT, [1990] 185 ITR 129 gave its
imprimatur to assessment previously being carried out at Delhi,
being transferred to Meerut, keeping in view the fact that the
business activities of the assessee were located in
Muzaffarnagar and also keeping in perspective the fact that
other cases of assessee pertaining to the same group were also
transferred to Meerut. Another Division Bench of this Court in
K.K. Loomba -vs- CIT, [2000] 241 ITR 152 applied Bidi Supply
Co. -vs- UOI, [1956] 29 ITR 717(SC) and Pannalal Binjraj to
reject the challenge to the transfer of cases from Amritsar to
Delhi. In K.P. Mohammed Salim -vs- CIT, [2008] 300 ITR 302
their Lordships have clarified that the "power of transfer in
effect provides for a machinery provision. It must be given full
effect. It must be construed in any manner so as to make it
workable. Even Section 127 of the Act is the machinery
provision. It should be construed to effectuate a charging
section so as to allow the authorities concerned to do so in a
manner wherefor the statute was enacted".
11. In this conspectus and analysis of the law it will be
relevant to note that - firstly there is no fundamental right of an
assesse to be assessed at a particular place. Under Section 124
the assessment must be carried out at the principal place of
business but when powers under Section 127 are invoked,
territorial nexus becomes irrelevant. Secondly, the
determination of the venue of the assessment would be
governed by the greatest effectivity for collection of taxes.
Thirdly, the decision to transfer cases cannot be capricious or
malafide. If the venue is changed from year to year, or
periodically for no apparent reason, it would not manifest an
instance of exercise of power which is not available, but an
example of an abuse of power in the manner in which it is
exercised. Fourthly, whilst the convenience of the assessee
should be kept in mind, it would always be subservient to the
interests of adjudication and collection of taxes.
12. When these tests are applied to the case in hand the
decision to transfer the cases out of Delhi would become
unassailable keeping in view the outcome of the Searches made
in Delhi and in several other parts of Uttar Pradesh under the
Commissioner, Kanpur. There is no material before us to come
to the conclusion that the decision to transfer the cases out of
Delhi is malafide. In fact, Mr. C.S. Aggarwal has rightly
conceded that no challenge can be laid to the decision to
consolidate cases and/or even transfer them to Ghaziabad. We
cannot accept his argument that the powers to transfer are
restricted, so far as venue is concerned, to the choice between
one of the several places where the cases are pending. No such
principle is extractable from any of the precedents cited before
us; it does not follow from a reading of the provisions of Section
127 of the Act. Therefore, even if the notice in question
erroneously mentions the pendency of a case in Meerut, since
the decision to transfer it there is in large measure influenced
by the convenience of the Petitioners, it becomes impervious to
challenge. Ms. Bansal states that while there may be senior
officers available at Ghaziabad, the officer concerned is posted
at Meerut and not at Ghaziabad. A perusal of the decisions itself
make it abundantly clear that several cities to which the cases
could be considered in Uttar Pradesh, such as Agra, Lucknow,
Kanpur etc. were considered, Meerut is undoubtedly of closest
proximity both to Delhi as well as to the Noida and hence the
impugned decision is neither malafide nor arbitrary.
13. Given all the venues available with the Respondents,
Meerut is the most convenient for the Petitioners. In the light of
these facts, we are unable to be persuaded that the decision to
transfer the cases to Meerut suffers from capriciousness,
arbitrariness or malafides.
14. The Petitions lack merit and are dismissed. Pending
applications also stand dismissed. There shall be no order as to
costs.
( VIKRAMAJIT SEN )
JUDGE
May 27th, 2009 ( RAJIV SHAKDHER )
tp JUDGE
