Chhattisgarh Distilleries ... vs Union Of India
2022 Latest Caselaw 4254 MP

                               1                       WP-6610-2022




IN THE HIGH COURT OF MADHYA PRADESH AT JABALPUR
                          BEFORE
          HON'BLE SHRI JUSTICE SHEEL NAGU
                                   &
    HON'BLE SHRI JUSTICE MANINDER SINGH BHATTI
                              th
                  ON THE 28        OF MARCH, 2022


             WRIT PETITION No. 6610 of 2022



      Between:-

      CHHATTISGARH DISTILLERIES LIMITED
      HAVING CIN NO. U15520WB1988PLCO45554
      REGISTERED    OFFICE AT     MCLEOD
      HOUSE, 1ST FLOOR, 3, NETAJI SUBHAS
      ROAD, KOLKATA, WEST BENGAL-700001
      AND ITS CORPORATE OFFICE AT
      VILLAGE KHAPRI, KUMHARI, DISTRICT
      DURG,   CHHATTISGARH-490042     AND
      HAVING   PAN    AAACS5073L   ACTING
      THROUGH MR. ACHINT KUMAR S/O
      MOTILAL, A/A 43 YEARS, R/O 4/39, 1ST
      FLOOR, SARSWATI BUILDING GRP LINE
      SANDEEP GAS AGENCY KACHGHAR
      (MADHYA PRADESH)

                                                    .....PETITIONER

      (BY SHRI AJAY VOHRA - SENIOR ADVOCATE WITH SHRI
      AKSHAY PAWAR - ADVOCATE AND SHRI PRAVEEN
      SURANGE, ADVOCATE )

      AND
                                           2                                  WP-6610-2022




       1.      UNION     OF  INDIA THROUGH   ITS
               SECRETARY, DEPARTMENT OF REVENUE,
               MINISTRY OF FINANCE, GOVERNMENT
               OF INDIA, NEW DELHI

       2.      PRINCIPAL COMMISSIONER OF INCOME
               TAX (CENTRAL), BHOPAL AAYAKAR
               BHAWAN, 48 ARERA HILLS, BHOPAL
               (MADHYA PRADESH)

       3.      DEPUTY COMMISSIONER OF INCOME
               TAX (C)-1, AAYAKAR BHAWAN, CIVIL
               LINES, RAIPUR (CHHATTISGARH)


                                                                      ....RESPONDENTS

       (SHRI SANJAY LAL - ADVOCATE FOR RESPONDENTS NO.2 & 3)
-------------------------------------------------------------------------------------------

       This petition coming on for admission this day, JUSTICE SHEEL
NAGU passed the following:

                                        ORDER

The instant petition invoking writ jurisdiction of this Court under Article 226 of the Constitution of India assails the order dated 11.03.2022 of respondent No.2 passed u/S.127 of the Income Tax Act, 1961 ('IT ACT' for brevity) transferring the assessment proceedings pending against the petitioner u/S. 147 of the IT Act from Central Circle-1, Raipur to Central Circle - 08, New Delhi.

2. Learned counsel for rival parties are heard on the question of admission and also final disposal.

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3. Learned senior counsel for petitioner in support of his contentions that an order u/S.127(1) of the IT Act does not contain cogent and self-explanatory reasons, relies upon judgments in Ajantha Industries and Others Vs. Central Board of Direct Taxes, New Delhi and others, (1976) 1 SCC 1001; Divesh Prakashchand Jain Vs. Principal Commissioner of Income Tax [2022] 134 Taxmann.com 93 (Bombay); MRL Postnet Private Limited Vs. Principal Commissioner of Income Tax, [2019] 416 ITR 407; Hindustan M-I Swaco Ltd. Vs. Principal Commissioner of Income Tax, Vadodara [2016] 241 Taxman 239 (Gujrat); Sunisha Impex P. Ltd. Vs. Commissioner of Income - Tax and others,, 2014 SCC OnLine Bom 4737; M/s Zodiac Developers Pvt. Ltd. Vs. Principal Commissioner of Income Tax -8, Mumbai, 2016 SCC OnLine Bom 8011; and Dr. Ashok Vs. Commissioner of Income-tax-I, [2010] 190 Taxman 19 (Madhya Pradesh). It is further submitted that the power of transfer cannot be exercised if there is no financial nexus between the assessee and the searched party, for which reliance is placed upon judgments in RSG Foods (P.) Ltd. Vs. Commissioner of Income-tax, Bathinda, [2015] 61 taxmann.com 53 (Punjab & Haryana); and Anuben Lalabhai Bharwad Vs. Principal Commissioner of Income-tax-3, [2016] 72 taxmann.com 178 (Gujarat). It is further submitted that transfer of a case from one area to another on the pretext of centralization and co-ordinated investigation cannot take place u/S. 127, for which reliance is placed upon judgments in ATS Promoters & Builders (P.) Ltd. Vs. Chief Commissioner of Income-tax, Delhi (1), New Delhi, [2009] 179 Taxman 41 (Delhi); Saptagiri Enterprises Vs. Commissioner of Income-tax, [1991] 189 ITR 705 (AP); Global Energy 4 WP-6610-2022

(P.) Ltd. Vs. Commissioner of Income-tax, [2013] 215 Taxman 224 (Bombay); Anil Kumar Kothari Vs. Union of India, [2010] 192 Taxman 23 (Gauhati); and Lords Distillery Ltd. Vs. Commissioner of Income-tax, [2007] 294 ITR 147 (Calcutta). Lastly, it is submitted that affording of reasonable opportunity is a sine qua non for exercise of power of transfer u/S.127 of the IT Act, for which reliance is placed upon judgment in Virbhadra Singh Vs. Commissioner of Income-tax, [2015] 60 taxmann.com 269 (Himachal Pradesh).

4. On the other hand, learned counsel for the Revenue relies upon judgments in M/S MRL POSNET PRIVATE LIMITED (REP. BY ITS CHIEF FINANCIAL OFFICER MR. B. SUNDAR) Vs. PRINCIPAL COMMISSIONER OF INCOME TAX AND ANOTHER, 314 CTR 756 (MAD); SAMEER LEASING CO. LTD. Vs. CHAIRMAN, CENTRAL BOARD OF DIRECT TAXES & ORS., 185 ITR 129; DEV WINES SALES CORPORATION Vs PRINCIPAL COMMISSIONER OF INCOME TAX, 431 ITR 619; SIDH GOPAL GAJANAND & ORS Vs. INCOME TAX OFFICER & ORS, 73 ITR 226; ADVANTAGE STRATEGIC CONSULTING PRIVATE LTD. Vs. PRINCIPAL COMMISSIONER OF INCOME TAX & ANOTHER, 400 ITR 405 (MAD); CHARAN PAL SINGH Vs. COMMISSIONER OF INCOME TAX & ANR., 307 ITR 132 (P&H); SHREE RAM VESSEL SCRAP (P) LTD Vs. COMMISSIONER OF INCOME TAX, 366 CTR 274 (Guj); and ADITYA TRIPATHI Vs. PRINCIPAL COMMISSIONER OF INCOME TAX decided on 21.02.2022 in W.P. No.2010/2022 of this Court, to contend that the impugned order is a speaking one since it contains sufficient and 5 WP-6610-2022

cogent reasons for transfer of the case from Raipur to Delhi. It is further submitted that a bare perusal of the impugned order reveals that on carrying out search and seizure u/S. 132 of the IT Act at business and residential premises of three groups based in Raipur i.e. Bhatia Group, Tuteja Group and Dhand Group and related entities on 27.02.2020 documents were found which suggested that the petitioner-company is involved in payment of unexplained money running into multiple crores to Shri Anwar Dhebar, Pappu Bansal, Vikas Aggarwal, who are related to liquor business in the State of Chhattisgarh. The reasons in the impugned order further reveal that Shri Navin Kedia, the decision maker of the petitioner-company was also confronted with the said findings in the post-search investigation. It is further mentioned in the impugned order that critical evidences relating to payment of commission and related persons have been centralized with CC-08, Delhi and, therefore, to ensure a coordinated approach in assessment, the PAN of the petitioner should be centralized in Delhi. The impugned order has further taken into account the ground of inconvenience raised by the petitioner and hence dispelled the same by assigning reason that replies can be filed through online mode and thus the question of physical inconvenience is obviated. At the end, the impugned order raises the cause of serving public interest of coordinated, meaningful and joint assessment in all related cases.

5. After having heard learned counsel for rival parties, this Court is not impressed with the contentions of the petitioner, for the reasons infra.

(i) The relevant provision of Section 127 of the IT Act is founded upon the principle of public interest and object of facilitating an expeditious, 6 WP-6610-2022

uninterrupted, fair and impartial search and investigation by the Revenue.

(ii) The discretion available to the competent authority u/S. 127 of the IT Act is wide and is circumscribed by three aspects, which are as follows:

(a) Affording of reasonable opportunity of being heard to the assessee before deciding to transfer a case.

(b) Recording of reasons for the intended transfer of case.

(c) Passing of order of transfer by higher competent authority in cases where the place from which the case is being transferred and the place to which the case is being tranferred are not situated within the territorial jurisdiction of the same competent authority.

6. The sweep and scope of the power u/S. 127 of the IT Act being wide is also evident from the expression used in sub-section (4) of Section 127 i.e. "..... at any stage of the proceedings.....". Meaning thereby that the transfer can take place at any stage of the proceedings in the case sought to be transferred. The width of jurisdiction u/S. 127 of the IT Act is further revealed by absence of any express stipulation prescribing reasons for transferring a particular case. As such, reasons for transfer are left to the wisdom of the competent authority. The legislature by not making the provision of Section 127 exhaustive in nature has given a clear indication that the object behind the provision is to ensure collection of income tax and prevent tax evasion, which is the ultimate object behind the IT Act.

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6.1    As such the test of the validity of an order passed u/S. 127 is as to

whether the larger public interest and the object behind the IT Act is served or not.

7. When the impugned order of transfer is tested on the anvil of the aforesaid interpretation and object behind u/S. 127 of the IT Act, it is seen that adequate and sufficient reasons (supra) which appear to be cogent are assigned while taking the impugned decision. The principles of natural justice were duly complied with by issuance of show cause notice on 04.03.2022 and taking into account the reply filed by the petitioner to the same before passing the impugned order.

8. In this view of the matter, there does not seem to be any jurisdictional lacuna in the order assailed.

9. Moreso, this Court recently on 21.02.2022 has taken a similar view in favour of the Revenue in a case challenging an order of transfer u/S. 127 of the IT Act.

10. The decisions cited by the learned senior counsel for petitioner turn on their own facts. The decisions pertaining to existence of financial nexus between the assessee-petitioner and the search party as a pre-requisite for exercise of power u/S. 127 of the IT Act do not assist the petitioner as the impugned order herein clearly reveals that incriminating documents were found in the search and seizure of the premises of Bhatia Group, Tuteja Group and Dhand Group suggesting that the petitioner-company was involved in payment of unexplained money running into multiple crores to certain persons in the State of Chhattisgarh. Even if financial nexus is not palpable between the petitioner and the searched party, that by itself cannot take away the 8 WP-6610-2022

right of the Revenue to exercise its wide and sweeping powers u/S. 127 of transferring a case in public interest i.e. for effective and expeditious completion of search, seizure and other operations. of premises. The citations relied upon by the petitioner relating to reasons not being cogent also are not relevant as they turn on their own facts. The impugned order herein clearly elicits cogent reasons which no man of ordinary prudence can categorize as irrelevant or extraneous. Moreso, the sufficiency and adequacy of the reasons assigned for transferring a case, cannot be gone into provided such reasons are cogent, based on relevant consideration and not motivated by malice. A bare perusal of reasons assigned in impugned order indicates that they are based on reasonable consideration which has nexus with the ultimate object of public interest sought to be achieved.

11. In view of above discussion, this Court has no manner of doubt that the order impugned herein of transferring the case of the petitioner from Raipur to Delhi cannot be found fault with in limited writ jurisdiction.

12. Accordingly, writ petition stands dismissed, sans cost.

            (SHEEL NAGU)                                  (MANINDER S. BHATTI )
              JUDGE                                             JUDGE
DV

Digitally signed by
DINESH VERMA
Date: 2022.03.31
14:11:45 +05'30'