ORDER
1. The petitioner prays for the issue of a writ of certiorari calling for the records comprised in the proceedings of the first respondent dated 14-10-1997 in Order No. 66/III/97-98 (1127/III/Judn./97-98) and quashing the same.
2. Heard the learned counsel for the petitioner and the learned senior counsel for the respondents. With the consent of either side, the writ petition itself was taken up for final disposal.
3. No counter has been filed by the respondents, as there is no factual dispute and the counsels for either side confined themselves to the legal contentions alone.
4. On the earlier occasion, the petitioner filed W.P. No. 9731 of 1997 on the file of this Court to call for and quash the order of transfer dated 10-6-1997 passed by the first respondent. This Court, by order dated 11-9-1997, allowed the writ petition and quashed the impugned proceedings dated 10-6-1997 and directed the respondents to pass fresh orders in terms of section 127 of the Income-tax Act, 1961 (‘the Act’) by complying with the requirements of the said provision. Further, the earlier order of transfer was quashed by this Court following the judgment of the Supreme Court in Ajanda Industries v. CBDT AIR 1976 SC 457 and Vijayasanthi Investments (P.) Ltd. v. Chief CIT [1991] 187 ITR 405/56 Taxman 190 (AP), as in the show-cause notice, no reasons have been set out for the transfer, no reasons have been communicated to the petitioner and there has been violation of the principles of natural justice as well as the mandatory requirements of sub-section (2) of section 127.
5. Subsequently, the first respondent issued a notice under section 127(1), read with section 127(2)(a) on 22-9-1997 proposing to transfer the case of the petitioner from the file of Assistant Commissioner, City Circle VII (Div.), Chennai, to the file of the Assistant Commissioner, Central Circle VIII, New Delhi, for the three reasons detailed in the said notice and the petitioner had been called upon to state its objections.
6. The petitioner was also called upon to attend the hearing on 30-9-1997 before the first respondent. On 10-10-1997, the petitioner submitted its objections in detail. At the request of the petitioner, the hearing was adjourned to 13-10-1997 and permission to inspect the file was also granted by the first respondent. The file was inspected by the petitioner’s authorised representative on 7-10-1997.
7. The first respondent had listed the matter for 13-10-1997 for affording personal hearing to the petitioner, but the petitioner had not availed the said opportunity. Instead, the petitioner had submitted its objections dated 10-10-1997. The objections submitted by the petitioner had received elaborate consideration in the hands of the first respondent and the said objections have been over-ruled. The first respondent by the impugned proceedings dated 14-10-1997 transferred the petitioner’s file to the file of the Assistant Commissioner, Central Circle VIII, New Delhi.
8. Being aggrieved, the present writ petition has been filed.
9. Mr. Mohan Parasaran, the learned counsel for the petitioner, while realising the legal position and while admitting that it is the subjective satisfaction of the first respondent, did not address arguments on merits. It is to be pointed out that this Court is not exercising appellate jurisdiction with respect to the impugned proceedings passed by the first respondent dated 14-10-1997 but it could only exercise power of judicial review. On merits, this Court will not at all be justified in interfering with the orders passed by the first respondent, as it is the subjective satisfaction of the first respondent which matters, and with respect to the conclusions arrived at by the first respondent, unless reasons are perverse, or arbitrary or suffer from an error apparent on the face of the record, this Court will not be justified in interfering with the impugned proceedings passed by the first respondent after careful consideration.
10. On merits, the learned counsel for the petitioner rightly accepted that it is the subjective satisfaction of the first respondent, who is the transferring authority and this Court further holds that no case has been made out in this respect. The learned counsel for the petitioner, however, contended that the Commissioner, the first respondent herein, is not the competent authority, but it is the Chief Commissioner, who could pass orders.
11. In this respect, it is relevant to quote sub-section (2)(a) of section 127, which reads thus :
“(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 Director General or Chief Commissioner or Commissioner, –
(a) where the Directors General or Chief Commissioners or Commissioners to whom such Assessing Officers are subordinate are in agreement, then the Director General or Chief 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;”
12. The above statutory provision enables either the Director General or Chief Commissioner or Commissioner to whom such Assessing Officers are subordinate to order transfer and if the said transferring authorities are in agreement, then, either the Director General or Chief Commissioner or Commissioner from whose jurisdiction the case is to be transferred, after affording assessee a reasonable opportunity of being heard, could order transfer for reasons to be recorded. Thus, all the three authorities are competent and the present impugned proceedings have been passed by the Commissioner.
13. In terms of section 127(2)(a), the Commissioner, the first respondent herein, is competent to order transfer. The contentions raised by the learned counsel for the petitioner cannot be sustained.
14. The learned counsel for the petitioner relied upon the judgment in Rajasthan Mining & Engg. (P.) Ltd. v. CIT, where a Single Judge of the Rajasthan High Court had occasion to consider an order of transfer and quashed the order of transfer as invalid, as no reasons have been recorded. One of the contentions that has been raised before the Rajasthan High Court is that being the Commissioner, Jaipur, he has no power to transfer the case to Cuttack and that he could only transfer the cases, if permissible under law, to the file of any ITO subordinate to him in his area and not to the Commissioner. It was further contended in the said case that such a transfer could be ordered only by the Director General who is in-charge of all the Income-tax Departments in the country. But the learned Judge just made a reference to the contentions raised by the learned counsel for the petitioner therein and had not decided the said point, as there were other grounds on which the order of transfer had been quashed. In the said decision, this aspect had not been decided as the learned Judge had decided the writ petition on the ground that the impugned order did not contain reasons. However, this Court is of the considered view that the Director General, Chief Commissioner or Commissioner have been conferred with concurrent jurisdiction to order transfer as in the present case.
15. The order of transfer is not a stigma nor could it be considered as if it is penal in nature. The contention of the learned counsel for the petitioner that it is only the Director General who could only order transfer cannot be sustained.
16. The learned counsel for the petitioner submitted that after the Commissioner agreeing with the proposal for transfer, the present notice has been issued and, therefore, the Commissioner had already made up his mind and thereafter issued a notice, which is only a formality and it, would be in violation of the principles of natural justice. It is further submitted by the learned counsel for the petitioner that having agreed to the proposal or the move of the Commissioner, the first respondent should not have decided the matter but it should have been decided by some other authority. This contention also cannot be sustained. When the second respondent, the Commissioner, Central Circle, New Delhi, sends the proposal, it is open to the first respondent to agree and if the first respondent concurs with the second respondent, thereafter, a show-cause notice could be issued in terms of the said provision.
17. Objection, if any, submitted to the show-cause notice is considered by the first respondent and orders are being passed by the first respondent. Where the two Commissioners are not in agreement, the order transferring the case has to be passed by the Board or such Director General as the Board may, by notification, authorise in this behalf, which would fall under clause (b) of sub-section (2) of section 127.
18. To a case falling under sub-section (3) of section 127, the procedure prescribed under sub-section (1) and sub-section (2) need not be followed as it is within the same city or jurisdiction or from one Assessing Officer to other Assessing Officer in the same city or locality or place. Sub-section (2) of section 127 prescribes the procedure and the said procedure has been followed in the present case. Merely because the Commissioner, the first respondent, had concurred with the second respondent, it cannot be assumed that there has been violation of the principles of natural justice or the first respondent, who had issued the show-cause notice, is disqualified to decide the question of transfer. If such a contention is to be accepted, then every authority who issues show-cause notice would be disqualified or would be disabled from passing orders after considering and hearing objections. Such a proposition is far-fetched and cannot be appreciated.
19. The order of transfer is discretionary order and for reasons recorded, the authority competent could order transfer of the case. In other words, at the time when the first respondent – Commissioner had agreed with the proposal, he had prima facie concurred with the second respondent Commissioner for the transfer of the case and thereafter issued a notice. After considering the objections, it is still open to the first respondent to sustain the objections raised and decline to transfer the case. Merely because the first respondent – Commissioner had come to a prima facie conclusion or concurred with the second respondent, it cannot be held that he has prejudged the issue and he should not have passed an order. Such a contention cannot be sustained and it is rejected. Only when the first respondent – Commissioner agrees or arrives at a consensus with the second respondent, issue of show-cause notice arises and it is only a prima facie view and it is not as if the first respondent after considering the objections, cannot sustain the objections.
20. The learned counsel for the petitioner next contended faintly that the transfer of a case for coordinated investigation cannot be a valid ground and on this ground, the impugned proceeding is liable to be quashed. Before considering the contentions, this Court has to necessarily refer to the portions of the order which necessitated the transfer of the petitioner’s case. A search and seizure operation was conducted under section 131 of the Act in the petitioner’s premises on 6-11-1996 as part of larger operation conducted at the premises of Shri S. Krishna Kumar, Ex-Minister and his business associates. During search and seizure, documents seized were instruments of partnership deeds executed at Madras by partners of the petitioner-firm including Smt. L. Sridevi Pillai, mother-in-law of Ex-Minister Shri S. Krishnakumar and Mr. M. A. Karim. The partnership-deed dated 20-9-1994 between the said Smt. L. Sridevi Pillai, Mr. Adarsh Kumar, Mr. M. A. Karim and Sinju A. Karim was also seized and the said partnership-deed was executed to carry on the business of trade and export of goods under the name and style of General Exporters at Madras. Mr. Adarsh Kumar is the son of the said Ex-Minister S. Krishnakumar. The said Smt. Sridevi Pillai and Mr. Adarsh Kumar are the partners in the firm General Exporters, which is already assessed in the Central Circle VIII, New Delhi.
21. According to the first partnership deed dated 20-9-1994, the said Mrs. Sridevi Pillai and Mr. Adarsh Kumar had a profit-sharing ratio of 40 per cent in the said firm and the balance being shared by other partners, while in the second instrument of partnership dated 5-10-1994, the said Sridevi Pillai had a profit-sharing ratio of 80 per cent. Though there is some variance in the profit-sharing ratio, the fact remains that the said Sridevi Pillai and Mr. Adarsh Kumar, respectively, mother-in-law and son of Shri S. Krishnakumar Ex-Minister, have substantial share in the profit-sharing ratio. The said two persons were being assessed at New Delhi.
22. As per the materials recovered during the search and seizure, which are available with the second respondent, the second respondent applied his mind and came to the conclusion that it is essential to have coordinated investigation of the said group of cases. The search and seizure in the premises of Shri S. Krishnakumar, Ex-Minister, revealed that the said two persons are close relatives and business associates and the recovery of documents necessitated coordinated investigation by the department and this, consequently, necessitated the transfer of the petitioner’s case also to the Assessing Officer at New Delhi.
23. Taking into consideration the above facts, the second respondent had apprised the first respondent of the necessity of transfer of the petitioner’s case from Madras to New Delhi and the first respondent, prima facie, concurred with the proposal of the second respondent, issued the show-cause notice and thereafter passed the orders of transfer, after affording sufficient opportunity and after recording reasons for the transfer.
24. The main objection that has been raised by the petitioner being that instead of transferring the case to Delhi, the case at Delhi may be transferred to Madras, which aspect of the matter has been considered by the first respondent. So also the objection that the petitioner would be put to irreparable loss has also been considered. The first respondent has held thus :
“This is a clear case where the Commissioner of Income-tax, Central II, New Delhi, and the Commissioner of Income-tax, Tamil Nadu III (Myself) are in clear agreement that the case is to be assessed along with the other connected cases by the Assistant Commissioner of Income-tax, Central Circle VIII, New Delhi. There is clear connection between the assessee-firm and close relatives of Shri S. Krishnakumar who are being assessed at Delhi. The assessee’s objection that the file cannot be transferred in order to facilitate coordinated investigation and that this itself is an irrelevant circumstance, is also not accepted and I am supported by the Court decisions already cited in paragraphs 15, 16, 17, 18, 19 and 20. Again the assessee’s objection that he could be put to irreparable loss and inconvenience if he is made to travel to Delhi, is not accepted as in any case, the partners do not reside in Madras. Even in their writ petition filed before the High Court of Madras in W.P. No. 9731/97 in June, 1997. Shri M. A. Karim, Managing Partner, has stated that he is residing at Duison. It was also found that nobody is residing at the business address given in No. 3, 3rd Cross Street, Sylvan Lodge Colony, Chennai-10 when notices were sent for service and the Income-tax Inspector had to go and serve it by affixure on the address. He has stated that though there was a signboard by name of General Exporters, there was no sign of any business activity being carried out in that premises. The assessee’s auditors Shri. B. B. Rao & Co. have also stated in their letter dated 23-9-1997 that ‘there is no business in General Exporters as at present’. Therefore, no inconvenience will be caused to the assessee by transferring the file from Madras to Delhi. In any case, the High Court decisions already cited also make it very clear that inconvenience and entailment of extra expenditure to the assessee will not constitute a valid ground for not transferring the case. Therefore, after examining the assessee’s petitions. I do not accept the same. I am of the opinion that in order to have coordinated investigation in this group of cases, the assessee-firm is to be transferred to Assistant Commissioner of Income-tax, Central Circle VIII, New Delhi.”
25. On a consideration of the above reasons, set out in paragraph 22 of the impugned proceedings, this Court is of the firm view that there are more than sufficient reasons which warranted the transfer of the petitioner’s case from Madras to New Delhi.
26. In Maheshwari Lime Works v. CIT [1984] 147 ITR 804/[1985] 21 Taxman 214, identical objection was considered by a Division Bench of the Madhya Pradesh High Court. The Division Bench, while rejecting the identical contention, held thus :
“The objection of the petitioners that they have to incur a lot of expenditure in travelling to and from Katni to Jabalpur and back has been duly considered by the Commissioner and the ITO, Special Investigation Circle II, Jabalpur, has been directed to take hearing of these cases as far as possible at Katni : Shri Sanghi, learned counsel for the Commissioner, assured that for the purpose of disposing of these cases, the petitioners would not be required to come to Jabalpur as the ITO, Special Investigation Circle II, Jabalpur, will be camping at Katni. The petitioners have no legal right to insist that their assessment cases be tried by a particular officer, simply because he is a senior officer. The Commissioner is the best judge as to who should decide these cases. It appears that there was a raid in the premises of the petitioners on May 12, 1981. The search and seizures were challenged in a writ petition in this Court, which was dismissed, although the account books were ordered to be returned. On scrutiny it has been found that several parties were concerned with the transactions entered into with the petitioners. Under the circumstances, the Commissioner was justified in ordering that the cases be handled by the ITO, Special Investigation Circle II, Jabalpur, who generally deals with such cases. It has also been mentioned that because of the routine cases, it may not be possible for the ITO, Katni, to complete a thorough scrutiny and detailed investigation before completing the assessment.” (p. 806)
27. In Bhatia Minerals v. CIT [1993] 200 ITR 591, a Division Bench of the Allahabad High Court had occasion to consider as to whether the reason to have a coordinated investigation is a valid ground for transfer and in that context, it has been held thus :
“The petitioner’s counsel strongly urged that the cases should not be transferred to Meerut but should remain at Dehradun for, otherwise, the petitioner will face a lot of hardship. We are not inclined to accept this submission. The allegations in the counter-affidavit indicate that threats were given to the Income-tax Officers and difficulties were created in their official work. It becomes, thus, evident that an Income-tax Officer at Dehradun may not be able to work properly and may get threats in future also. It is, hence, best if the assessment work of the group is done at a place away from Dehradun.
Learned counsel for the petitioner placed before us the decisions of the Andhra Pradesh High Court reported in Vijayasanthi Investments (P.) Ltd. v. Chief CIT [1991] 187 ITR 405 and Saptagiri Enterprises v. CIT [1991] 189 ITR 705 in support of his contention that the expression ‘coordinated investigation’ is vague, but in view of the decision of our Court in Peacock Chemicals (P.) Ltd. v. CIT , with which we respectfully agree, we are not inclined to follow the decisions of the Andhra Pradesh High Court. With regard to the decision of the Madhya Pradesh High Court in Sagarmal Spg. & Wvg. Mills Ltd. v. CBDT [1972] 83 ITR 130, it may only be mentioned that, subsequently, the Madhya Pradesh High Court has taken a contrary view in Maheshwari Lime Works v. CIT [1984] 147 ITR 801. The Delhi High Court (sic) has also taken a view which is in consonance with the view of our Court.” (p. 593)
28. In Sameer Leasing Co. Ltd. v. Chairman, CBDT [1990] 185 ITR 129/53 Taxman 265, a Division Bench of Delhi High Court held thus :
“… The power under section 127 of the Act is to be exercised in public interest and in the interest of administration of the Act. In order to safeguard the interest of the assessee, an opportunity of being heard is granted and the section further requires reasons to be stated for transferring a case. The decision to transfer can be taken, in a case like the present, only if there is a concurrence between the two Commissioners of income-tax who may be concerned with the transfer. When such high functionaries agree to the transfer and a show-cause notice is issued and reasons are contained in the order of transfer and those reasons appear to be germane to the transfer and show that the transfer has been made in the public interest and for a proper adjudication under the Act, we do not see how the impugned provision can be said to be ultra vires.” (p. 133)
29. In Jharkhand Mukti Morcha v. CIT [1997] 225 ITR 284/95 Taxman 132, Ranchi Bench of Patna High Court after referring to Sameer Leasing Co. Ltd.’s case (supra), V.K. Steel Industries (P.) Ltd. v. Asstt. CIT and Vijayasanthi Investments (P.) Ltd.’s case (supra) preferred to follow the decision reported in Assam Surgical Co. v. CBDT [1984] 145 ITR 400 (Gauhati) and Bhatia Minerals’ case (supra) as against the view of the Andhra Pradesh High Court in Vijayasanthi Investments (P.) Ltd.’s case (supra), and further held thus :
“Apart from the Delhi and Allahabad High Courts, the Gauhati High Court in the case of Assam Surgical Co. v. CBDT [1984] 145 ITR 400, the Rajasthan High Court in the case of Shri Rishikul Vidyapeeth v. Union of India [1982] 136 ITR 139 and the Calcutta High Court in the case of Dwarka Prosad Agarwalla v. Director of Inspection [1982] 137 ITR 456 have held that facility of investigation or coordinated investigation is a substantial ground for transfer from one officer to another officer.
As noticed above, the very object of transfer is to achieve the object of the Act. If coordinated investigation is necessary for the purpose of proper assessment, prevention of evasion of tax, collection of tax and other relevant matters, then the proper and coordinated investigation is a good ground for transfer of the case. It cannot be laid down as a proposition of law that the said ground cannot be a valid ground for transfer. In a given case, the same may not be a good ground for transfer, on being noticed that the coordinated investigation in no way will help to achieve the object of the Act. No doubt, transfer of a case from the place where the assessee has its place of residence of business to another place causes inconvenience but if it is necessary in the public interest, then the transfer on the ground of proper and coordinated investigation cannot be held to be impermissible in law. I find myself in disagreement with the view that coordinated or centralised investigation will not be a ground of transfer under section 127 of the Act. I am in agreement with the view taken by the different High Courts, as mentioned above, holding that proper and coordinated investigation would be relevant ground to exercise the power under section 127 of the Act.” (p. 295)
30. This Court is in respectful agreement with the view taken in Assam Surgical Co.’s case (supra) and Sameer Leasing Co. Ltd.’s case (supra) and on the facts of the case, this Court holds that the first respondent is well-founded and well-justified in considering the request of the second respondent to transfer the petitioner’s case to Delhi in order to have coordinated investigation along with Shri S. Krishnakumar Group of Cases. Further, there is every justification for the first respondent to order transfer of the petitioner’s case to New Delhi and no interference is called for with respect to the impugned proceedings.
31. The learned counsel for the petitioner had not placed any Division Bench judgment of this Court taking a contrary view by following the view of the Andhra Pradesh High Court in Vijayasanthi Investments (P.) Ltd.’s case (supra).
32. The writ petition is dismissed, with cost of Rs. 3,500. Consequently, W.M.P. No. 27432 of 1997 is also dismissed.