JUDGMENT
J.M. Malik, J.
Page 2019
1. The short question that falls for consideration in this writ petition relates to the validity of an order by which the income tax assessment proceedings qua the petitioner have been transferred from Delhi to Chandigarh. The question precisely is whether the transfer of the proceedings to Chandigarh is bad even when the petitioner’s corporate office is situated in Chandigarh and all its manufacturing units are situated in the States of Punjab, Haryana, Himachal Pradesh and Jammu and Kashmir. The petitioner insists that no matter only one out of a total work force of 400 and odd employees is posted in Delhi, the assessments should have been allowed to continue in Delhi. The controversy arises in the following circumstances:
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2. The petitioner is a public limited company incorporated at Delhi having its Head Office at Delhi at 159, Bhagirath Palace, Chandni Chowk, Delhi. Its registered office is at 85, HPSIDC Industrial Estate Badi (HP), which is now in the process of being shifted back to Delhi vide special resolution dated 28th January, 2006 passed by the Board of Directors. The petitioner company used to file its income tax returns at Delhi from the assessment year 1993-1994. The tax audit reports were also filed in time with the Deputy Commissioner of Income Tax Circle 9 (1), New Delhi. Due to administrative reasons the registered office of the company was shifted to Badi, District Solan, Himachal Pradesh on 28th July, 2000. The petitioner is having its factories, offices at Himachal Pradesh, Delhi, Haryana, Punjab, Jammu and Kashmir, Chandigarh. It has corporate office only at Chandigarh. The petitioner has already assessed to tax at Delhi for the last 13 years and the jurisdiction has never been transferred to any other place.
3. According to the respondent the assessed had not filed its return either in Delhi or Chandigarh under Sections 133A of the Income Tax Act, 1961 (hereinafter referred to as the Act) on 30.11.2005 for assessment years 2004-2005 and 2005-2006, when admittedly time for filing voluntary return under Section 139 Clause (1) had expired on 31.10.2004 and 31.10.2005 respectively. As a matter of fact, a survey was conducted by the Income Tax Department in the premises of the petitioner at Chandigarh on 30.11.2005. Mr. Rajeev Goyal, Managing Director of the petitioner’s company, made the following statement.
The TDS returns of the petitioner are being filed at Panchkulan and the books of accounts are being maintained by the company at the office at Chandigarh. Approximately 400 employees are employed in the company, one employee is in Delhi office, one employee is in Mumbai and rest of the employees are at Chandigarh, Punchkula, Badi and Banus. The corporate office of company is at SCO No. 164-165, Sector 9-C, Chandigarh. Accounts are being maintained in this office and the entire business is being operated from Chandigarh office.
4. On a query made by Ms.Kalpana Kataria, Dy. Commissioner, who recorded the statement, he fully agreed that the proforma invoice No. SPL/05-113 (01) dated 07.10.2005 issued to Galena Quinmica and Pharmaceuticals Limited mentioned the address of the company as ‘Surya Pharmaceutical Limited, 164-165, Sector 9-C, Chandigarh’, and that the exports, internal sales as well as other business of the company is being run from Chandigarh office.
5. On 19th January, 2006, the petitioner was served with a show cause notice asking the petitioner company as to why its case should not be transferred from Delhi to Chandigarh. The petitioner raised the following objections on 2nd February, 2006.
a) The company is already in the process of shifting its registered office from Baddi, District Solan, Himachal Pradesh to Delhi and a lot of inconvenience would be caused to it, in case it was asked to submit to the jurisdiction of the Assessing Officer at Chandigarh, from Delhi.
b) The Head Office of the company being at Delhi and the Registered Office being at Baddi, District Solan in Himachal Pradesh, the jurisdiction Page 2021 of the Assessing Officer to assess would either be at Delhi or at Baddi, District Solan in Himachal Pradesh, but in no case would it lie at Chandigarh.
c) The company has factories and Corporate Offices at various places spread over Punjab and Haryana but the Head Office and the Registered Office is at Delhi and and Baddi, Distt.Solan only.
d) The company has been continuously assessed at Delhi since the assessment year 1993-94 till date, the tax audit report up to assessment year 2005-06 and returns of income have been filed at Delhi and therefore there was no justification/ cause to shift the assessments of the petitioner to any other place other than Delhi.
e) No business activities were being carried out from Chandigarh Office except that of coordination with business associates in India and Aboard and it was only a facilitating office.
f) The entire accounts department of the company was at Delhi and the tax consultants were also located at Delhi.
g) That apprehension was also expressed by the petitioner that they would be subjected to arbitrary and capricious assessments at the hands of the Assessing Officer at Chandigarh.
6. An order under Section 127 of the Act transferring the case of the petitioner to Dy. Commissioner of Income Tax, Circle-I (1), Chandigarh was passed by the Commissioner of Income Tax, Circle-3, New Delhi, effective from 10.02.2006. The sole reason given for the transfer reads, ‘administrative convenience’.
7. It is alleged that the petitioner, who was directly affected by the said transfer, was not communicated with a copy of the impugned order. The same was supplied to it by DCIT, Circle-I (1), Chandigarh only on 23.02.2006. On 22.01.2006 the petitioner received a letter from the Office of Dy. Commissioner of Income Tax, Circle-I (1), Chandigarh asking them to furnish details as asked for by questionnaire dated 24.08.2005 by the Assessing Officer at Delhi and produce books of accounts and bank pass-books for the year. The petitioner was also warned that it was a time barring case, as on 31.03.2006 no adjournment would be granted and in case of non-compliance the case could be decided on the basis of material available on record. The petitioner gave written reply on 28.02.2006, wherein they displayed surprise due to transfer of jurisdiction.
8. The petitioner has enumerated the following grounds, in addition to above mentioned grounds. No detailed and proper reasons were given in the transfer order. It is a non-speaking order and had been passed without application of mind because it does not narrate the submissions made by the petitioner. The High Court of Madras in the case of General Exporter v. CIT 234 ITR 860 has held that Section 127 of the Act makes it abundantly clear that a notice should be given by the transferring authority, such notice should contain reasons for the proposed transfer, opportunity of hearing should be granted to the petitioner and the orders should be communicated by the transferring authority disclosing the reasons for transfer.
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9. It is further averred that the survey was conducted in an illegal manner. The statements of Sh. Rajiv Goyal, Managing Director and Sh. Rajan Thukral, Company Secretary, of the company were recorded after building immense pressure on them and they were forced to write/ admit that the registered office of the company had not changed from Delhi to Baddi, Himachal Pradesh, the affairs of the company are being carried out and controlled from corporate office of the company situated at Chandigarh and that in future the company shall file income tax returns at Chandigarh. The copies of the statements were not supplied to the petitioner. No incriminating document or material was found. After survey the officers of DCIT, Circle-I (1), Chandigarh started sending notices to further pressurise the petitioner-company. An affidavit sworn by Mr. Rajeev Goyal has also been filed with the writ and it is alleged that Commissioner of Income Tax III has pinned great importance with the statement of the Managing Director. As a matter of fact, Managing Director categorically stated that head office of the company has been at Delhi since its inception and the income tax returns have always been filed in Delhi. The Managing Director also stated that the office at Chandigarh was only a co- ordinating office and no manufacturing activities is carried out there. It is pointed out that transfer order cannot be passed on his statement.
10. The sole reason in the transfer order that it was passed due to administrative convenience, finds no place in the proposed reasons for the transfer of jurisdiction from Delhi to Chandigarh. The files were transferred to Chandigarh without giving any time or opportunity to the petitioner to make an appeal against that order. Immediately upon transfer the DCIT, Circle 1 (1), Chandigarh, issued notice for appearance to the petitioner in haste asking it to appear on 28.02.2006 with a clear threat that in the event of non-compliance no further opportunity shall be granted. The petitioner immediately sent its objections dated 15.12.2005 and again on 26.12.2005 informing the authority that the returns for income tax for assessment years 2004-2005 and 2005-2006 have already been filed with the Deputy Commissioner of Income Tax Circle 9 (1), New Delhi, who has jurisdiction of the case. It was also pointed out that jurisdiction could only be transferred by the Director General, Chief Commissioner or Commissioner to whom such assessing officer was subordinate and nobody else.
11. We have heard the counsel for the parties. The learned Counsel for the petitioner has advanced a three fold argument in order to assail the above said transfer order. He submitted that recording of reasons and communication of the order is mandatory. He has cited an authority reported in Ajantha Industries v. CBDT 102 ITR 281 (SC), wherein it was held; ‘We are clearly of opinion that the requirement of recording reasons under Section 127(1) is a mandatory direction under the law and non- communication thereof is not saved by showing that the reasons exist in the file although not communicated to the assessed.’
12. It was contended that this decision has been followed by this Court in cases, Takshila Educational Society v. Secy., CBDT 188 CTR 601 and Manoj Didwania v. Union of India and Ors. 167 ITR 177 (Del). The attention of the Page 2023 Court was also drawn towards other authorities by the Madras High Court in General Exporters v. CIT Supra, Kerala High Court in Benz Corporation v. ITO 232 ITR 807 and Andhra Pradesh High Court in Vijaya Santhi Investments 19/87 405. The learned Counsel for the petitioner also referred to another judgment in Mohammad Zafer v. UOI (1994) Supp.2 SCC 1, wherein it was held that ‘recording of reasons itself includes the duty to convey the reasons so recorded.’
13. The second limb of argument advanced by the learned Counsel for the petitioner was that there is violation of natural justice. In this context, attention of this Court was drawn towards an authority titled Aligarh Muslim University v. Mansoor Ali Khan, wherein it was observed that where natural justice is violated issue of writ may be a useless formality only where : a) no other conclusion is possible on admitted or indisputable facts, OR b) there is no real prejudice. The learned Counsel has also cited Ajantha Industries case (supra) and Union of India and Ors. v. E.G. Nambudiri .
14. It was also pointed out that procedural fairness is totally lacking because the statement of Managing Director which is the foundation for the transfer order was furnished only on 27th March, 2006, on the directions of this Court. It was submitted that the reasons for transfer were furnished for the first time in the counter affidavit filed on 24th March, 2006. No explanation is forthcoming as to why the reasons were not given or the order was not served on the petitioner. The counsel for the petitioner has referred to a decision in Ridge v. Baldwin (1963) 2 All ER 66.
15. The last submission made by the learned Counsel for the petitioner was that in Union of India v. H.P. Chotia , it was held that ‘reasons which need to be furnished in the order cannot be furnished by way of counter affidavit’.
19. After marshalling the evidence, We find that learned Counsel for the petitioner has raised copious objections merely for the sake of cavil. By no stretch of imagination, it can be said that no reason was mentioned in the transfer order. The above said authorities have no application to this case. The statement of Mr. Rajeev Goyal, Managing Director of the company is the main pillar, foundation on which the entire case rests, the heart of the problem. The revelations made by him clearly go to show that the entire business is run at Chandigarh. His statement is of of infinite importance. It is crystal clear that the case was transferred due to the statement made by Mr. Rajeev Goyal, keeping in view the convenience of the petitioner as well as that of the Page 2024 department. It hits the nail on the head. His statement itself goes to show why the case was transferred. Certain harsh realities cannot be glossed over. The statement made by him cannot be skimmed over.
20. It is regrettable that despite making a statement before a lady officer, Mr.Rajeev Goyal chose to file an affidavit before this Court that he was forced to make a statement under duress. Again he committed a glaring mistake by remaining silent for such a long time. His statement under his signature was recorded as back as on 30.11.2005. There is not even an iota of evidence, not even a whisper to the effect that immediately after recording of his statement, he took some steps to straighten up this problem. This is an admitted fact that he signed the statement with open eyes. His criticism of the statement comes out for the first time when this writ was filed. The silence on his part shows that the grievance is an afterthought. Why did he keep the facts under the hat’ Why and how a lady officer could force him to make a statement against his wishes’ The office of Income Tax Commissioner is a public office meant for everybody. Everybody can have access to that office. He could have raised a protest immediately before signing the statement or if he was forcibly made to sign it, he could have reported the matter immediately to the higher officers. It appears that he has no qualms in giving such a false affidavit before the High Court. This is a clear cut case of perjury. He has tried to pull the wool over the eyes of Law. However, since this matter involves only a transfer order simpliciter, therefore, we do not propose to take action against him. It is thus clear, specific and unequivocal that the reasons were mentioned by the transferring authority.
21. Besides the statement of Rajiv Goyal there are further factors which go to support this conclusion, viz., petitioner had obtained certificate of Export from Chandigarh. It had website wherein it only advertises its corporate office at Chandigarh and refers to no other office etc. Again the assessed did not co-operate during the year 2003-2004 and department had to levy the penalty under Section 271(1)(b) of the Act.
22. Transfer notice was given after the statement of Rajiv Goyal was recorded on 30.11.2005, on 19.01.2006. Board of Directors in their meeting held on 28th January, 2006 took the decision to shift back the registered office to Delhi from Himachal Pradesh in order to have better interactive facilities to interact with business houses in India and abroad’ Was it a deliberate attempt to thwart the proposed transfer proceedings’
23. Now I advert to the question of service of the transfer order. The records submitted by the petitioner itself goes to show that transfer order was passed on 10.02.2006. Copies were sent to various persons. Item No. 6 (Page 58 of the petition) is re-produced as hereunder :
The DCIT Circle 9 (1), New Delhi with the direction that the assessed may be informed about the change of jurisdiction immediately and transfer the case records to the officer mentioned at Serial No. 5 of above.
24. Thereafter, Ms. Kalpana Kataria, Dy. Commissioner Income Tax sent a letter dated 21.02.2006 to the petitioner (Annexure 9 appended with the petition), which goes to show that a copy of the order of Mr. Sailo, Page 2025 Commissioner of Income Tax dated 10.02.2006 was enclosed with the said letter. The relevant para is re-produced as under :
You are hereby informed that the Commissioner of Income Tax, Delhi-III, New Delhi vide this order passed under Section 127 of the Income Taxt Act, 1961 issued under No. CIT-III/Juris. Under Section 127/05/06/4048 dated 10.02.06 (copy enclosed) has transferred your case to this Circle. Therefore, the assessment proceedings pending in your case for the asst. year 2003-04 are to be completed by this Circle.
25. This fact is itself admitted by the petitioner himself in his writ petition in para No. 24. It appears that the petitioner is blowing hot and cold in the same breath. On the one hand, it admits that the copy of the letter issued by Ms. Kalapana Kataria, Dy. Commissioner of Income Tax was received by them vide her letter dated 23.02.2006. On the other hand, it is stated that reasons were furnished to him by way of counter affidavit dated 27th March, 2006.
26. The petitioners have not come to the Court with clean hands. They have tried to suppress the real facts. It is well said that the truth has the annoying habit of not staying suppressed for too long. For that reason, too the petitioner does not deserve any favor from this Court.
27. Last but not the least, we are of the considered view that there is no violation of natural justice. The petitioner was given a show cause notice, their objections were considered, they were heard, transfer order was passed, reason that due to administrative convenience the transfer was being made and it was communicated to the petitioner.
28. In Shri Rishikul Vidyapeeth v. Union of India (Raj.) it was held:
(i) that in response to the notice of the Board for the proposed transfer of their cases, the petitioners had submitted their objections in writing. Further, the petitioners were informed that they could appear personally before the Board on a particular date and there was nothing on the record to show why the petitioners could not appear before the Board on that day or whether they had asked for any other date for appearing before the Board. Moreover, the order of the Board stated that the transfer was effected to facilitate co- ordinated investigation along with other connected cases. Therefore, it could not be said that the reasons for the transfer had not been recorded in the order of transfer. The fact that in the order of the Board, the Board had not given any reasons for rejecting the submissions contained in the objections filed by the petitioners was of no consequence inasmuch as the submissions did not deal with or controvert the reasons that had been disclosed in the notice for the proposed transfer.
Therefore, the transfer of the cases of the petitioners from the ITO, Jaipur, to the ITO, Bombay, was valid.
29. This is clear that petitioner’s assumptions are all wet. Writ petition has no force and is hereby dismissed.