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Judgment
M.S. Sanklecha, J.—By this petition under Art. 226 of the Constitution of India, the petitioner seeks that the order dt. 27th Dec., 2012 passed by the CIT-8, Mumbai (respondent No. 1) be quashed and set aside. By the impugned order dt. 27th Dec., 2012, the respondent No. 1 in exercise of his powers under s. 127(2) of the IT Act, 1961 has transferred the petitioner''s case i.e. all pending proceedings under the Act w.e.f. 27th Dec, 2012 to Dy. CIT, New Delhi (respondent No. 3) from Asstt. CIT, Mumbai (respondent No. 2). 2. Briefly, the facts are that petitioner No. 1 admittedly belongs to the Sahara Group of companies. The petitioner No. 1 is engaged in the hospitality business owning and operating a hotel in the name and style of Sahara Star at Mumbai and also trading in petroleum products in Mumbai. Since 2003 onwards, the petitioner is being assessed to income tax at Mumbai.
On 12th Sept., 2011, the respondent No. 1 i.e. the CIT, Mumbai issued a notice to the petitioner, seeking its no objections to transfer the petitioner''s case i.e. pending proceedings under the Act to New Delhi.
Thereafter on 5th Jan., 2012, the CIT passed an order under s. 127(2) of the Act, transferring the assessment proceedings i.e. the petitioner''s case from Mumbai to Dy. CIT, Delhi, Central Circle 6, New Delhi i.e. respondent No. 3 w.e.f. 6th Jan., 2012. The above order dt. 5th Jan., 2012 was challenged by filing Writ Petn. No. 596 of 2012 in this Court. On 12th Sept., 2012, this Court by an order passed in Writ Petn. No. 596 of 2012, set aside the order of the CIT, Mumbai dt. 5th Jan.. 2012. as the same was passed without granting a personal hearing to the petitioners. The order dt. 12th Sept., 2012 of this Court directed the CIT to pass a fresh order after granting a personal hearing to the petitioner No. 1.
Consequent to the order of this Court, petitioner No. 1 on 17th Dec, 2013, attended a personal hearing granted by CIT and objected to the proposed transfer/centralisation of the petitioner''s case i.e., income tax proceedings from Mumbai to New Delhi. At the hearing, the petitioner pointed out that the reason for the proposed transfer was to have centralized assessment of the Sahara Group of companies in view of large-scale financial transactions and investments inter se between the petitioner and other companies belonging to the Sahara Group. The petitioner No. 1 pointed out that there were no large-scale financial transactions and investments of the assessee with other entities of the Sahara Group i.e. neither the petitioner No. 1 has invested large amounts with the companies in the Sahara Group or vice versa, save and except, some amount being invested by the petitioner No. 1 in mutual funds managed by an entity belonging to the Sahara Group. Further, it was pointed out that no loans were either taken or given by the petitioner No. 1 from/to various entities belonging to the Sahara Group of companies. Consequently, it was the petitioner No. l''s submission that the transfer of the petitioners'' assessment proceedings from Mumbai to New Delhi under s. 127(2) of the Act, was not warranted.
On 27th Dec, 2012, the CIT passed an order, transferring the petitioner No. l''s case from Asstt. CIT, Mumbai to Dy. CIT, New Delhi w.e.f. 27th Dec, 2012. Consequently, all pending assessments commencing with the asst. yr. 2010-11 stood transferred to New Delhi w.e.f. 27th Dec, 2012.
During the hearing before us, counsel for both the sides inform us that consequent to the impugned order dt. 27th Dec, 2012, the Dy. CIT, New Delhi has on 19th March, 2013 passed an assessment order under s. 143(3) of the Act for asst. yr. 2010-11. A copy of the order dt. 19th March, 2013 of the Dy. CIT, New Delhi was tendered across the Bar.
In the context of the above facts, Mr. Jehangir Mistry, learned senior counsel in support of the petition, submits as under:
(a) The impugned order dt. 27th Dec, 2012 is in breach of natural justice as the order was passed without dealing with and considering submissions made by the petitioner No. 1, objecting to the proposed transfer of income tax proceedings of the petitioners from Mumbai to New Delhi;
(b) The mere fact that the petitioner No. 1 belongs to the Sahara Group of companies would not by itself warrant the transfer of its income tax proceedings to New Delhi. Besides, no loans were taken and/or given to/by the petitioners to any of the entities in the Sahara Group of companies. Nor has the petitioner any investments in the entities belonging to Sahara Group, save and except some amount being invested in the Sahara Mutual Fund managed by an entity in the Sahara Group of companies; and
(c) The transfer of the assessment proceedings to New Delhi would cause immense prejudice to the petitioner. This is for the reason that their operations are localized in Mumbai, their personnel/officers are also residing and working in Mumbai.
In view of the above, it is submitted that the transfer as proposed is not warranted and the impugned order ought to be set aside.
As against the above, Mr. Arvind Pinto, learned counsel appearing for the respondents supports the impugned order and submits as under:
(a) The transfer of proceedings to Delhi is an order with reasons in as much as the basis for the transfer is that the petitioner No. 1 belongs to the Sahara Group of companies and it has substantial financial transactions with various entities in the group. Therefore, the need to have assessment centralized; and
(b) The impugned order is neither arbitrary or perverse. The impugned order itself indicates substantial financial transactions of the petitioner with the various group entities belonging to Sahara Group as the reason for transfer.
In view of the above, it is submitted that the petition be dismissed.
We have considered the submissions. We find that the petitioners in their written submissions filed with the CIT while opposing the proposed transfer from Mumbai to New Delhi have specifically mentioned the fact that the revenue received from entities in the Sahara Group of companies was as follows:
From the above, it would be noticed that the. revenue earned from related party transactions for the financial years 2007-08 to 2011-12 were substantial. It must be appreciated that while exercising its power of transferring proceedings under s. 127(2) of the Act, the CIT has exercised the discretionary power vested in him to transfer the case from one AO to another. Sec. 127 of the Act itself does not circumscribe/limit the power of a CIT to transfer assessment proceedings from one AO to another but has left it to the judgment of the CIT to exercise his discretion In a reasonable manner. To ensure that the CIT exercises his discretion in a just and reasonable manner he has to record reasons for doing so. If the reasons are arbitrary, the Court will set aside the order of transfer. In this case, we find that the CIT has so recorded reasons while exercising his powers and these reasons are the substantial transactions of petitioner No. 1 with related parties i.e. entities belong to Sahara Group of companies. Therefore, so long as reasons indicated in the order are neither arbitrary and/or unreasonable, this Court would not be justified in setting aside the impugned order passed by the CIT under s. 127(2) of the Act. Therefore, we find the reason/purpose for co-ordinated investigations and assessments viz. the substantial financial transactions of the petitioner No. 1 with the various entities within the Sahara Group of companies is not perverse or arbitrary.
The petitioner No. 1 is a corporate entity. Thus objection with regard to inconvenience to the staff and officers of petitioner No. 1, in case of transfer of assessment proceedings to New Delhi is not such as to hold the impugned order to be bad. In any event, it is a settled position in law that an assessee cannot as a matter of right insist on being assessed by a particular officer.
Independently of the above, we find that for the asst. yr. 2010-11, the petitioner No. 1 had participated in proceedings before the Dy. CIT, New Delhi leading to order dt. 19th March, 2013. On perusal of the order dt. 19th March, 2013, we find that the petitioner No. 1 received a notice on 18th Jan., 2013 under s. 142(1) of the Act from the Dy. CIT, New Delhi. Further, a notice under s. 143(2) of the Act was issued to the petitioner No. 1 on 30th Jan., 2013 by the Dy. CIT, New Delhi. The petitioner admittedly participated in proceedings before the Dy. CIT, New Delhi leading to the order dt. 19th March, 2013. The petitioner No. 1 has, therefore, submitted to the jurisdiction of the AO at New Delhi. The petitioners have not pointed out any protest by them at New Delhi. This is an additional reason why we see no reason to entertain this petition.
This petition was filed in Court on 20th Feb., 2013. There is not a whisper in the petition about proceedings having been commenced at New Delhi and notice under s. 143(2) of the Act having been received on 30th Jan., 2013 and the petitioner No. 1 is participating in the same. In all fairness the petitioners should have mentioned these facts in the petition. We trust the petitioners would be more careful in the future.
In view of the fact that we find that the impugned order dt. 27th Dec, 2012 transferring the petitioner No. l''s proceedings from Mumbai to New Delhi is neither arbitrary and/or perverse and/or unreasonable, no interference is warranted by this Court in its writ jurisdiction. Therefore, we see no reason to entertain the present petition. Accordingly, the petition is dismissed with no order as to costs.