Cwp-4264-2019 (O&M v. Anuradha2019.09.16 12:01I Attest To The Accuracy

CWP-4264-2019 (O&M) 1 IN THE HIGH COURT OF PUNJAB AND HARYANAAT CHANDIGARH IAT CW P-4264-2019 (O&MDate of Decision :9.9.2019 M/s. H.M.Steels Limited and another eeePetitioners 2!1&3& Principal Commissioner of Income Tax, Patiala ...... Respondent CORAM : HON'BLE MR.JUSTICEKE AJAY TEWA* HON'BLE MR. JUSTICK HARNARESH SINGH GILL Present:Ms. Radhika Suri, Senior Advocate withMr. M.S.Kanda, Advocatefor the petitioners-assessees,Mr. M.S.Kanda, Advocatefor the petitioners-assessees, Mr. Kunal Sharma, Standing counselfor the respondent. 888 AJAY TEWARI, J. (Oral) This petition has been filed challenging the order dated2.1.2019 (Annexure P-6) passed by Principal Commissioner of IncomeTax, Aaykar Bhawan, Patiala under Section 127 (2) of the Income TaxAct, 1961 transferring assessment of the case of the assessees from DCIT,Sangrur to DCIT, Karnal. Admitted facts of the case are that the assessees started theiroperation in the year 2005-2006. In the year 2013-14, three Directors ofM/s Jai Bharat Group were inducted as Directors of the petitioners’company (after acquiring adequate share holding). On 3.5.2018 a searchand seizure was conducted at the residential premises of the M/s Jai Bharat Group and a lot of incriminating material was found there. Thereafter, a CWP-4264-2019 (O&M) survey was conducted in the business premises of the assessees' group butnothing incriminating was found. Subsequently, a notice was issued to thepetitioners’ company on 27.6.20138. The operative part of which is asfollows :- ;In this regard, it is informed that a search andseizure operation was carried out in the above group of casesby the Directorate of Income Tax (Inv), Chandigarh on05.05.2018. Subsequently the Pr. Commissioner of IncomeTax (Central), Gurgaon has proposed centralization inrespect of your case to Assessing Officer Central Circle atChandigarh which also includes-M/s Jat Bharat Group,.Panipat.All cases in the proposal have been covered underwarrant of authorization u/s 132 (1) and survey u/s 133A ofthe Income Tax Act, 1961 and the books of accounts andother documents were found and seized/impounded in thesecases. Ihese are all core cases and directly connected withgroup and for proper and meaningful coordinatedinvestigations; these required to be centralized with AssessingOfficer. The petitioners filed reply in which it was averred that there isno direct or indirect connection with M/s Jai Bharat Group and in fact, itwas only in the year 2013-14 that some Directors of M/s. Jai Bharat Groupwere inducted on the Board of the petitioners' company and the Directorsof the petitioners' company have no stake in M/s. Jai Bharat Group and infact, during the survey conducted on their premises nothing incriminatingwas found. Hearing was took place on 16.10.2018 before the PrincipalCommissioner of Income Tax, Patiala. Thereafter, the respondent couldhave passed the order but instead, he addressed a letter to the DeputyDirector of Income Tax, Investigation on 24.10.2018, asking it forcomments which were sent on 14.12.2018 Annexure R-2 and it was CWP-4264-2019 (O&M) pointed out that during the course of search proceedings at the premises ofM/s. Jai Bharat Group, some incriminating documents related to both theassessees were found and impound. It was further mentioned that the dataof a computer installed at the premises also contained reference to bogusbilling which had been indulged by both these groups. After receipt of thisletter, ultimately, the impugned order dated 2.1.2019 Annexure P-6 waspassed. A perusal of this order also states that there is no reason indicatedtherein, and rather the order proceeds on the basis of that both are ‘relatedconcerns.. CWP-4264-2019 (O&M) pointed out that during the course of search proceedings at the premises ofM/s. Jai Bharat Group, some incriminating documents related to both theassessees were found and impound. It was further mentioned that the dataof a computer installed at the premises also contained reference to bogusbilling which had been indulged by both these groups. After receipt of thisletter, ultimately, the impugned order dated 2.1.2019 Annexure P-6 waspassed. A perusal of this order also states that there is no reason indicatedtherein, and rather the order proceeds on the basis of that both are ‘relatedconcerns.. Learned Senior counsel for the petitioners has argued thatnotice issued to the petitioners indicates no reason and from the verybeginning the petitioners have disputed that they are ‘related concerns’ andthey have urged material arguments and averments to dispute this assertionbut the impugned order proceeds on the assumption that they are ‘relatedconcerns without dealing the objections of the petitioners regarding thisidentification. Her further submission is that the comments which weresubmitted by DDIT also weighed with the respondent in passing theimpugned order but no copy thereof was ever supplied to the petitionerbefore, so that they could get an opportunity to rebut the same. She hasplaced reliance upon the judgment of the Supreme Court passed in thematter of.Ajantha Industries & others Vs. Central Board of DirectTaxes, New Delhi & othersreported asAIR 1976 SC 437,the judgment ofBombay High Court in the matter ofGlobal_Energy Pvt. Ltd. vs.Commissioner of Income Tax,reported as|(2013) 356 ITR 502 Bom.andthe judgment of this Court in the matter ofRajesh Mahajan and others vs. CWP-4264-2019 (O&M) CITreported as.ZOO? TTR 75 577. Counsel for the respondent-Revenue has argued that thepetitioners were heard before the orders transferring their assessment waspassed and that transfer from Sangrur to Karnal can hardly be deemed tobe prejudice. He has relied upon the judgment of this Court in the matterotfCharan Pal Singh vs. Commissioner of Income Tax and anotherreported as(2008) 307 ITR 132 (P&H)and the judgment of SupremeCourt passed in the matter ofAmbika Solvex and Ors vs. Commissionerof Income Tax and Orsreported as"1976 CTR (SC) 79. In our considered opinion, petition must succeed. The noticedid not contain any reason. The impugned order is cryptic and there wasno earthly reason why the report of the DDIT could not having been put tothe petitioner. On this limited ground, we set aside the impugned order andgrant liberty to the Revenue to cure the illegality. For this purpose, thepetitioners (who now have access to the copy of the letter dated14.12.2018) may file further objections within three weeks from today andthe respondent would be at liberty to pass a fresh order thereof, aftergiving them one more opportunity of hearing. The petition stands disposed of. Since the main case has been decided, the pending CM, if any,also stands disposed of. (AJAY TEWARIT) JUDGE 9.92019anuradha| (HARNARESH SINGH GILL)JUDGE Whether speaking/reasonedYes/NoWhether reportableYes/No