M/S Zodiac Developers Pvt. Ltd v. Principal Commissioner Of Income Tax-8,Mumbai

IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTION WRIT PETITION NO. 1204 OF 2015 M/s Zodiac Developers Pvt. Ltd. Vs. Principal Commissioner of Income Tax-8,Mumbai ..Petitioner ..Respondent .... Mr. S.C. Tiwari, Advocate for Petitioner.Mr. Nirmal Mohanty, Advocate for Respondent. .... P.C.: CORAM : M.S. SANKLECHA & N.M. JAMDAR, JJ.DATED : 18[th] JUNE 2015 At the request of the Counsel, the petition itself is beingdisposed of at the stage of admission. 2.This petition under Article 226 of the Constitution ofIndia challenges the order dated 18 February 2015 passed by thePrincipal Commissioner of Income Tax under Section 127(2) of theIncome Tax Act, 1961 (the 'Act'). By the impugned order, thepetitioner's case i.e. income tax proceedings pending with the 1 / 5 Income Tax Officer, Mumbai have been transferred to AssistantCommissioner of Income Tax (the 'ACIT'), Aurangabad. 3.The petitioner carries on business as Builders andDevelopers in Mumbai. On 6 January 2015, the office of the ChiefCommissioner of Income Tax issued a show cause notice to thepetitioner calling upon the petitioner to show why the petitioner'sproceedings (case) pending with the ITO, Mumbai should not betransferred to ACIT, Aurangabad for the sake of co-ordinatedinvestigation. As the above notice was bereft of particulars, thepetitioner by letter dated 27 January 2015 requested theCommissioner of Income Tax for better particulars in support of theproposed action of transfer of its case from Mumbai to Aurangabad.In response, the office of Principal Commissioner of Income Tax byletter dated 6 February 2015 pointed out that the basis ofcentralization of petitioner's case to Aurangabad was the searchcarried out by the Director of Income Tax, Nagpur and the papersobtained during the course of the search carried out at JhaveriGroups of Companies. It was on the aforesaid ground that the revenue sought centralization of all the cases dealing with theJhaveri Group of Companies for coordinated inquiry andinvestigation. 4.The petitioner responded to the show cause notice by itsreply dated 16 February 2015 and pointed out that they are in nomanner connected with the Jhaveri Group of Companies. They areindependent group carrying on the business as developers inMumbai and the only connection they have had with the JhaveriGroup of Companies is that certain flats in buildingsdeveloped/constructed by them have been sold by them to themembers of the Jhaveri Group of Companies. In the aforesaidcircumstances, it was submitted that the transfer of its case fromMumbai to Aurangabad was not warranted. 5.Thereafter, a personal hearing was granted to thepetitioner by the Principal Commissioner of Income Tax. At thehearing, the petitioner reiterated the submissions in its reply.Consequent thereto, the Principal Commissioner by impugned order 3 / 5 dated 18 February 2015 allowed the transfer under Section 127(2)of the Act for the following reasons: “I have gone through the letter of DIT (Investigation),Nagpur along with its Annexure and I have alsocarefully considered the submissions of the assesseepertaining to objection against centralization of thiscase. Having done so, I am of the considered viewthat in view of the fact as clearly stated in the letter ofDIT (Investigation), Nagpur that search and seizureaction was carried out in respect of premises of ZodiacDevelopers Pvt. Ltd. and this Group is related toJhaveri Group.” 3 / 5 dated 18 February 2015 allowed the transfer under Section 127(2)of the Act for the following reasons: “I have gone through the letter of DIT (Investigation),Nagpur along with its Annexure and I have alsocarefully considered the submissions of the assesseepertaining to objection against centralization of thiscase. Having done so, I am of the considered viewthat in view of the fact as clearly stated in the letter ofDIT (Investigation), Nagpur that search and seizureaction was carried out in respect of premises of ZodiacDevelopers Pvt. Ltd. and this Group is related toJhaveri Group.” 6.From the above, it is clear that the impugned order doesnot deal with any of the submissions made by the petitionerresisting the transfer of its case from Mumbai to Aurangabad.Besides, Mr. Tiwari, the learned Counsel appearing for Petitionerinforms us that the letter of Director of Income Tax (Investigation),Nagpur which forms the basis of transfer of the petitioner's case wasnot made available to the petitioners even though the impugnedorder has been passed relying upon the same. Thus we find that theimpugned order has been passed in breach of principles of naturalS.S.DESHPANDE4 / 5 justice in as much as evidence in the form of DIT (Investigation)letter which has been relied upon the impugned order was neverfurnished to the petitioners. Therefore the petitioner was unable tomake appropriate submission with regard to the same. Further, theimpugned order is a non-speaking order as it merely states that thesubmission of petitioner has been considered and having done so, itis concluded the transfer of the case is warranted. Thus theimpugned order is a non-speaking order and in breach of principlesof natural justice in as much as it relies upon evidence of which nonotice was given to the petitioners. 7.Accordingly we set aside the impugned order dated 18February 2015. Needless to state it would be open to the revenueto pass fresh order after following the principles of natural justice.The petition is disposed of in the above terms. No order as to costs. [N.M. JAMDAR, J] [M.S. SANKLECHA, J.]