Wa/3460/2013 Of The Commissioner Of Income Tax v. M/S Span Design And Development(P) Ltd

IN THE HIGH COURT OF KARNATAKA AT BENGALURUDATED THIS THR 12[th]DAY OF JANUARY, 20195) PRESENT THR HON' BLE MR. JUSTICK N.KUMAR ANT) THR HON' BLE MR. JUSTICEK B. VEBRAPPA (WRIT APPEAL No. 3460/2013 (TIT) BBRTWERE 1.The Commissioner of Income Tax, Bangalore-lIll, L[st]Floor, C.R. Building, Queens Road, Bangalore-560 OO1.. ?)The Income Tax Officer, Ward 12(2),No.14/3, 4[th]Floor,R.P. Bhavan,|Nrupathunga Road,No.14/3, 4[th]Floor,R.P. Bhavan,|Nrupathunga Road, Bangalore-560 OO1.. 3.The Deputy Commissioner of Income Tax,Central Circle-3, Central Circle-3, Ayakar Bhavan,| Basheer Bagh, Hyderbad-500 O04. 4The Assistant Commissioner of Income.Tax, Central Circle-3, Room No.8&11,Tax, Central Circle-3, Room No.8&11, ?[th]Floor, Ayakar Bhavan, Basheerbagh,|Hyderabad-500 O04. ... APPELLANTS (BY SRI K V ARAVIND, ADVOCATE) AND: M/s. Span Design andDevelopment (P) Ltd.,Head Office:#25, 1[st]Main, /[th]Cross,Central Excise HBC Layout,Bhoopsandra,|sanjay Nagar Post, Bangalore-560 094,Represented by itsManaging Director,|sri Nasser Aziz AN,Aged about 48 years,Son of late Sri Abdul Aziz.... RESPONDENT (BY SRI 8S. PARTHASARATHI, ADVOCATE) This Writ Appeal is filed under Section 4 of theKarnataka High Court Act praying to set aside the orderpassed in Writ Petition No. 6492/2010 (T-IT) dated17.4.2013. | This Writ Appeal coming on for Hearing this day,N. Kumar J.,delivered the following: JUDGMENT The revenue has preferred this appeal against theorder passed by the learned Single Judge transferring the case of the assessee to the Deputy Commissioner of Income Tax, Central Circle-3, Hyderabad and remittingthe proceeding for fresh consideration. 2. The assessee is a company. A search undersection 132 of the Income Tax Act, 1961 (for shorthereinafter referred to as ‘the Act) was conducted in thepremises of M/s. Bibi General Hospital and CancerCentre, Malakpet, Hyderabad. A sum of Rs.85,00,000/-.was seized in 12 envolopes. A statement of Sri SyedIqbad Mehdi was recorded and he admitted the cashbeing handed over by Sri Naseer Aziz A.N., who is theManaging Director of the assessee. Sri Naseer Aziz alsoadmitted his visit to the hospital on 7.2.2009. Surveyunder Section 133A of the Act was conducted in the!case of the assessee. The residential premises of Srisyed Mohd. Mehdi was also subjected to search andincriminating documents were found and seized. Postsearch investigation statements were recorded from SriNaseer Aziz and seized materials were confronted to' him. According to the revenue from the entire|investigation, it was found that Sri Naseer Aziz throughassessee was having various transactions through Srisyed M. Mehdi. For coordinated investigation, theassessee was proposed to be centralized at Hyderabadalong with 8 other assesses. The individual assessmentof Sri Nazeer Aziz and his wite were also centralized atHyderabad. 3. A show cause notice was issued under Section127 of the Act to the respondent. The assessee throughhis Managing Director-Sri Nazeer Aziz objected fortransfer of assessment from Bengaluru to Hyderabad. —Aiter considering the objections raised, an order came tobe passed transferring the assessment from Bengaluruto Hyderabad for coordinated investigation. Thereaiter,notices were issued under Section 153C oft the Act. The!assessee filed its return after issue of notice under|sections 143(2) and 143(1) of the Act. The Assessing Officer concluded the assessment for the assessment|years 2007-08, 2008-09 and 2009-10 by assessing theincomeaT|Rs.14,04,112/-,Rs.46,39,425/-.andRs.13,91,897/- respectively. The assessee challengedthe said order of transierring his file from Bengaluru toHyderabad for centralized assessment before thelearned Single Judge of this Court. Officer concluded the assessment for the assessment|years 2007-08, 2008-09 and 2009-10 by assessing theincomeaT|Rs.14,04,112/-,Rs.46,39,425/-.andRs.13,91,897/- respectively. The assessee challengedthe said order of transierring his file from Bengaluru toHyderabad for centralized assessment before thelearned Single Judge of this Court. 4. The learned Single Judge of this Court, whoheard the matter, was of the view that, the notice under|Section 127 of the Act issued to the assessee should|have been enclosed with all the relevant material|particulars and copies of the documents relating tosearch and seizure alleged to have been carried out atHyderabad on 7.2.2009. In the absence of suchrelevant particular, the assessee was handicapped tosubmit explanation and objections to the transfer of hiscase from Bengaluru to Hyderabad. The notice bereit ofmaterial particular. Therefore, it does not satisfy the requirements of principles of natural justice. Therefore,the order of transfer passed in pursuance of the saidnotice was quashed. Aggrieved by the said order, thepresent appeal is preferred.| o. The learned Counsel for the revenue assailingthe impugned order contends that, when the notice was_issued under Section 127 of the Act to the assessee, itdid not plead that they want particulars of search andseizure, but in contrary, it entered appearance throughits Managing Director and filed a detailed statement ofobjections opposing the transfer. It is only aftterconsidering the said objection, the impugned order has.been passed and therefore, the impugned order passedby the learned Single Judge on the ground thatprinciples of natural justice has been violated and thereis no obligation on the part of the revenue to furnish allthe particulars and hence, contended that it requires tobe set aside. 6. Per contra, learned Counsel for the assesseesubmitted that in the notice issued, there is no whisperabout how the search and seizure were conducted at!Hyderabad which is in no way connected with theassessee. Even in the impugned order passed, no suchconnection is found to have been existing and unlessthe nexus is made out, the question of transferring thefile of the assessee from one jurisdiction to anotherjurisdiction would not arise and therefore, on thissround, the impugned order is sustainable for thereasons given by the learned Single Judge. 7. The material on record discloses that theManaging Director of the assessee has given hisstatement against the transfer of his file from Bengaluruto Hyderabad and he has not challenged the same. On.the contrary, he has participated in the assessmentproceedings and the assessment order has been framed. —In so far as communication conducting search and seizure at Hyderabad in so far as assessee is concerned, it could be clearly gathered from the answers given bythe Managing Director in his statements which arerecorded on 7.2.2009 in the form of question andanswers as follows: “9. Question: Please mention when you!entered in to the qbove mentioned realestate deal with Mr. Syed M. Mehdi andalso give full detatls. Answer: [entered in to agreement with SriSyed M. Medhi for purchasing 10 plots forrupees 1.50 crores. A part of which I havealready paid APP. 1.40 crores and thebalance Rs.10 lacks ts yet to be paid. Theregistration for these 10 plots is over thedocuments are at Hyderabad with Shrisyed M. Mehdt. He shall give abovedocuments once Ipaid the entire amount. 10. Question: Please explain the forms for'the above mentioned payments made byyou to Shri Syed M. Mehdi. it could be clearly gathered from the answers given bythe Managing Director in his statements which arerecorded on 7.2.2009 in the form of question andanswers as follows: “9. Question: Please mention when you!entered in to the qbove mentioned realestate deal with Mr. Syed M. Mehdi andalso give full detatls. Answer: [entered in to agreement with SriSyed M. Medhi for purchasing 10 plots forrupees 1.50 crores. A part of which I havealready paid APP. 1.40 crores and thebalance Rs.10 lacks ts yet to be paid. Theregistration for these 10 plots is over thedocuments are at Hyderabad with Shrisyed M. Mehdt. He shall give abovedocuments once Ipaid the entire amount. 10. Question: Please explain the forms for'the above mentioned payments made byyou to Shri Syed M. Mehdi. AnswerTheabove.mentionedplotregistered in my name and in my wife. |Out of the 10 plots mentioned aboveroughly 2 are registered in my name androughly 8 plots registered in my wifename. The source of payments made toShri Syed M.Mehdi are the drawing madeby me from the Company Span Design andDevelopment Put. Ltd., and the partnership|firm Span Centre where me and my wife|are partner, the entire payment has beenmade by way of cheque. These chequesgiven to Mr. Mehdi on various dates and|the cheques were drawn from the bankaccount of our company Span Design andDevelopment Put. Ltd., and partnership.firm Span Centre and my and my wife|personal accounts at Kotak MahendraBank,ITPL.Branch,whitefield,Bangalore.” 8. The above answers clearly disclose that theManaging Director of the assessee has paid money forpurchase of 10 plots, out of which, two are registered in his name and 8 are registered in his wife’s name andthe seller — Sri Syed M. Mehdi was paid the money bycheques from the account of the assessee and thepartnership firm where he and wife are partners. It isasserted that the cheques given to Sri Mehdi on various:dates and the cheques were drawn from the bankaccount of the assessee and the partnership firm andalso of his and his wife’s personal account at KotakMahendra Bank, ITPL Branch, Whitefield, Bangalore. —From this answers, it is clear that the 10 plots werepurchased in Hyderabad, two in the name of theManaging Director and 8 in the name of his wife. Theconsideration for these 10 plots was paid to thepurchaser from the account of the assessee and fromthe account of the partnership firm and the individualaccount of the Managing Director and his wife. That iswhy it is necessary to centralize all the returns in orderto find out the true nature of the transaction - from|which account, how much account is paid? and how the documents came to be registered in the name ofhusband and his wite? The Managing Director is fullyacquainted with all these facts. It is he, who has givenall these information and he has no difficulty in going toHyderabad for being present during the assessmentproceedings of his, individual account and his wite’saccount. We do not see what difficulty he would have, ifthe assessee’s account, of which he is the ManagingDirector, is also processed at the same time where hisindividual and his wile is processed. 9. In that view of the matter, the order passed bythe authorities transferring the file of the assessee tothe Hyderabad is just and proper and without anyjustification the learned Single Judge has interferedwith the well considered order passed. Therefore theimpugned order cannot be sustained. Hence, we passthe following: ORDER -)Appeal is allowed; --)The impugned order passed by the learned single Judge is hereby said aside and theorder of transfer is restored; and ---)Parties to bear their own cost. sd/-|Judgeod/-/Judge Nsu/-_