M/S Unnao Distilleries & Braviers Ltd vs Commr.Of Income Tax-Ii & Ors
- SCC(2009) 17 SCC 668
Ratio decidendi
The rule this decision rests on
Where the circumstances giving rise to an order of transfer of a taxpayer's case under Section 127 of the Income Tax Act, 1961 have materially changed — specifically where the underlying search-related investigation has culminated in a final assessment order and the associated proceedings in the Settlement Commission have rendered the transfer infructuous — the order of transfer cannot be sustained and shall be set aside.
Written by Miss Lucy from the judgment below, not taken from a headnote.
Judgment
As delivered
CIVIL APPEAL NO. 5068 OF 2009 (Arising out of SLP(C) NO. 11364/2007)
M/S. UNNAO DISTILLERIES AND BRAVERIES LTD. Appellant(s)
VERSUS
COMMISSIONER OF INCOME-TAX-II AND ORS.Respondent(s)
ORDER
Leave granted.
An order of transfer passed by the Commissioner of Income Tax on
18.1.2007, purported to be under Sub-section (2) of Section 127 of the Income Tax
Act, 1961 is questioned in this appeal, which arises out of a judgment and order dated
21.2.2007 passed by the High Court of Allahabad, dismissing the wit petition filed by
the appellant herein.
The basic fact of the matter is not in dispute.
A search was conducted in the premises of M/s. Radico Khaitan Ltd. on
14.2.2006 wherein, inter alia, it was found that some payments had been collected by
the U.P. Distilleries Association for payment to public servants. By a notice dated
10.11.2006, the appellant was directed to attend the office of the Commissioner of
Income Tax, stating:
-2-
"As per result of search & seizure operation u/s. 132 of the Income Tax Act, 1951 in the case of the above mentioned group conducted on 14.02.2006, the Commissioner of Income Tax, Delhi (Central- III), New Delhi vide his letter F. NO.CIT(C-II) Cent/010/CC-
19/2006-07/45/807 dated 18.10.2006 has proposed to centralise your case u/s 127 of the Income Tax Act, 1961 with Deputy Commissioner of Income Tax, Central Circle 19, New Delhi for the purpose of coordinated investigation and meaningful assessment."
By an order dated 2.1.2007, the appellant prayed for an opportunity of
hearing, inter alia, contending:
"(3) That the notice dated 10.11.2006 issued on us is not having proper jurisdiction, inexplicit in nature and do not reflect specific reasons for centralization of our case with Deputy Commissioner of Income Tax, Central Circle-19, Delhi.
(4) That due to shortcomings of the impugned notice we are in no position to give any explanation in this respect as well as to plead our position before your honour on hearing as per the notice.
(5) That without prejudice to the submissions made above and reserving our right of natural and legal justice, we categorically state here that we have our head office at Kanpur factory at adjoining District at Unnao. We have no business or other transactions at New Delhi. Our directors are also residing at Kanpur and Unnao. There is no person at New Delhi to look after any proceedings or to take care of any work concerning to income tax matters."
-3- No response thereto was made and the impugned order was passed on
18.1.2007 solely on the basis of the search made in the premises of M/s. Radico
Khaitan Ltd.
Although a large number of contentions including non-grant of a reasonable
opportunity of a hearing have been raised before us, but it is not necessary for us to
go thereinto in view of the fact that now it is contended that the Assessing Officer had
passed an order of assessment in the case of the appellant for the year 2006-07 on or
about 24.12.2008, from a perusal whereof it appears that that aspect of the matter,
namely, search and seizure in the premises of M/s. Radico Khaitan Ltd. and the effect
thereof have been taken into consideration and the amount allegedly paid by the
Association has been held to be added as an unexplained amount in the assessment of
M/s. Radico Khaitan Ltd.
It has further been stated that M/s. Radico Khaitan Ltd. had also filed an
application before the Settlement Commission and the order passed therein in favour
of M/s. Radico Khaitan Ltd. is the subject matter of challenge before the Delhi High
Court, at the instance of the revenue.
-4-
In view of the above subsequent events, we are of the opinion that the
proceedings for transfer of the file of the appellant from Kanpur to Delhi, for the
purpose of centralising the cases for coordinated investigation and meaningful
assessment has become infructuous. In this view of the matter, the impugned order
cannot be sustained which is set aside accordingly. The appeal is allowed.
..........................J. [S.B. SINHA] ..........................J. [HARJIT SINGH BEDI]
New Delhi.
JULY 28, 2009.
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