Madras High Court, in a recent ruling, dismissed a writ petition challenging the transfer of an income tax case to the Central Circle in Kolkata, following the discovery of incriminating materials during a search and seizure operation.
The petitioner, Arise Industries, a company based in Coimbatore, sought to quash the Income Tax Department’s notification ordering the transfer, citing concerns over jurisdiction and the violation of natural justice.
The case arose from a search and seizure operation conducted under Section 132 of the Income Tax Act, 1961 (ITA), on October 12, 2023. Following the operation, a notification dated May 17, 2024, was issued under Section 127 of the tax statute, ordering the transfer of the petitioner’s case from Coimbatore to Kolkata. The petitioner challenged the transfer, arguing that their office was based in Coimbatore and that they conducted no business in Kolkata, making the relocation of the case unreasonable. They further contended that the financial burden of defending the case in Kolkata would be significant and proposed centralizing the case in Coimbatore.
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The petitioner’s counsel also stressed a procedural grievance, asserting that while a show-cause notice had been issued on April 9, 2024, and a reply submitted on April 13, 2024, the authorities failed to provide a personal hearing, which was claimed to be a violation of the principles of natural justice.
The Income Tax Department, represented by its counsel, defended the transfer on the grounds that incriminating materials linking the petitioner to a lottery business in Kolkata and other states had been discovered during the search operation. They argued that the transfer of the case was essential for a coordinated investigation, as the documents and evidence were spread across multiple locations.
After hearing both parties, the bench of Justice Krishnan Ramasamy found that the materials seized in Kolkata were indeed central to the investigation, and justified the transfer under Section 127 of the tax legislature. The court also dismissed the petitioner’s claim of procedural violations, holding that the opportunity to submit a written reply fulfilled the principles of natural justice.
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Furthermore, the court determined that the petitioner’s objections regarding jurisdiction and financial hardship lacked merit, as the assessment needed to occur where the incriminating evidence was located.
As a result, the writ petition was dismissed, affirming the transfer of the case to Kolkata.
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