IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

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)

O R D E R

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:

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“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.”

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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.   

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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.