CHENNAI: The Madras High Court has rejected a plea from Advantage Strategic Consulting Private Limited in Nandanam Extension, a firm engaged in consultancy services, with which Karti Chidambaram, son of former Union Finance Minister P Chidambaram is allegedly associated, to quash a notification dated June 24, 2016, of the Principal Commissioner of Income Tax.
By virtue of the impugned notification, cases against the petitioner firm had been transferred from the DCIT, Corporate Circle-1(1) to DCIT Central Circle-2(1) in Chennai.
The Enforcement Directorate conducted search operations at the office premises of the petitioner company and its director M Ramesh and the residences of its directors under Section 137 of the Foreign Exchange Management Act (FEMA), 1999, on December 1, 2015.
Simultaneously, the Income Tax (I-T) department conducted a survey at the office premises of the petitioner and the residences of its directors in exercise of the powers under Section 133(A) of the Act. While the matters were at that stage, the impugned notification has been passed by the Principal Commissioner of Income Tax-1, transferring the petitioner’s cases to a different officer, who is within the city.
In the subject column of the impugned notification, it is stated as ‘Centralisation of Search and Seizure cases- in the group cases of AM Arun, Vasan Health Care (P) Ltd - Notification - Reg’. The reference column in the notification read as ‘Letter of the DGIT (Inv.) (i/c), Chennai to the CCIT-1, Chennai in F.No. 2003/2016- 17, dated May 30, 2016’.
Nalini Chidambaram, senior counsel for the petitioner, contended that the notification suffered from errors apparent, as it had been issued under Section 127 (2) of the Act, without giving the petitioner a reasonable opportunity of being heard.
Dismissing the petition, Justice S Sivagnanam said that sub-sec. (3) of Section 127 of the Act does not commence with a non-obstante clause, but it is a clause providing for exclusion of certain procedures, which are required to be adhered to under circumstances not mentioned in sub-section. Therefore, the theory of harmonious construction cannot be applied to the facts of this case, nor sub-sec (3) of Sec 127 of the Act, can be construed as a non-obstante clause, but a clause providing for exclusion of certain procedure in certain contingencies.
The judge said the fact that the transferee and transferor officers are within the same city is not in dispute. This court has found that there has been an agreement between the two heads of department and the petitioner cannot plead for an opportunity to be granted before an order of transfer.