2013 (10) TMI 1472 - HC - Income Tax

Court partially sets aside transfer order under Income-tax Act, emphasizes non-arbitrary nature of decisions.

Aamby Valley Limited and anr. Versus Commissioner of Income Tax­-8 and ors.

The Court partially set aside the transfer order, excluding assessment proceedings for A.Y. 2010-11, directing the revenue to provide the assessee with a ... Justification of transfer order of case u/s 127 - Centralization of case - exercise of discretion of the authority - scope of the reasons for transfer of case - arbitrary and/or perverse and/or malafide - agreement between CIT Mumbai and CIT Delhi - requirement of co-ordinated Investigation - CIT rejected the objections of the assessee - HELD THAT:- There is no reason as to how the transfer of the petitioners' case from Mumbai to Delhi was required for co-ordinated investigation and assessment, yet it does give reasons for co-ordinated investigation i.e. the petitioners are a part of the Sahara Group of the Companies and the petitioners had substantial transactions and investments in other entities of the Sahara Group particularly-Sahara Adventures Sports (Pvt.) Ltd. which is assessed in Delhi with DCIT, Central Circle-6 to whom the petitioners case is transferred. Another view is that there is no evidence of any agreement between Commissioner of Income Tax (Central 6) New Delhi, and Commissioner of Income Tax, Mumbai that the petitioners case should be transferred from Mumbai to New Delhi. These proceedings for transfer of the petitioners case was initiated on report instituted by communication dated 30 August 2011 from the Commissioner of Income Tax (Central 6) New Delhi seeking to centralization of the petitioners' case at Delhi. Thereafter by the impugned order dated 7 March 2013, the Commissioner of Income Tax-8, Mumbai has transferred the petitioner's case from Mumbai to New Delhi. Thus, there is an agreement between the Commissioners of Income Tax, New Delhi and Mumbai as required in terms of section 127(2)(a) of the Act was available. Therefore, this objection was not sustainable. The decision of SAHARA HOSPITALITY LIMITED AND OTHERS VERSUS COMMISSIONER OF INCOME TAX-8 AND OTHERS [2013 (10) TMI 289 - BOMBAY HIGH COURT] was followed. In view of all the above reasons, Court did not find any reason to entertain this petition. Accordingly, petition was dismissed with no order as to costs. Issues:Challenge to order transferring case under Article 226 of the Constitution of India.Detailed Analysis:Issue 1: Challenge to Transfer Order- The petitioner challenged the transfer order dated 5 January 2012, which transferred the case from Mumbai to Delhi.- The Court held that granting a personal hearing was necessary before passing an order under Section 127(2) of the Income-tax Act, 1961.- The transfer order dated 5 January 2012 was partially set aside, excluding the assessment proceedings for A.Y. 2010-11.- The revenue was directed to provide an opportunity for the assessee to be heard before transferring the case.Issue 2: Impugned Order dated 7 March 2013- The impugned order dated 7 March 2013 transferred the petitioner's case to Delhi for coordinated investigation and assessment.- The petitioner raised objections to the transfer, but the Commissioner did not accept them.- The petitioner contended that the order was beyond the show cause notice and breached natural justice.Issue 3: Contentions by Petitioner- The petitioner argued that the order lacked reasons and did not address objections raised.- The transfer was questioned for lacking reasons justifying coordinated investigation.- The petitioner claimed the order was unsustainable due to the absence of evidence of an agreement between tax commissioners.Issue 4: Court's Analysis- The Court examined the exercise of transferring cases under Section 127 of the Act.- The discretion to transfer a case should not be arbitrary, perverse, or malafide.- The Court emphasized that an assessee cannot choose their Assessing Officer.- The reasons for transfer must indicate a due application of mind and not be malafide or arbitrary.Conclusion:- The Court found no merit in the petitioner's objections.- The Court dismissed the petition, stating there was no reason to entertain it.- The petition was dismissed with no order as to costs.