2013 (10) TMI 982 - HC - Income Tax

Court Upholds Transfer of Assessment Cases; Stress on Reasons & Public Interest

The court upheld the transfer of pending assessment cases from Bhavnagar to Ahmedabad under section 127(2) of the Income-tax Act, 1961. It found that the ... Transfer of cases at Central place for co-ordinated and effective investigation - Petitioners belonged to the same family or group. They were subjected to common search operation. Their assessments were, therefore, under proposal for transfer – Commissioner transferred the case to Ahmedabad – Held that:- Commissioner not committed any error either in law or in facts. Reason for transfer was clearly indicated in the show-cause notice, namely, for centralisation of cases and for effective and co-ordinated investigation. Such reasons were further elaborated while dealing with and disposing of the objections of the petitioners in the final order of the transfer - Authorised representative of the petitioners was offered three other alternatives-Rajkot, Baroda and Surat where the Department had centralized wing. Several places of the company were subjected to common search operation, it is but natural that it would be in the interests of the Revenue and perhaps also in the interests of the assessees that cases be consolidated and be placed before one single Assessing Officer. This would avoid duplication of collection of evidence and assessment of evidence. This would also avoid conflict of opinions. The reason that being search cases they had to be placed before a centralised circle office also cannot be stated to be irrelevant. The Department for internal convenience and efficient functioning, it has created a special branch for dealing with search cases and has decided to conduct assessments of such cases under such wing, surely the assessee cannot have any objection to the same. The assessee has no right in law to insist that his case be kept out of consideration of such branch – Petition dismissed – Decided against the Assessee. Issues Involved:1. Legality of the transfer of pending assessment cases from Bhavnagar to Ahmedabad under section 127(2) of the Income-tax Act, 1961.2. Adequacy and specificity of the reasons provided for the transfer.3. Compliance with procedural requirements under section 127(2) of the Act.4. Judicial review of administrative decisions concerning the transfer of cases.Detailed Analysis:1. Legality of the Transfer:The petitioners challenged the transfer of their pending assessment cases from Bhavnagar to Ahmedabad. The Commissioner of Income-tax, Ahmedabad, passed an order on June 15, 2012, transferring the cases for 'effective and co-ordinated investigation.' The petitioners argued that the transfer was unjustified and inconvenient as they were regularly assessed at Bhavnagar or Mumbai.2. Adequacy and Specificity of Reasons:The petitioners contended that the reason 'for effective and co-ordinated investigation' provided in the show-cause notice was too vague and general. They argued that this did not fulfill the requirement of giving a reasonable opportunity to meet the grounds for transfer. The Commissioner, however, maintained that the centralization was necessary due to the lack of a Central Range Office in Bhavnagar and offered alternative locations (Surat, Baroda, Rajkot, and Ahmedabad) for the transfer, which the petitioners did not accept.3. Compliance with Procedural Requirements:The court examined whether the procedural requirements under section 127(2) were met, which include giving a reasonable opportunity of being heard, recording reasons for the transfer, and communicating these reasons to the assessee. The court found that the Commissioner had complied with these requirements. The petitioners had been given a chance to object, their objections were considered, and a speaking order was passed and communicated to them.4. Judicial Review of Administrative Decisions:The court analyzed the scope of judicial review in such administrative decisions. It emphasized that judicial review focuses on the decision-making process rather than the decision itself. The court concluded that as long as the transfer was made bona fide, for public purpose, and in the interests of the Revenue, it would not interfere unless the reasons were wholly irrelevant or arbitrary.The court cited various precedents to support its view, including:- Ajantha Industries v. CBDT: Emphasized the mandatory nature of recording and communicating reasons for transfer.- Naresh Kumar Agarwal v. Union of India: Held that reasons for transfer must be specific and comprehensive.- General Exporters v. CIT: Upheld the transfer for co-ordinated investigation as a valid ground.- Arti Ship Breaking v. Director of Income-tax (Investigation): Supported transfer for administrative reasons when no Central Range Office was available.Conclusion:The court dismissed the petitions, siding with the view that the reason 'for effective and co-ordinated investigation' is neither vague nor insufficient. The court found that the Commissioner had followed due process, provided adequate reasons, and offered alternative locations for the transfer. The transfer was deemed necessary for centralization and effective investigation, aligning with public interest and the efficient functioning of the Income-tax Department.