2015 (5) TMI 434 - HC - Income Tax

Transfer of Assessment Proceedings Overturned: Emphasis on Valid Reasons and Assessee's Rights

Shri Farooq Ali Khan Versus The Principal Commissioner of Income Tax, The Asst. Commissioner of Income Tax

The court set aside the order/notification transferring assessment proceedings from Bengaluru to Mumbai under Sections 153A and 127 of the Income Tax Act. ... Notices u/s 153A - assessment proceedings of petitioner transferred from jurisdictional ACIT / DCIT, Circle - 6(2)(1), Bengaluru, to ACIT / DCIT,- Income Tax, Central Circle - 8(2), Mumbai - Held that:- There are no reasons forthcoming from the impugned order as to why the assessment proceedings of the petitioner pending before the jurisdictional Assessing Officer at Bengaluru is being transferred to Assessing Officer at Mumbai, except indicating that 'transfer is being effected to facilitate effective and coordinate the investigations in the connected case of petitioner', in which search and seizure operations under Section 132 of the Act was conducted on 24.02.2014 by the Director of Investigations, Mumbai. This would not satisfy the criteria of reasons as indicated under Section 127 of the Act or the dicta laid down by this Court as well as by the Hon'ble Apex Court in the cases referred to hereinabove. In that view of the matter, it would suffice and meet the ends of justice if the impugned order is set aside and matter is remitted back to the Principal Commissioner of Income Tax, Bengaluru-560 006 to redo the matter after affording opportunity to petitioner. If further objections, if any, is filed to proposed transfer same shall also be considered. Decided in favour of assessee. Issues:Quashing of notices and order/notification under Income Tax Act, 1961.Analysis:The petitioner sought to quash notices and an order/notification issued under Sections 153A and 127 of the Income Tax Act, transferring assessment proceedings from Bengaluru to Mumbai. The petitioner contested the transfer, alleging lack of communication, absence of reasons, and inadequate disclosure of particulars. The respondent justified the transfer citing a search at the business premises of Associate Group in Mumbai, linking it to the petitioner's case. The court examined Section 127 of the Act, emphasizing the need for reasons and the assessee's right to be heard. Referring to precedents, the court highlighted the importance of valid reasons for transfers, especially when moving files to a different city. The court cited a Supreme Court ruling mandating the recording and communication of reasons for transfers under Section 127.The court analyzed the facts, noting the absence of specific reasons in the impugned order for transferring the petitioner's case to Mumbai. The vague explanation of facilitating investigations was deemed insufficient under Section 127 and legal precedents. Consequently, the court set aside the impugned order and directed the matter to be reconsidered by the Principal Commissioner of Income Tax in Bengaluru. The petitioner was granted an opportunity to present objections, and no fresh notice for a personal hearing was to be issued. The petitioner was instructed to appear before the Principal Commissioner for further proceedings. The court clarified that no opinion was expressed on the merits of the case, focusing solely on the procedural aspects of the transfer.In conclusion, the court's decision centered on the procedural flaws in the transfer of assessment proceedings, emphasizing the necessity of valid reasons and communication thereof to the assessee. The judgment underscored the importance of adherence to legal requirements and established principles in such matters, ensuring fairness and transparency in administrative actions under the Income Tax Act, 1961.