High Court sets aside transfer order under Income Tax Act for lack of reasoning and natural justice, directs fresh order.

The High Court set aside the order transferring income tax proceedings from Mumbai to Aurangabad under Section 127(2) of the Income Tax Act, 1961. The Court found the order lacked specific details and failed to address the petitioner's submissions, breaching principles of natural justice. It was deemed a nonspeaking order with insufficient reasoning. The Court directed the revenue to issue a fresh order following due process. The petition was disposed of without costs.

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Issues: Challenge to transfer of income tax proceedings from Mumbai to Aurangabad under Section 127(2) of the Income Tax Act, 1961.

In this case, the petitioner, engaged in the business of Builders and Developers in Mumbai, challenged the transfer of its income tax proceedings from the Income Tax Officer, Mumbai to the Assistant Commissioner of Income Tax, Aurangabad. The challenge was based on a show cause notice issued by the Chief Commissioner of Income Tax, which lacked particulars regarding the transfer. The petitioner requested better particulars, highlighting their independence from the Jhaveri Group of Companies, which was the basis for centralization of cases for coordinated inquiry. Despite the petitioner's submissions that they were not connected to the Jhaveri Group of Companies, the Principal Commissioner of Income Tax allowed the transfer under Section 127(2) of the Act, citing the search carried out at Zodiac Developers Pvt. Ltd., related to the Jhaveri Group.

The High Court found that the impugned order did not address the petitioner's submissions against the transfer and was passed without providing the petitioner with the letter of the Director of Income Tax (Investigation), Nagpur, which formed the basis of the transfer. The Court held that the order breached principles of natural justice as the evidence relied upon was not disclosed to the petitioner, preventing them from making appropriate submissions. Additionally, the Court noted that the impugned order was a nonspeaking order, lacking detailed reasons for the decision. As a result, the Court set aside the order dated 18 February 2015, allowing the revenue to pass a fresh order after following the principles of natural justice. The petition was disposed of with no order as to costs.

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