2015 (7) TMI 18 - HC - Income Tax

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

M/s Zodiac Developers Pvt Ltd Versus Principal Commissioner of Income Tax-8, Mumbai

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 ... Transfer of a caase u/s 127 - petitioner's case pending with the Income Tax Officer, Mumbai have been transferred to Assistant Commissioner of Income Tax Aurangabad - Held that:- The impugned order does not deal with any of the submissions made by the petitioner resisting the transfer of its case from Mumbai to Aurangabad. Besides, Mr. Tiwari, the learned Counsel appearing for Petitioner informs us that the letter of Director of Income Tax (Investigation), Nagpur which forms the basis of transfer of the petitioner's case was not made available to the petitioners even though the impugned order has been passed relying upon the same. Thus we find that the impugned order has been passed in breach of principles of natural justice in as much as evidence in the form of DIT (Investigation) letter which has been relied upon the impugned order was never furnished to the petitioners. Therefore the petitioner was unable to make appropriate submission with regard to the same. Further, the impugned order is a nonspeaking order as it merely states that the submission of petitioner has been considered and having done so, it is concluded the transfer of the case is warranted. Thus the impugned order is a nonspeaking order and in breach of principles of natural justice in as much as it relies upon evidence of which no notice was given to the petitioners. Accordingly we set aside the impugned order of transfer - Decided in favour of assessee 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.