Court quashes jurisdiction transfer for violating natural justice; subsequent proceedings invalidated.

The court quashed the order transferring the case to the Assistant Commissioner of Income Tax, Meerut, as it violated principles of natural justice. It held that the jurisdiction transfer was illegal, rendering subsequent proceedings invalid, including notices under Section 153A and the order for a special audit under Section 142(2A). The writ petition was allowed, and the competent authority was given the opportunity to issue a fresh order following the law.

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Issues Involved:
1. Legality of the order passed under Section 127 of the Income Tax Act.
2. Jurisdiction of the Assistant Commissioner of Income Tax, Meerut.
3. Validity of the notice issued under Section 153A of the Income Tax Act.
4. Validity of the order directing a special audit under Section 142(2A) of the Income Tax Act.

Issue-wise Detailed Analysis:

1. Legality of the Order Passed Under Section 127 of the Income Tax Act:
The petitioner contended that the order dated 23rd September 2008 by the Commissioner of Income Tax, New Delhi, transferring the case to the Assistant Commissioner of Income Tax, Meerut, was illegal and violated principles of natural justice. The petitioner argued that no notice or opportunity of hearing was provided before transferring the jurisdiction. The court found that the Commissioner of Income Tax, New Delhi, issued the notice at the petitioner's old address, despite knowing the new address due to a search conducted under Section 132 at the new address. The court held that the notice should have been sent to the new address and that the department failed to prove the notice was received by the petitioner. Consequently, the order dated 23rd September 2008 and the corrigendum dated 26th October 2009 were quashed as they were passed in violation of natural justice.

2. Jurisdiction of the Assistant Commissioner of Income Tax, Meerut:
The petitioner argued that the Assistant Commissioner of Income Tax, Meerut, had no jurisdiction to issue a notice under Section 153A for initiating assessment proceedings. The court agreed, stating that the transfer of jurisdiction was illegal. Therefore, all consequential proceedings initiated by the Assistant Commissioner of Income Tax, Meerut, were also without jurisdiction and could not be sustained.

3. Validity of the Notice Issued Under Section 153A of the Income Tax Act:
The petitioner received a notice under Section 153A on 30th October 2009, which the petitioner contended was invalid due to the illegal transfer of jurisdiction. The court held that since the transfer of jurisdiction was void, the notice under Section 153A issued by the Assistant Commissioner of Income Tax, Meerut, was also invalid and quashed it.

4. Validity of the Order Directing a Special Audit Under Section 142(2A) of the Income Tax Act:
The petitioner contended that the order dated 18th December 2009 directing a special audit was passed without specifying reasons and without examining the books of accounts. The court found that the Assistant Commissioner of Income Tax, Meerut, issued the order mechanically and without application of mind. The court emphasized that an order under Section 142(2A) entails civil consequences and must be based on a thorough examination of the accounts. The court held that the order was passed without perusing the books of accounts and without giving reasons, making it invalid. Consequently, the order dated 18th December 2009 was quashed.

Conclusion:
The court quashed the order dated 23rd September 2008 and the corrigendum dated 26th October 2009 issued by the Commissioner of Income Tax, New Delhi, as well as all consequential proceedings, including the notices under Section 153A and the order directing a special audit under Section 142(2A). The writ petition was allowed, and it was left open to the competent authority to pass a fresh order in accordance with the law.

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