Order transferring assessment jurisdiction quashed for lack of reasons

The court quashed the order transferring assessment jurisdiction from Kolkata to Aurangabad under Section 127 of the Income Tax Act, 1961, as it lacked justification and reasons. The court emphasized the right of the assessee to know the reasons for such transfers. The decision allowed the department to proceed with previous proceedings or initiate new ones, but directed them to provide reasoned orders in compliance with natural justice principles in the future. The writ petition was disposed of without costs.

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Issues: Challenge to order under Section 127 of the Income Tax Act, 1961 for transfer of assessment jurisdiction from Kolkata to Aurangabad.

Analysis:
The petitioner challenged an order under Section 127 of the Income Tax Act, 1961, dated October 4, 2018, which transferred the assessment jurisdiction from Kolkata to Aurangabad. The petitioner contended that the authorities did not provide any reasons for the transfer in the show cause notice or the impugned order. The petitioner argued that they were entitled to know the reasons for the transfer of jurisdiction. The department, on the other hand, alleged that the petitioner was a shell company engaged in fraudulent activities, and it was necessary for them to be assessed in Aurangabad. However, the court noted that neither the show cause notice nor the order contained any reasons for the transfer. The court emphasized that an assessee has the right to know the reasons for the transfer of assessment jurisdiction under Section 127 of the Act. It held that a non-speaking order, like the one in question, is invalid.

The court, after considering the arguments from both sides, found that the impugned order was non-speaking and lacked any justification for the transfer of jurisdiction. As a result, the court quashed the order dated October 4, 2018. However, the court clarified that this decision does not prevent the department from concluding the proceedings based on a previous show cause notice or initiating fresh proceedings against the petitioner for the same assessment years. The court directed the department to adhere to the principles of natural justice and issue a reasoned order in any future proceedings under Section 127 of the Act. Consequently, the writ petition was disposed of with no order as to costs.

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