2019 (12) TMI 321 - HC - Income Tax

Transfer of income tax cases valid from Dimapur to Kollam under Income Tax Act.

M.K. Rajendran Pillai Versus Principal Commissioner Of Income Tax And 4 Ors. Assam, Central Board Of Direct Taxes, The Deputy/Assistant Commissioner Of Income Tax Dimapur

M.K. Rajendran Pillai Versus Principal Commissioner Of Income Tax And 4 Ors. Assam, Central Board Of Direct Taxes, The Deputy/Assistant Commissioner Of ... Issues Involved:1. Transfer of assessment cases under Section 127(2)(a) of the Income Tax Act, 1961.2. Adequacy of notice and opportunity to be heard.3. Validity of reasons for transfer.4. Service of notice and procedural compliance.5. Alleged violation of principles of natural justice.Issue-wise Detailed Analysis:1. Transfer of assessment cases under Section 127(2)(a) of the Income Tax Act, 1961:The petitioners challenged the transfer of their income tax assessment cases from Dimapur, Nagaland to Kollam, Kerala. The transfer was ordered by the Principal Commissioner of Income Tax, Jorhat, exercising powers under Section 127(2)(a) of the Income Tax Act, 1961. The petitioners argued that the transfer was done without proper notice and an opportunity to be heard, thus violating principles of natural justice. The court noted that a search and seizure operation was conducted on the petitioners' premises, revealing significant financial interests in Kerala, justifying the need for coordinated investigation and administrative convenience.2. Adequacy of notice and opportunity to be heard:The petitioners contended that the notices dated 23.05.2018 and 26.06.2018 were either not served or served at incorrect addresses, denying them a reasonable opportunity to respond. The court examined the notices and found that they contained sufficient reasons for the proposed transfer, allowing the petitioners to make effective representations. The court also noted that the petitioners did not provide specific dates of receipt of the notices, which weakened their claim of inadequate opportunity.3. Validity of reasons for transfer:The court found that the notices provided adequate reasons for the transfer, including the need for centralized investigation due to substantial financial interests and business activities of the petitioners in Kerala. The court held that the reasons given were sufficient to justify the transfer under Section 127(2)(a) of the Act, facilitating coordinated investigation and administrative convenience.4. Service of notice and procedural compliance:The petitioners argued that the notices were not served at their registered addresses in Nagaland but at addresses in Kerala. The court held that the addresses in Kerala were not incorrect, as they were the same addresses used in previous communications. The court also referred to Section 27 of the General Clauses Act, 1897, which presumes proper service of notice when sent to the correct address. The court found that the petitioners' claim of non-service was not substantiated, and the procedural requirements were substantially complied with.5. Alleged violation of principles of natural justice:The court concluded that there was no violation of the principles of natural justice. The petitioners were given reasonable opportunities to respond to the notices, which they failed to utilize. The court emphasized that the discretion to transfer cases under Section 127 of the Act is vested in high-ranking officials and should not be interfered with unless it is arbitrary, perverse, or mala fide. The court found that the transfer orders were not arbitrary or perverse and were based on valid reasons.Conclusion:The court dismissed the writ petitions, upholding the transfer orders dated 18.07.2018 and the consequent notices issued under Section 153A of the Income Tax Act, 1961. The court found no merit in the petitioners' claims of inadequate notice, improper service, or violation of natural justice principles. The interim order was recalled, and no costs were awarded.