2022 (4) TMI 182 - HC - Income Tax

Transfer of Income Tax Assessment Proceedings Upheld: Section 127 Authority Discretion

The Court upheld the transfer of assessment proceedings from Central Circle-1, Raipur to Central Circle-08, New Delhi under Section 127 of the Income Tax ... Order of transfer u/s 127 - transferring the case of the petitioner from Raipur to Delhi - HELD THAT:- The decisions pertaining to existence of financial nexus between the assessee-petitioner and the search party as a pre-requisite for exercise of power u/s 127 do not assist the petitioner as the impugned order herein clearly reveals that incriminating documents were found in the search and seizure of the premises of Bhatia Group, Tuteja Group and Dhand Group suggesting that the petitioner-company was involved in payment of unexplained money running into multiple crores to certain persons in the State of Chhattisgarh. Even if financial nexus is not palpable between the petitioner and the searched party, that by itself cannot take away the right of the Revenue to exercise its wide and sweeping powers u/s 127 of transferring a case in public interest i.e. for effective and expeditious completion of search, seizure and other operations. of premises. The citations relied upon by the petitioner relating to reasons not being cogent also are not relevant as they turn on their own facts. The impugned order herein clearly elicits cogent reasons which no man of ordinary prudence can categorize as irrelevant or extraneous. Moreso, the sufficiency and adequacy of the reasons assigned for transferring a case, cannot be gone into provided such reasons are cogent, based on relevant consideration and not motivated by malice. A bare perusal of reasons assigned in impugned order indicates that they are based on reasonable consideration which has nexus with the ultimate object of public interest sought to be achieved. This Court has no manner of doubt that the order impugned herein of transferring the case of the petitioner from Raipur to Delhi cannot be found fault with in limited writ jurisdiction. Issues:Challenge to order transferring assessment proceedings under Section 127 of the Income Tax Act.Analysis:The petitioner contested the transfer of assessment proceedings from Central Circle-1, Raipur to Central Circle-08, New Delhi under Section 127 of the Income Tax Act. The petitioner argued that the order lacked cogent reasons and cited various judgments to support this claim. They also emphasized the necessity of a financial nexus between the assessee and the searched party for such transfers. Additionally, they contended that transfer for centralization and coordinated investigation purposes is not permissible under Section 127. The petitioner stressed the importance of affording a reasonable opportunity before transferring a case.On the contrary, the Revenue defended the transfer order, asserting that it contained sufficient and cogent reasons. The impugned order highlighted incriminating documents found during a search at premises related to the petitioner, indicating involvement in unexplained payments to individuals in Chhattisgarh. The order justified the transfer to ensure a coordinated approach in assessment and public interest. The Revenue relied on previous judgments to support the speaking nature of the order and the valid reasons for the transfer.The Court examined the provisions of Section 127 of the IT Act, emphasizing public interest and fair investigation by the Revenue. It outlined the three aspects that circumscribe the competent authority's discretion in transferring cases. The Court noted that the power under Section 127 is broad and can be exercised at any stage of proceedings. It highlighted that the transfer must serve public interest and the objective of preventing tax evasion.After considering the arguments and legal principles, the Court found the reasons in the impugned order to be adequate and compliant with natural justice. It concluded that the transfer was in line with the public interest and objectives of the IT Act. The Court dismissed the writ petition, upholding the validity of the transfer from Raipur to Delhi under Section 127, emphasizing the wide scope of the authority's power in such matters.