Tax Jurisdiction Transfer to Jaipur Overturned Due to Procedural Lapses; Mumbai to Reassess with Valid Reasons.

The HC quashed the order transferring the assessment jurisdiction from Mumbai to Jaipur under Section 127 of the Income Tax Act, 1961, due to lack of adequate reasons and material evidence. The court found procedural lapses, including failure to provide the petitioner a reasonable opportunity to be heard. It directed the Principal Commissioner, Mumbai, to reassess the transfer with valid reasons and material within four weeks, allowing the petitioner to present their case. The impugned notice dated 21 November 2022 was set aside, and the writ petition was disposed of accordingly.

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Issues Involved:
1. Validity of the transfer of assessment jurisdiction under Section 127 of the Income Tax Act, 1961.
2. Adequacy of reasons and material for such transfer.
3. Compliance with procedural requirements and opportunity of being heard.

Summary:

1. Validity of the Transfer of Assessment Jurisdiction:
The petitioner sought the issuance of a writ of Certiorari to quash the Order dated 21 November 2022, which transferred the assessment jurisdiction from DCIT-19(3), Mumbai to DCIT Central Circle-3, Jaipur under Section 127 of the Income Tax Act, 1961. The petitioner argued that he had been filing his income returns in Mumbai for the last 22 years and that there was no material found during the search operation connecting him with the Veto Group of Jaipur.

2. Adequacy of Reasons and Material for Transfer:
The petitioner contended that no incriminating material was found during the survey conducted on M/s Landmark Hospitality Pvt. Ltd., where he was a Director, nor during the search proceedings on the Veto Group. The show cause notice did not mention any material collected against the petitioner. The court noted that the reply affidavit from the Respondent-revenue did not provide specific averments of incriminating material found against the petitioner. The authorities seemed to be speculating that the documents and data found "may relate to the assessee as well as other assessees of this group."

3. Compliance with Procedural Requirements and Opportunity of Being Heard:
The court emphasized that Section 127 requires the Principal Chief Commissioner to transfer cases only after recording reasons and giving the assessee a reasonable opportunity of being heard. The instructions dated 17 September 2008 from CBDT were cited, which mandate that reasons and relationships with the main persons of the group be included in the proposal for centralization. The court found that the impugned order did not reflect why it was necessary to transfer the jurisdiction and that the assessing officer acted mechanically, treating the request from Jaipur as binding without an independent assessment.

Conclusion:
The court held that the order impugned was unsustainable in law and set it aside. It allowed the Principal Commissioner, Mumbai, to pass orders afresh if cogent material and reasons justifying the transfer to Jaipur were communicated within four weeks. The petitioner would be given an opportunity of being heard, and any requisite order should be passed within eight weeks. Consequently, the impugned notice dated 21 November 2022 was quashed, and the writ petition was disposed of on these terms.

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