2024 (6) TMI 821 - HC - Income Tax

IT assessment transfer upheld despite challenge over notice and DIN requirements under Section 127(2)

The Kerala HC dismissed a writ petition challenging the transfer of assessment proceedings from Sangli to Kozhikode under Section 127(2) of the IT Act. ... Validity of Assessment u/s 153A - Jurisdictional Authority for Assessment Proceedings - transfer of assessment proceedings from Sangli to Kozhikode was questioned on the grounds of lack of mandatory notice and hearing as required by Section 127(2) - petitioner argued that the transfer order lacked clarity on reasons and did not contain a Document Identification Number (DIN), rendering it illegal - HELD THAT:- From the record and the pleadings, it can be noted that after receipt of the centralization proposal dated 15.01.2021 from the 4th respondent/Director General of Income Tax (DGIT) (Inv.) Kochi, a notice was sent to the petitioner by the 3rd respondent/ Principal Commissioner of Income Tax, Pune in Annexure R1 (A) dated 26.02.2021 giving an opportunity to the petitioner to convey his objections, if any, to the proposed centralization of his case with Deputy Commissioner of Income Tax (DCIT), Central Circle, Kozhikode. The said notice was duly delivered on the e-filing portal as well as the registered e-mail ID of the petitioner. In the notice, it was categorically mentioned that in the event of not receiving any reply from the petitioner within ten days of receipt of the notice, an order under Section 127 (2) of the IT Act shall be passed transferring his case to the 1st respondent/Assessing Officer, DCIT, Central Circle, Kozhikode. Despite the service of notice on the petitioner on the e-filing portal as well as the registered e-mail ID, the petitioner chose not to file any reply to the said notice. The petitioner's contention that the notice was not received by him cannot be accepted in view of the aforesaid facts. As the petitioner did not choose to file a reply, the order in Annexure R1(B) dated 09.04.2021 has been passed transferring the proceedings from Sangli to Kozhikode, as mentioned above. The question of whether in the absence of DIN, the order becomes inoperative, is pending consideration before the Supreme Court in THE COMMISSIONER OF INCOME TAX Versus BRANDIX MAURITIUS HOLDINGS LTD.[2024 (1) TMI 276 - SC ORDER] arising out of the judgment of the Brandix Mauritius Holdings Ltd [2023 (4) TMI 579 - DELHI HIGH COURT], wherein the learned Division Bench of the Delhi High Court has held that in the absence of DIN any communication, order should be treated invalid. However, the Supreme Court has stayed the said judgment vide interim order passed on 03.01.2024 in the said Special Leave Petition. So far as the question of no reasons in the order passed under Section 127 (2) in IT Act in Annexure R1 (B) is concerned, it may be said that the petitioner chose not to file any reply to the notice issued to him. Even otherwise, the facts would disclose that the petitioner is a resident within the jurisdiction circle of Kozhikode. The money was recovered here. The petitioner’s place of business is within the jurisdiction limit and therefore valid reasons are available for transferring the proceedings from Sangli to Kozhikode. No error in the proceedings as contended by the learned Counsel for the petitioner. Thus, the writ petition has no merit which is hereby dismissed. Issues:1. Jurisdictional transfer of assessment proceedings2. Validity of notices under Section 153A and Section 142(1)/143(2) of the IT Act3. Source of seized money and explanation provided by the petitioner4. Lack of response to centralization proposal notice and transfer of case5. Validity of order under Section 127(2) without DIN6. Consideration of reasons for transfer of proceedings from Sangli to KozhikodeJurisdictional Transfer of Assessment Proceedings:The petitioner challenged the transfer of jurisdiction from the 2nd respondent to the 1st respondent without filing any objection to the notice issued by the Principal Commissioner at Pune. The petitioner contended that the transfer lacked mandatory notice and hearing as required by Section 127(2) of the IT Act. However, the court noted that the petitioner did not respond to the notice giving an opportunity to convey objections to the proposed centralization, resulting in the transfer of the case to Kozhikode.Validity of Notices under Section 153A and Section 142(1)/143(2) of the IT Act:The petitioner filed a writ petition challenging notices under Section 153A and Section 142(1)/143(2) of the IT Act for the Assessment Years 2015-16 to 2020-21. Additionally, the petitioner impugned assessment orders passed under Section 144 read with Section 153A for the same years. The petitioner did not file any return under Section 153A despite receiving notices, leading to further legal complications.Source of Seized Money and Explanation Provided by the Petitioner:A sum of Rs. 1,46,45,000 was seized from the petitioner and another individual during a joint inspection by Customs officials. The petitioner claimed ownership of the entire cash seized and provided explanations regarding the source of the money, including details of a supposed business transaction involving antique jewelry. However, the petitioner failed to produce sufficient evidence to substantiate the claims, leading to doubts about the authenticity of the provided documents and explanations.Lack of Response to Centralization Proposal Notice and Transfer of Case:Despite receiving a notice regarding the centralization proposal of the case, the petitioner did not respond within the stipulated time frame. Consequently, the case was transferred from Sangli to Kozhikode as per the provisions of the IT Act. The court rejected the petitioner's contention of not receiving the notice, emphasizing the importance of timely responses in legal proceedings.Validity of Order under Section 127(2) Without DIN:The petitioner raised concerns about the legality of the order passed under Section 127(2) due to the absence of a Document Identification Number (DIN). The court noted that the issue of the order's validity in the absence of DIN is pending before the Supreme Court, citing a related judgment from the Delhi High Court. However, the court highlighted that the petitioner's lack of response to the notice was a crucial factor in the decision to transfer the case jurisdiction.Consideration of Reasons for Transfer of Proceedings from Sangli to Kozhikode:The court found that valid reasons existed for transferring the assessment proceedings from Sangli to Kozhikode, considering the petitioner's residence, business location, and the location where the money was recovered. Despite the petitioner's objections, the court concluded that the transfer was justified based on the available facts and jurisdictional considerations.In conclusion, the court dismissed the writ petition, stating that the petitioner's contentions lacked merit. The petitioner was advised to seek appropriate remedies under the Income Tax Act if aggrieved by the assessment orders. The court also mentioned that time spent on the petition would be excluded when calculating the limitation period for filing an appeal against the assessment orders.