2025 (3) TMI 948 - HC - Income Tax

Transfer order under Income Tax Act Section 127 upheld after petitioner failed to respond to corrigendum notice

Vishal Darshanlal Talreja Versus Principal Commissioner Of Income Tax, PCIT, Vadodara 1 & Anr.

Gujarat HC dismissed petitioner's challenge to transfer order under section 127 of Income Tax Act. Petitioner's case was transferred from Vadodara to Pune ... Transfer u/s 127 - transfer of case of the petitioner to Pune on the ground that the petitioner was having significant suspicious cash transactions with M/s. G.K. Associates which is assessed with DCIT Central Circle-2(2), Pune - Denial of principles of natural justice by not providing the petitioner with the necessary documents and information relied upon for the transfer of the case Whether the corrigendum orderby providing further opportunity of hearing issued by the respondent was beyond the scope of the original order? HELD THAT:- Assessing Officer acquires the jurisdiction as per provisions of section 124 (1) of the Act for assessment whereas section 127 (1) of the Act provides for powers to the concerned authority to transfer any case of an assessee from one Assessing Officer to another Assessing Officer or officer subordinate to such authority. Such powers can be exercised only after giving assessee a reasonable opportunity of hearing and recording the reasons for the same. As per the provisions of section 127 of the Act, requirement of transferring the assessment in appropriate cases would have element of public interest and the assessee has no choice to select his Assessing Officer. Therefore, respondent no. 1 has passed the corrigendum order by providing further opportunity of hearing to the petitioner vide notice dated 21.12.2024 so as to comply with the mandatory requirement of providing opportunity of hearing and after recording the reasons, case is found to be fit to be transferred from Vadodara to Pune. Contention raised on behalf of the petitioner that impugned notice and order being corrigendum notice and order containing further details is without jurisdiction, is not tenable as the same are in continuation of order dated 29.11.2023 so as to comply with the provisions of the Act to provide opportunity of hearing to the petitioner. It is not in dispute that the petitioner has not filed any reply to the notice dated 21.12.2024 and now it is contended that the petitioner did not file reply as the said corrigendum notice referred to details relied upon to transfer case. Such approach of the petitioner cannot be accepted to quash the impugned order. In view of the provisions of section 127 and conspectus of law enumerated here in above, power of transfer of case of the petitioner cannot be said to have been exercised without jurisdiction or contrary to the material on record to justify such action. We are therefore of the view that we should not interfere with the impugned corrigendum order of transfer passed by respondent no. 1 under section 127 (2) of the Act. 1. ISSUES PRESENTED and CONSIDEREDThe core legal questions considered in this case include:Whether the issuance of the impugned notice dated 21st December 2024 and the order dated 2nd January 2025, under Section 127 of the Income Tax Act, was valid and within jurisdiction.Whether the respondent's actions violated the principles of natural justice by not providing the petitioner with the necessary documents and information relied upon for the transfer of the case.Whether the corrigendum order issued by the respondent was beyond the scope of the original order and notice, and whether it was justified under the legal framework.Whether the petitioner was provided with a reasonable opportunity to be heard before the transfer of the case.Whether the transfer of the case was justified in the interest of revenue and public purpose.2. ISSUE-WISE DETAILED ANALYSISRelevant legal framework and precedents:The legal framework primarily involves Section 127 of the Income Tax Act, which empowers authorities to transfer cases between assessing officers after providing a reasonable opportunity to the assessee and recording reasons for such transfer. The principles of natural justice, including the right to be heard, are integral to this process. Precedents from various High Courts and the Supreme Court have established that while the assessee does not have a vested right to choose their assessing officer, the transfer must be justified by valid reasons, and the opportunity to be heard must be provided.Court's interpretation and reasoning:The Court interpreted that the issuance of the impugned notice and order was within the jurisdiction of the respondent as it was a continuation of the earlier order dated 29th November 2023. The Court found that the corrigendum was issued to comply with procedural requirements, providing the petitioner an opportunity to respond to the additional details and reasons recorded for the transfer.Key evidence and findings:The Court relied on evidence such as the details of suspicious cash transactions between the petitioner and M/s. G.K. Associates, as revealed through WhatsApp chats and statements recorded during search proceedings. These transactions were considered significant enough to warrant a coordinated investigation by transferring the case to Pune.Application of law to facts:The Court applied Section 127 of the Act, emphasizing that the transfer of cases is permissible when justified by public interest and revenue considerations. It noted that the petitioner was given an opportunity to respond to the notice dated 21st December 2024, which the petitioner did not avail. The Court found that the procedural requirements under Section 127 were met, and the transfer was justified based on the evidence of cash transactions.Treatment of competing arguments:The petitioner argued that the corrigendum notice and order exceeded the scope of the original notice and lacked jurisdiction. The Court rejected this argument, finding that the corrigendum was a procedural step to ensure compliance with the Act's requirements. The respondent's argument that the transfer was necessary for coordinated investigation and public interest was upheld.Conclusions:The Court concluded that the impugned notice and order were valid and within jurisdiction, and the transfer of the case was justified. The petitioner's failure to respond to the notice and the evidence of cash transactions supported the respondent's decision to transfer the case.3. SIGNIFICANT HOLDINGSThe Court held that the issuance of the corrigendum notice and order was a valid exercise of power under Section 127 of the Act. It emphasized the principle that the assessee does not have a right to choose their assessing officer, and transfers can be justified by public interest and revenue considerations. The Court stated that:'...the transfer of a pending case from one Assessing Officer to another outside of a city, locality or place is likely to cause considerable inconvenience to an assessee. However, as long as such powers are exercised bona fide, for public purpose and in the interest of Revenue, the role of the Court to dissect such reasons and to come to a different conclusion would be extremely limited.'The Court also highlighted that the procedural requirements under Section 127, including the opportunity to be heard and recording of reasons, were duly complied with by the respondent. The petition was rejected, affirming the validity of the transfer order.