2004 (4) TMI 64 - HC - Income Tax

Whether block assessment under Chapter XIV-B, would fall within the meaning of case in the Explanation to section 127, enabling the Chief Commissioner of Income-tax to transfer block assessment to a subordinate officer - whether the Chief Commissioner has got the power to transfer the case relating to block assessment to the Assistant Commissioner of Income-tax Considering the object and purpose of section 127 and to facilitate effective and co-ordinate investigation, the Explanation to section 127 has to be liberally construed and therefore block assessment would fall within the expression case enabling the Commissioner to transfer those cases relating to block assessment to the subordinate officer - we find no infirmity in the order passed by the Chief Commissioner in transferring the case to the Assistant CIT

Issues Involved:
1. Whether block assessment under Chapter XIV-B of the Income-tax Act, 1961, falls under the meaning of "case" in the Explanation to section 127 of the Income-tax Act, 1961.
2. Whether the Chief Commissioner of Income-tax has the authority to transfer block assessment cases to a subordinate officer.
3. Validity of the transfer order issued by the Chief Commissioner of Income-tax.
4. Jurisdiction of the Assistant Commissioner of Income-tax, Investigation Circle-I, Calicut, to make the block assessment.

Detailed Analysis:

Issue 1: Definition of "Case" in the Context of Block Assessment
The primary question was whether block assessment under Chapter XIV-B of the Income-tax Act, 1961, falls within the meaning of "case" in the Explanation to section 127 of the Income-tax Act. The court noted that the term "case" in relation to any person means all proceedings under the Act in respect of any year pending on the date of such order or direction or which may have been completed on or before such date. The court concluded that the expressions "any case" and "any year" exclude limitation or qualification, connoting a wider generality. Therefore, "block assessment" falls within the expression "case," enabling the Commissioner to transfer those cases relating to block assessment to the subordinate officer.

Issue 2: Authority of the Chief Commissioner to Transfer Block Assessment Cases
The court examined whether the Chief Commissioner of Income-tax has the authority to transfer block assessment cases to a subordinate officer. The court observed that section 127 confers powers on the Director General or Chief Commissioner or Commissioner to transfer any case from one or more Assessing Officers subordinate to him to any other Assessing Officer, after giving the assessee a reasonable opportunity of being heard and recording reasons for doing so. The court held that the Chief Commissioner is not exercising jurisdiction but rather the power of transferring a case from one officer to another. Thus, the Chief Commissioner has the authority to transfer block assessment cases.

Issue 3: Validity of the Transfer Order
The assessee contended that the show cause notice issued by the Chief Commissioner did not contain the entire reasons prompting the transfer order. The court noted that the statutory formalities, including giving the assessee a reasonable opportunity of being heard and recording reasons, were complied with. The court emphasized that the power under section 127 has to be exercised in public interest and to facilitate effective and coordinated investigation. The court found no illegality in the transfer order issued by the Chief Commissioner, thus upholding its validity.

Issue 4: Jurisdiction of the Assistant Commissioner of Income-tax, Calicut
The assessee argued that the Assistant Commissioner of Income-tax, Investigation Circle-I, Calicut, did not have jurisdiction to make the block assessment, which should remain with the original Assessing Officer. The court referred to section 158BG, which states that the order of assessment for the block period shall be passed by an Assessing Officer not below the rank of an Assistant Commissioner or Deputy Commissioner or Assistant Director or Deputy Director. The court concluded that the Chief Commissioner rightly transferred the file to the Assistant Commissioner, Calicut, who had the jurisdiction to handle the block assessment.

Conclusion:
The court dismissed the appeal and writ petition, answering the questions in favor of the Revenue. The court held that block assessment falls within the meaning of "case" in the Explanation to section 127, and the Chief Commissioner has the authority to transfer such cases to a subordinate officer. The transfer order issued by the Chief Commissioner was valid, and the Assistant Commissioner of Income-tax, Calicut, had the jurisdiction to make the block assessment.

← Previous Next →