1997 (12) TMI 43 - HC - Income Tax

Summary

Issues Involved:
1. Competency of the Commissioner to order transfer u/s 127(2)(a) of the Income-tax Act, 1961.
2. Validity of transfer for coordinated investigation.
3. Alleged violation of principles of natural justice.

Summary:

1. Competency of the Commissioner to order transfer u/s 127(2)(a) of the Income-tax Act, 1961:
The petitioner contended that the Commissioner of Income-tax was not the competent authority to order the transfer, arguing that only the Chief Commissioner or Director-General could do so. The court referred to sub-section (2)(a) of section 127 of the Income-tax Act, which allows the Director-General, Chief Commissioner, or Commissioner to order a transfer if they are in agreement. The court concluded that the Commissioner was competent to order the transfer, stating, "Thus all the three authorities are competent and the present impugned proceedings have been passed by the Commissioner of Income-tax."

2. Validity of transfer for coordinated investigation:
The petitioner argued that the transfer for coordinated investigation was not a valid ground. The court examined the necessity for coordinated investigation due to the involvement of close relatives and business associates of an ex-minister, whose cases were already being assessed in New Delhi. The court cited multiple precedents supporting the validity of transfer for coordinated investigation, including Maheshwari Lime Works v. CIT and Bhatia Minerals v. CIT. The court held, "The first respondent is well founded and well justified in considering the request of the second respondent to transfer the petitioner's case to Delhi in order to have coordinated investigation."

3. Alleged violation of principles of natural justice:
The petitioner claimed that the Commissioner had prejudged the issue by agreeing to the transfer proposal before issuing the show-cause notice, thus violating principles of natural justice. The court rejected this contention, stating that the issuance of a show-cause notice after a prima facie agreement does not imply prejudgment. The court noted, "Merely because the first respondent-Commissioner had come to a prima facie conclusion or concurred with the second respondent, it cannot be held that he has prejudged the issue."

Conclusion:
The court dismissed the writ petition, affirming the competency of the Commissioner to order the transfer and validating the transfer for coordinated investigation. The court found no violation of principles of natural justice and upheld the impugned proceedings. The writ petition was dismissed with costs of Rs. 3,500.