2011 (4) TMI 692 - HC - Income Tax

Power to transfer cases - under Section 127 of the Act assessment can be transferred to a place other than the place of normal assessment only for adequate reasons - Such jurisdiction has to be exercised fairly and after complying with the principles of natural justice by giving hearing and recording reasons - Once bonafide opinion is formed on the basis of valid reasons order of transfer is not liable to be interfered with - Held that the petitioner had dealings with the group of companies not only as a lawyer but also in dealing with the property having financial implications - The adequacy of reasons or the fact that the different remedy could be taken under Section 153C of the Act as suggested by learned counsel for the petitioner cannot be a ground to interfere with the impugned order -Appeal is dismissed.

Summary

Issues:
Petition seeking quashing of order transferring assessment from Gurgaon to Delhi under Section 127(2) of the Income Tax Act, 1961.

Analysis:
The judgment delivered by the Punjab and Haryana High Court involved a petition seeking the quashing of an order dated 18.10.2010 under Section 127(2) of the Income Tax Act, 1961, which transferred the assessment of the petitioner from Gurgaon to Delhi. The reason cited for the transfer was the petitioner's connection to the Ashok Soloman and Chintels Group of companies, which were subjects of a search and seizure operation on 26.3.2010. The Commissioner found it necessary for a coordinated post-search investigation and proper assessment framing to transfer the case to Delhi, considering the petitioner's role as a lawyer for the group and his involvement in property transactions with them. The petitioner contended that there was no valid ground for the transfer, as he had no financial association with the companies under investigation in Delhi, despite purchasing land and entering a collaboration agreement with an associate company of the group.

The Court considered the arguments presented by both parties. The petitioner's counsel argued that the reasons for transferring the assessment were not relevant, asserting that there was no financial nexus between the petitioner and the searched companies, with only one transaction of land purchase disclosed by the petitioner in his return. However, the Court disagreed with this submission, emphasizing that Section 127 of the Act allows assessment transfer to another location for valid reasons, ensuring fairness and compliance with natural justice principles by providing a hearing and recording reasons. Once a genuine opinion is formed based on valid reasons, the transfer order should not be interfered with.

The Court further elaborated that the petitioner had dealings with the group of companies not just as a lawyer but also in financial matters related to property transactions, justifying the transfer decision. The Court dismissed the petitioner's argument that an alternative remedy under Section 153C of the Act could have been pursued, stating that this alone was not sufficient grounds to challenge the transfer order. Ultimately, the Court found no valid reason to interfere with the transfer decision and dismissed the petition.