2011 (10) TMI 472 - HC - Income Tax

Power to transfer cases - CIT, Bikaner u/s 127 transferred assessment proceedings of the petitioner s case from ITO Ward-2, Sriganganagar to D.C.I.T. (Central), Bikaner - Revenue contended that even name of petitioner-Trust was mentioned in the search warrants, therefore, it cannot be said that there was no reasons for transfer of the proceedings - Held that - Under the said order, all the proceedings of all the family members of person searched u/s 132 including, the petitioner-Trust, whose name was mentioned in such warrants u/s 132 also and, therefore, all connected cases were transferred from Sriganganagar to Bikaner to one Assessing Authority, for coordinated investigation and administrative convenience. It is not in dispute that said Commissioner had power to transfer the proceedings of assessment from one range to another under his charge as per the provisions of Section 127. Therefore, the said order u/s 127 is found to be perfectly valid and legal. Validity of Notice issued u/s 153A - assessee instead of complying with the notice, challenged the same before this Court - Held that - In the present case, nothing invokes the good conscience of this Court for exercising its wide discretionary powers under Articles 226 and 227 of the Constitution of India for quashing of the impugned notice u/s 153A. In considered opinion of this Court, it would be premature to quash such a notice at this stage specially when objections of the assessee in this regard are yet to be decided and the petitioner has made a prayer to this effect also in the writ petition. The interest of justice would be served by now directing the respondents to decide the objections of the petitioner-Trust within one month from today and allow the assessee-Trust to proceed further in the matter - Petition dismissed.

Summary

Issues Involved:
1. Validity of the order under Section 127 of the Income Tax Act.
2. Validity of the notice under Section 153A of the Income Tax Act.

Issue-wise Detailed Analysis:

Validity of the order under Section 127 of the Income Tax Act:

The petitioner, a charitable trust, challenged the transfer of its assessment proceedings from ITO Ward-2, Sriganganagar to D.C.I.T. (Central), Bikaner, under Section 127 of the Income Tax Act. The petitioner argued that the transfer order was invalid as the reasons for the transfer were not recorded as required by Section 127(1). The court noted that the reasons for the transfer were communicated to the petitioner, stating that the transfer was necessary for coordinated investigation as the petitioner trust was closely connected with a search case involving its trustees. The petitioner did not file any objections to the transfer after being given an opportunity to do so. The court held that the transfer order was valid and legal, citing precedents that supported the transfer of cases for coordinated and effective investigation. The court dismissed the challenge to the transfer order, stating that it was justified and in accordance with Section 127 of the Act.

Validity of the notice under Section 153A of the Income Tax Act:

The petitioner also challenged the notice issued under Section 153A, which required the petitioner to file a return of income for the assessment year 2008-09. The petitioner argued that Section 153A could only be invoked if a search was initiated against the assessee-trust itself under Section 132, and since no such search was conducted, the notice was invalid. The court observed that the notice was a mere procedural step and did not lack jurisdiction. The petitioner had not complied with the notice and instead challenged it prematurely before the court. The court noted that the petitioner had already made representations against the notice, which were yet to be decided by the authorities. The court held that the writ petition was premature and directed the respondents to decide the petitioner's objections within one month. The court vacated the interim order that had stayed the proceedings and dismissed the writ petition, allowing the authorities to proceed with the matter in accordance with the law.

Conclusion:

The court upheld the transfer order under Section 127 and dismissed the challenge to the notice under Section 153A as premature, directing the authorities to decide the petitioner's objections within one month. The writ petition was dismissed with costs.