2014 (1) TMI 815 - HC - Income Tax

Transfer of assessment proceedings - Held that - As per section 127 - The transfer can take place only after sufficient compliance of principles of natural justice - The notice issued to petitioner does not indicate the reasons which have led to the revenue being of the view that the transfer of assessments from Mumbai to Bangalore is necessary for proper investigation - Following Shikshan Prasarak Mandal vs. CIT 2013 (3) TMI 153 - BOMBAY HIGH COURT - Giving of notice for proposed transfer must contain reasons for the same - This alone would enable a party to respond to the same and satisfy the audi alterm pa rtem rule - The reasons set out by the Commissioner on 29 October 2012 in support of the impugned order dated 2 November 2012 should be treated as a show cause notice and the Petitioner would respond to the same - Decided against assessee.

Summary

Issues:
Challenge to order transferring assessment proceedings from Mumbai to Bangalore under Section 127(2) of the Income Tax Act, 1961 based on failure to respond to summons; Breach of principles of natural justice in the transfer process.

Analysis:
The judgment by the High Court of Bombay involved three petitions challenging a common order transferring assessment proceedings from Mumbai to Bangalore under Section 127(2) of the Income Tax Act, 1961. The primary issue was the justification for the transfer based on the failure to respond to a summons issued under Section 131(1A) of the Act. The petitioners contended a breach of natural justice, arguing that the reason for transfer was not communicated in the show cause notice, depriving them of a fair opportunity to respond.

The court emphasized that while an assessee has no right to be assessed by a specific officer, the transfer of assessment proceedings must adhere to the requirements of Section 127 of the Act, including principles of natural justice. The court noted that the show cause notice for the transfer lacked specific reasons, merely citing "proper investigation and administrative convenience." Referring to precedent, the court stressed that the notice must contain reasons to enable a party to respond effectively, upholding the principles of natural justice.

Consequently, the court set aside the impugned order transferring the proceedings to Bangalore. However, the court directed that the reasons provided by the Commissioner should be treated as a show cause notice, allowing the petitioner to respond. The Commissioner was instructed to consider the petitioner's reply and then pass an appropriate order under Section 127 of the Act, ensuring due process and adherence to natural justice principles.

In conclusion, the court highlighted the importance of providing specific reasons for transferring assessment proceedings and ensuring that parties have a fair opportunity to respond. The judgment underscored the significance of procedural fairness and the right of the assessee to address and challenge the grounds for transfer, ultimately upholding the principles of natural justice in tax assessment procedures.