2014 (3) TMI 473 - HC - Income Tax

Power to transfer the case u/s 127 of the Act Held that - Two notices were issued to the petitioner and she was also given the opportunity of being heard There cannot be any dispute to the proposition that the reasons for exercising power under Section 127(1) of the Act has to be relevant and germane - the power under Section 127(1) of the Act is exercised on extraneous reason the order falls outside the purview of Section 127 (1) of the Act - The reasons given in the order cannot be said to be irrelevant or not germane to the issues - Section 127(1) of the Act gives ample power to the Commissioner to transfer a case on a valid and cogent reason - There is no error in the order of the Commissioner in exercising the power by the Commissioner under Section 127 (1) of the Act in transferring the case of the petitioner. Search u/s 132(4A) of the Act Held that - Section 132(4A) of the Act contains a provision regarding presumption - The provision may be relevant at the time of final assessment regarding the cash seized in the search, but the provision does not help the petitioner in finding any fault in exercise of power under Section 127 (1) of the Act Decided against Assessee.

Summary

Issues:
1. Validity of order transferring the case under Section 127(2) of the Income Tax Act, 1961.

Analysis:
The petitioner sought to quash an order transferring their case from one jurisdiction to another under Section 127(2) of the Income Tax Act, 1961. The transfer was based on a search and seizure operation conducted against specific individuals connected to the petitioner. The petitioner contested the transfer, arguing that there was no valid reason provided for the transfer. The petitioner relied on legal precedents emphasizing the necessity of relevant and germane reasons for such transfers, as outlined in the Act.

The Commissioner, in the impugned order, detailed the reasons for the transfer, citing the petitioner's connection to the individuals under investigation and the physical location where the search operation took place. The Commissioner highlighted that cash was found in the petitioner's room during the search, linking the petitioner to the ongoing investigation. The Commissioner's order was challenged on the grounds that the reasons provided were not relevant or germane to the issues at hand.

The Court examined the provisions of Section 127(1) of the Act, emphasizing the requirement of valid and cogent reasons for transferring a case. The Court found that the reasons cited by the Commissioner were directly related to the petitioner's connection to the search operation and the seized cash. The Court concluded that the reasons provided were not irrelevant or non-germane, affirming the Commissioner's authority to transfer the case under Section 127(1) of the Act.

Additionally, the Court addressed the petitioner's references to Section 132(4A) and Section 153(C) of the Act. While these provisions were relevant to assessment proceedings and presumptions related to seized items, they did not impact the validity of the Commissioner's decision to transfer the case. The Court ultimately dismissed the writ petition, upholding the Commissioner's order to transfer the petitioner's case under Section 127(1) of the Act.

In summary, the judgment clarified the necessity of providing relevant and cogent reasons for transferring cases under Section 127(1) of the Income Tax Act, 1961. The Court examined the specifics of the case, including the petitioner's connection to the search operation and seized cash, and determined that the Commissioner's decision to transfer the case was valid and in accordance with the law.