2014 (12) TMI 18 - HC - Income Tax

Power to retransfer the case u/s 127 Instructions given by CBDT dated 31.01.2011 - Whether by virtue of the circular issued by the Board, dated 31.01.2011, fixing monetary limit for the officers to deal with the cases would oust the jurisdiction of the third respondent from exercising his power to transfer the assessment file of the petitioner from the second respondent to the first respondent in exercise of his power u/s 127 and the first respondent has jurisdiction to deal with the petitioner s assessment files and whether he has concurrent jurisdiction with that of the second respondent Held that - The proceedings dated 31.01.2011/08.04.2011 are instructions and are not orders or circulars - an instruction issued, cannot obliterate or deny the powers of the Director General or the Chief Commissioner or the Commissioner to exercise power of transfer u/s 127 of the Act - The object of Section 127 of the Act is to empower the officers at the level of Director General or Chief Commissioner or Commissioner with the power to transfer the Assessee s files from one or more Assessing Officers to any other Assessing Officers or Assessing Officers both being subordinate to him - the Commissioner has jurisdiction to transfer cases only within his jurisdiction whereas the power of the board is wider and it can transfer the cases from one jurisdiction of one Commissioner to another - The exercise of the power by the Commissioner does not exhaust the power of the transfer by the Board and the Board has independent power u/s 127 of the Act to transfer cases. Circular cannot mitigate against the power u/s 127 of the Act - on the basis of request received from the range head namely, Joint Commissioner Income Tax Circle-II, three cases including the petitioner s case, were transferred for effective and timely completion of scrutiny assessment proceedings, to make equitable distribution of workload the respondent has completed earlier assessment proceedings of the petitioner for the AY 2009-10, in which certain directions has been given by the CIT(A)-I regarding recomputing derivative laws - there is no inconvenience caused to the assessee. Whether the instruction issued with regard to the pecuniary jurisdiction issued by the Board from time to time is as sacrosanct and cannot be amended Held that - After the issuance of the instruction dated 31.01.2011, a subsequent instruction was given on 08.04.2011 - the monetary limit fixed in the instruction dated 31.01.2011, was not a rigid limit - This is manifest from the subsequent instruction dated 08.04.2011, which has given discretion to the Chief Commissioner and Director General to adjust the limits - the amended instruction dated 08.04.2011 itself, came to be issued, as Chief Commissioners have expressed the view that the limits fixed in the instruction dated 31.01.2011, if strictly enforced would lead to unequal distribution of workload between Assistant Commissioner and Income Tax Officers the order of transfer of the file of the petitioner to the first respondent states that the proceedings has been passed for administrative convenience and apart from the petitioner s case, two other cases have also been transferred - The purpose for such transfer has been elucidated in the counter affidavit -there is no malafide alleged as against the first respondent, though a faint plea was raised at the time of arguments, but nevertheless not pursued, since there was no such averments in the affidavit nor the concerned officer was impleaded in his personal capacity Decided against assessee.

Summary

Issues Involved:
1. Validity of the transfer order under Section 127 of the Income Tax Act.
2. Jurisdiction of the Income Tax Officer (ITO) to assess the petitioner's files.
3. Applicability and authority of CBDT circulars fixing pecuniary jurisdiction.

Issue-wise Detailed Analysis:

1. Validity of the Transfer Order under Section 127 of the Income Tax Act:
The petitioner challenged the transfer of his assessment file from the second respondent to the first respondent, asserting that it violated the CBDT circular dated 31.01.2011, which fixed monetary limits for assessing officers. The court clarified that the circular issued by the CBDT under Section 119 of the Act provides instructions for the proper administration of the Act but does not override the statutory powers granted under Section 127. The court emphasized that Section 127 empowers the Director General, Chief Commissioner, or Commissioner to transfer cases for administrative convenience, and this power is independent of Section 119. The court referred to precedents, including the Supreme Court's rulings in Kerala Financial Corporation vs. CIT and UCO Bank vs. CIT, which established that while CBDT circulars are binding for general interpretation, they cannot negate statutory provisions or the powers granted by the Act. Consequently, the court upheld the validity of the transfer order under Section 127, stating that the instruction issued by the CBDT does not mitigate against the statutory power of transfer.

2. Jurisdiction of the Income Tax Officer (ITO) to Assess the Petitioner's Files:
The petitioner argued that the first respondent, ITO Ward No.1(4), lacked territorial jurisdiction over his case since his properties and income sources fell under ITO Ward No.1(3). The court examined the territorial jurisdiction and found that the Deputy Commissioner of Income Tax Circle-I, Erode, has jurisdiction over ITO Ward No.1(1) to (4) with the same range code (65). Therefore, the court concluded that the first respondent has concurrent jurisdiction with the second respondent, and the transfer for administrative convenience does not violate the jurisdictional boundaries. The court dismissed the petitioner's contention regarding the lack of territorial jurisdiction.

3. Applicability and Authority of CBDT Circulars Fixing Pecuniary Jurisdiction:
The petitioner contended that the CBDT circulars fixing pecuniary limits for assessing officers should be strictly followed, and the transfer violated these instructions. The court noted that the circulars issued under Section 119 are for administrative convenience and do not have the force to override statutory provisions. The court highlighted that the circular dated 31.01.2011, and its subsequent modification on 08.04.2011, provided flexibility to Chief Commissioners and Directors General to adjust monetary limits to ensure equitable workload distribution. The court reiterated that these instructions are not rigid and do not negate the statutory powers under Section 127. The court concluded that the transfer order was justified for equitable workload distribution and administrative convenience, dismissing the argument that the circulars were sacrosanct.

Conclusion:
The court dismissed the writ petitions, upholding the validity of the transfer order under Section 127 and confirming the jurisdiction of the first respondent. The court clarified that CBDT circulars under Section 119 provide administrative guidelines but do not override statutory powers. The petitions were dismissed with no costs, and connected miscellaneous petitions were closed.