2015 (2) TMI 674 - HC - Income Tax

Transfer of assessments from Patiala to Ghaziabad - Held that - The power to transfer an assessment is administrative in nature. An order passed under section 127 of the Act would, therefore, fall for judicial review only where it has violated statutory safeguards provided by Section 127 of the Act or the order has been passed without assigning any reasons or is mala fide or arbitrary. A perusal of the impugned order reveals that clear and cogent reasons, have been assigned for retransfer of the assessments from Patiala to Ghaziabad, which are preceded by a credible process of reasoning, a just and fair consideration of the objections thereby negating arguments as to a mala fide or perverse exercise of jurisdiction. An argument raised by counsel for the petitioners that as assessments were initially centralised at Patiala, their re-transfer to Ghaziabad is a review of the earlier order must necessarily be rejected. We are unable to read into Section 127 of the Act any impediment prohibiting the re-transfer of an assessment. The fact that the other assessees have already been assessed at Ghaziabad renders imperative that the petitioners are also assessed at Ghaziabad. - Decided against assessee.

Summary

Issues Involved:
1. Legality of the transfer of assessments from Patiala to Ghaziabad.
2. Requirement of assigning clear and cogent reasons for the transfer.
3. Allegation of bias and influence by the Bajaj group.
4. Nature and scope of power under Section 127 of the Income Tax Act.
5. Applicability of judicial precedents cited by the petitioners.

Detailed Analysis:

1. Legality of the Transfer of Assessments from Patiala to Ghaziabad:
The petitioners challenged the orders transferring their assessments from Patiala to Ghaziabad, arguing that the transfer was arbitrary and lacked clear reasons. Initially, the assessments were centralized at Patiala, but a fresh show cause notice proposed transferring them to Ghaziabad. Despite objections, the assessments were transferred. The court noted that the petitioners were initially assessed at Delhi and Chandigarh, and after a search operation, their assessments were centralized at Patiala. However, the assessments of the other group, which had parted ways with the petitioners, were transferred to Ghaziabad. The court found that the respondents had provided detailed reasons for the transfer, including the need for coordinated investigation and administrative convenience.

2. Requirement of Assigning Clear and Cogent Reasons for the Transfer:
The petitioners argued that the respondents failed to provide clear reasons for the re-transfer from Patiala to Ghaziabad. The court examined the impugned order and found that it assigned detailed reasons for the transfer, including the long-standing joint business of the group until 2010 and the need for coordinated investigation. The court held that the reasons provided were clear and cogent, satisfying the requirement under Section 127 of the Act.

3. Allegation of Bias and Influence by the Bajaj Group:
The petitioners alleged that the re-transfer was influenced by the Bajaj group, which had considerable influence in Ghaziabad. The court dismissed this argument, noting that the other group had already been assessed at Ghaziabad, and a huge demand had been raised against them. The court found no evidence of bias or influence and held that the re-transfer was based on administrative convenience and the need for coordinated investigation.

4. Nature and Scope of Power under Section 127 of the Income Tax Act:
The petitioners contended that Section 127 of the Act does not confer the power of review, and the re-transfer amounted to a review of the earlier decision. The court rejected this argument, holding that the power to transfer assessments under Section 127 is administrative in nature and includes the power to re-transfer. The court emphasized that the power to transfer assessments is subject to statutory safeguards, including providing a reasonable opportunity to the assessees and assigning reasons.

5. Applicability of Judicial Precedents Cited by the Petitioners:
The petitioners relied on several judicial precedents to argue that the power to review cannot be exercised if it is not conferred by statute. The court examined these precedents and found them irrelevant, as the impugned order was not an order of review but an administrative transfer. The court held that the reasons provided for the re-transfer were sufficient and satisfied the requirements under Section 127 of the Act.

Conclusion:
The court dismissed the writ petitions, holding that the re-transfer of assessments from Patiala to Ghaziabad was legal and based on clear and cogent reasons. The court found no evidence of bias or influence and upheld the administrative nature of the power under Section 127 of the Act. The judicial precedents cited by the petitioners were found to be inapplicable to the case.