2020 (12) TMI 1361 - HC - Income Tax

Transfer of case u/s 127 - As submitted Authority to whom the proceedings were transferred has already passed the Assessment Order and the same has been served on the Appellant Assessee also - HELD THAT - We are of the opinion that the Writ Appeal has become infructuous in view of the Assessment Order having been passed by the Assessing Authority in pursuance of the impugned transfer order under Section 127 - We are further of the opinion that the Transfer Order passed under Section 127 is more in the nature of an administrative order rather than quasi-judicial order and the Assessee cannot have any right to choose his Assessing Authority, as no prejudice can be said to have been caused to the Assessee depending upon which Authority of the Department passes the Assessment Order. Assessee can only be concerned with getting an opportunity of hearing before the concerned Assessing Authority and adduce his evidence and make his submissions before the concerned Assessing Authority. The Income Tax Department has recently introduced a Scheme of Faceless Assessments which will avoid personal hearing and physical interaction of Assessee and Assessing Authority altogether. Assessee need not even know the name of the Assessing Authority who will deal with his case. The process of hearing appears to have been undertaken by the Assessing Authority who passed the order on 30.12.2016 during the pendency of the writ petition with the permission of the Court, and the Assessment Order to be kept in sealed cover and which was served on the Assessee after the dismissal of the Writ Petition on 05.12.2017. We do not see anything wrong in the Assessing Authority passing the Assessment Order in the present case and for other years with the due permission of the Court itself and keeping that in a sealed cover until the writ petition was dismissed on 05.12.2017. Even thereafter, the orders were sought to be served only along with a communication dated 21.01.2019 to which the Assessee responded by his letter dated 07.02.2019 and thereafter, another letter by the Chartered Accountants of the Assessee, Mr.R.Balachandran, a response for payment of outstanding tax was given by stating that they were not liable to pay the tax as assessed in the orders in question merely because the Writ Appeal was pending before this Court. It is made clear that there was no stay order from the Division Bench of this Court either against the recovery or passing of the order itself or service thereof on the Assessee. In our opinion, therefore, there was an abuse of process of the Court in the writ proceedings by the Assessee and taking advantage of the pending litigation, the Assessee has tried to ride roughshod over the Departmental Authorities which it was not entitled to do. An assessment of the tax liability under the Income Tax Act is an obligation of the Assessing Authority and equally obliged is the Assessee to abide by it subject to his right to avail remedy by way of appeals as provided in the Law. Instead of choosing either availing of those remedies or paying the tax as assessed by the Assessing Authority, the Assessee seems to be resting upon the pendency of the litigation in this Court which in our considered opinion was wholly misconceived in the first instance, and infructuous in any case with the passing of the Assessment Order on 30.12.2016. Therefore, we dismiss this Writ Appeal without interfering with the order of the learned Single Judge in any manner or the Assessment Order passed by the Assessing Authority or the Transfer Order passed by the Revenue Authorities under Section 127.

Summary

Issues:
Challenge to transfer order and consolidation of cases under centralization of search and seizure cases; Interpretation of Section 127 of the Income Tax Act; Impact of interim orders on assessment proceedings; Service of Assessment Order on the Assessee; Validity of Transfer Order under Section 127 of the Income Tax Act; Abuse of process of the Court by the Assessee.

Interpretation of Section 127 of the Income Tax Act:
The Appellant Assessee challenged the transfer order and consolidation of cases under centralization of search and seizure cases, arguing against the transfer of proceedings from one Assessing Officer to another. The High Court, in its judgment, emphasized that Section 127 of the Income Tax Act does not contain a non-obstante clause but provides for exclusion of certain procedures in specific circumstances. The Court noted that the transferee and transferor officers were in the same city and found no statutory requirement for the Assessee to be granted an opportunity before the transfer order. The Court concluded that the impugned notification was valid, as reasons were recorded for the transfer, and the petitioner failed to establish grounds for interference.

Impact of Interim Orders on Assessment Proceedings:
During the pendency of the writ petition, an interim order allowed the Revenue to conclude assessment proceedings, which were to be kept in a sealed cover until further court orders. The Assessment Order for the relevant year was passed after the interim order but could not be served on the Assessee due to ongoing legal proceedings. The Assessee later contested the service of the Assessment Order, citing the interim order's implications. However, the Court clarified that the interim order did not prevent the Assessing Authority from passing the Assessment Order, which was served on the Assessee post the dismissal of the writ petition.

Service of Assessment Order on the Assessee:
The Assessee claimed non-receipt of the Assessment Order and requested its withdrawal based on the pending writ appeal. The Court noted that the Assessment Order had been duly served on the Assessee, who attempted to evade payment by relying on the pending litigation. The Court criticized the Assessee's response to the Assessing Authority, highlighting the obligation to abide by tax assessments and the availability of legal remedies instead of exploiting ongoing legal proceedings to avoid compliance.

Validity of Transfer Order under Section 127 of the Income Tax Act:
The High Court opined that the Transfer Order under Section 127 of the Income Tax Act was administrative rather than quasi-judicial in nature. It emphasized that the Assessee does not have the right to select the Assessing Authority and must focus on presenting evidence and submissions before the designated authority. The Court mentioned the introduction of Faceless Assessments by the Income Tax Department, emphasizing reduced personal interaction between the Assessee and the Assessing Authority.

Abuse of Process of the Court by the Assessee:
The Court criticized the Assessee's conduct as an abuse of the legal process, noting attempts to circumvent tax liabilities by exploiting ongoing litigation. The Assessee's failure to pay the assessed tax or pursue available legal remedies was deemed misconceived and an abuse of the court's process. Consequently, the Court dismissed the Writ Appeal without altering the Single Judge's order or the Assessment Order, emphasizing the Assessee's obligation to comply with tax assessments and legal procedures.

This detailed analysis of the judgment from the Madras High Court covers various issues related to the challenge of transfer orders, interpretation of legal provisions, impact of interim orders, service of Assessment Orders, validity of Transfer Orders, and abuse of the court's process by the Assessee.