2007 (12) TMI 193 - HC - Income Tax

Transfer of assessee s case from Mumbai to New Delhi petitioner, a member of U.P. Distillery Association (UPDA) during search it was found that UPDA acted as nodal agency to made illegal payments to various public servants and politicians on behalf of distilleries situated in U.P. - there was sufficient material with revenue to prima facie show inadmissible expenditure by distilleries revenue is justified in proposing to transfer the case after complying with procedural requirements

Summary

Issues:
1. Transfer of assessment case from one jurisdiction to another under Section 127(1) of the Income Tax Act.
2. Justification of transferring the case based on material evidence of inadmissible expenditure by distilleries in U.P.
3. Violation of principles of natural justice or procedural irregularity in the transfer proceedings.

Analysis:
1. The petitioner received a letter regarding the centralization of assessment with another jurisdiction under Section 127(1) of the Income Tax Act. The petitioner responded, and an order for transfer was made. However, a review application was filed, leading to a writ petition. The court set aside the initial order but allowed the respondents to issue a proper show cause notice for transfer, ensuring due process was followed.

2. Notice was issued proposing the transfer of the case based on various reasons, including findings from search actions on distilleries in U.P. and incriminating documents seized. The petitioner contested the transfer, highlighting their business activities in U.P. and consolidation of accounts at the Mumbai head office. After detailed proceedings and hearing, the case was transferred under Section 127(2) of the Income Tax Act to a new Assessing Officer.

3. The petitioners argued that the transfer was unjustified, but the court found no violation of natural justice or procedural irregularity. Material evidence indicated inadmissible expenditure by distilleries and the petitioner's involvement in making payments. The court concluded that there was sufficient material for the transfer decision and that the petitioners were given a fair opportunity to present their case. Therefore, the court rejected the petition, stating that it was not a fit case for the court to intervene using its extraordinary jurisdiction.