2006 (2) TMI 161 - HC - Income Tax

CIT, Kanpur under section 127(2) transferring the cases from Kanpur to Mumbai, on ground that assessments is to be centralized at Mumbai, as the director of assessee group has residence-cum-business premises at Mumbai and having business and huge money transactions there assessee s objection to this transfer of case mere on ground of inconvenience to the assessee, is not acceptable no arbitrariness in order of transfer of case

Summary

Issues Involved:
1. Validity of the order dated December 20, 2005, passed under Section 127 of the Income-tax Act, 1961.
2. Consideration of objections raised by the petitioners regarding the transfer of cases.
3. Judicial review of administrative or executive action.

Issue-wise Detailed Analysis:

1. Validity of the order dated December 20, 2005, passed under Section 127 of the Income-tax Act, 1961:

The petitioners challenged the order dated December 20, 2005, passed by the Commissioner of Income-tax-II, Kanpur, under Section 127 of the Income-tax Act, 1961. This order transferred the cases from the Assessing Officers at Kanpur to the Assessing Officers at Mumbai. The petitioners argued that the order was unjustified, based on conjectures and surmises, and did not attract the provisions of Section 127 of the Act. The court, however, found that the Commissioner had provided valid reasons for the transfer, including the fact that the key person of the group, Pradeep Kumar Bansal, had significant business operations and residence in Mumbai. The court concluded that the reasons stated in the order were neither irrational nor irrelevant and thus upheld the validity of the order.

2. Consideration of objections raised by the petitioners regarding the transfer of cases:

The petitioners had previously filed objections to the transfer, which were not adequately addressed in earlier orders. The court had set aside those orders and directed the Commissioner to reconsider the objections. The Commissioner issued fresh notices and considered the objections, which included concerns about inconvenience and factual inaccuracies regarding the assessment locations. The Commissioner rejected these objections, citing the extensive business operations of the key person in multiple cities, including Mumbai, and the findings from the search conducted on July 26, 2003, which indicated large-scale transactions outside stock exchanges and accommodation entries for share applications/gifts. The court found that the Commissioner had duly considered and addressed the objections, thus fulfilling the legal requirements.

3. Judicial review of administrative or executive action:

The court examined the scope of judicial review in administrative decisions, referencing several landmark cases, including Ajantha Industries v. CBDT, Mahindra and Mahindra Ltd. v. CIT, and the Wednesbury case. The principles established in these cases dictate that judicial interference is warranted only if the decision is perverse, arbitrary, or influenced by irrelevant considerations. The court found that the Commissioner's decision was based on relevant facts and rational considerations, including the key person's business operations and the findings from the search. Therefore, the court concluded that there was no manifest error or arbitrariness in the exercise of power by the Commissioner, and judicial interference was not justified.

Conclusion:

The court dismissed the writ petition, upholding the validity of the order dated December 20, 2005, and confirming that the objections raised by the petitioners were duly considered and addressed by the Commissioner of Income-tax-II, Kanpur. The court emphasized the limited scope of judicial review in administrative decisions, finding no grounds for interference under Article 226 of the Constitution of India.