2016 (10) TMI 982 - SC - Income Tax

Transfer of cases - Power to transfer cases - transfer of the income-tax/assessment file of the appellant from Tamil Nadu to Kerala by HC 2015 (3) TMI 810 - MADRAS HIGH COURT - Held that - As the Income-tax/assessment file of the appellant assessee has been transferred from one Assessing Officer in Tamil Nadu to another Assessing Officer in Kerala and the two Assessing Officers are not subordinate to the same Director General or Chief Commissioner or Commissioner of Income Tax, under Section 127(2)(a) of the Act an agreement between the Director General, Chief Commissioner or Commissioner, as the case may be, of the two jurisdictions is necessary. The counter affidavit filed on behalf of the Revenue does not disclose that there was any such agreement. In fact, it has been consistently and repeatedly stated in the said counter affidavit that there is no disagreement between the two Commissioners. Absence of disagreement cannot tantamount to agreement as visualized under Section 127(2)(a) of the Act which contemplates a positive state of mind of the two jurisdictional Commissioners of Income Tax which is conspicuously absent. We will hold that the transfer of the Income-tax/assessment file of the appellant assessee from Assessing Officer, Tamil Nadu to Assessing Officer, Kerala is not justified and/or authorized under Section 127(2)(a) of the Act. The order of the High Court is, therefore, interfered with and the transfer is accordingly set aside.

Summary

Issues:
Challenge against the order of transfer of income-tax/assessment file from Tamil Nadu to Kerala upheld by the High Court of Madras, Madurai Bench.

Analysis:
The Supreme Court granted leave to appeal the order of the High Court of Madras, Madurai Bench, dated 20th March, 2015, which upheld the transfer of the income-tax/assessment file of the appellant from Tamil Nadu to Kerala. The appeal revolved around the interpretation of Section 127(2)(a) of the Income Tax Act, 1961, which deals with the power to transfer cases. The section requires an agreement between the Directors General, Chief Commissioners, or Commissioners of the two jurisdictions involved when the Assessing Officers are not subordinate to the same authority. In this case, the appellant's file was transferred from one Assessing Officer in Tamil Nadu to another in Kerala, and it was crucial for there to be an agreement between the relevant authorities for such a transfer to be valid.

The Court noted that the counter affidavit filed on behalf of the Revenue did not indicate the existence of any agreement between the Directors General, Chief Commissioners, or Commissioners of the two jurisdictions involved in the transfer. It was emphasized that the mere absence of disagreement did not amount to an agreement as required by Section 127(2)(a) of the Act. The Court highlighted the necessity of a positive state of mind from the jurisdictional Commissioners of Income Tax for the transfer to be considered valid. Since there was no evidence of such an agreement, the Court concluded that the transfer of the income-tax/assessment file was not justified or authorized under the relevant provision of the Act.

Consequently, the Supreme Court set aside the order of the High Court and held that the transfer of the appellant's file from the Assessing Officer in Tamil Nadu to the one in Kerala was not valid. The appeal was allowed in favor of the appellant based on the lack of the required agreement between the relevant authorities as mandated by Section 127(2)(a) of the Income Tax Act, 1961.