2017 (1) TMI 1008 - HC - Income Tax

Transfer of case - whether the order under Section 127(2) of the Act satisfies the requirements spelled out in the Statute? - Held that - A transfer order would mean that the authority to which the assessee is faced, points have to be canvassed, would be somewhere else then this would also undoubtedly be important on its part. As against this, the Revenue s interest would be to ensure that a holistic and cohesive view of all is taken with regard to a series or pattern of transactions or investments involving multifarious parties. In a case, like the present one, search and seizure proceedings have been taken place and notices have been issued under Section 153C of the Act, it would ordinarily be in the interest of justice of all i.e. the assessee and the Revenue alike, that if parties are scattered across the different Cities and States, a common view is taken by one Assessment Officer, that must be the intent and objective. In the process, the inconvenience to the assessee would be to a large measure would be obviated because the Assessment Officer or for that matter, the assessee would not be put to inconvenience in referring back and forth the orders of each of the other properties that have been searched and the view taken. This would also avoid possible conflicting views that may spell chaos. In view of the foregoing reasons, the Court finds no merit in this petition. The writ petition alongwith pending application is accordingly dismissed.

Summary

Issues:
Challenge to order under Section 127(2) of the Income Tax Act, 1961.

Detailed Analysis:
The petitioner contested an order made by the Principal Commissioner of Income Tax-17 under Section 127(2) of the Income Tax Act, 1961. The petitioner was issued a notice proposing to centralize cases at Kanpur, including the petitioner's case. The petitioner objected, stating no search took place at their premises and that they had been taxed within the jurisdiction of the Delhi Circle for many years. The objections were dismissed, and the order under Section 127(2) was issued, centralizing the case at Kanpur. The petitioner argued that the expression "meaningful and coordinated investigation" in the notice was vague and unauthorized. The petitioner cited various court cases to support their argument, emphasizing the need for cogent reasons for a valid transfer order.

The main issue at hand was whether the order under Section 127(2) of the Act met the statutory requirements. The Supreme Court's interpretation highlighted the need for prior notice to the assessee and an opportunity to present their case before such an order is made. The High Court further explained that the order must be reasoned as it has significant consequences for the assessee. Various court judgments criticized vague reasons given by the Revenue for transfer orders. The conflict between the assessee's inconvenience and the Revenue's interest in ensuring a cohesive view of transactions involving multiple parties was discussed. In cases involving search and seizure proceedings and notices under Section 153C of the Act, a common view by one Assessment Officer was deemed beneficial to both the assessee and the Revenue to avoid conflicting views and streamline the process.

Considering the arguments and legal precedents, the Court found no merit in the petitioner's case and dismissed the writ petition along with the pending application.