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2019 (9) TMI 779 - HC - Income TaxTransfer u/s 127 - transferring assessment of the case of the assessee from DCIT, Sangrur to DCIT, Karnal - HELD THAT - This petition must succeed. The notice did not contain any reason. The impugned order is cryptic and there was no earthly reason why the report of the DDIT could not having been put to the petitioner. On this limited ground, we set aside the impugned order and grant liberty to the Revenue to cure the illegality. For this purpose, the petitioners (who now have access to the copy of the letter dated 14.12.2018) may file further objections within three weeks from today and the respondent would be at liberty to pass a fresh order thereof, after giving them one more opportunity of hearing
Issues:
Challenge to transfer of assessment from one DCIT to another under Section 127(2) of the Income Tax Act, 1961 based on lack of direct or indirect connection with another group, failure to provide reasons for transfer, and lack of opportunity to rebut comments submitted by DDIT. Analysis: The petitioners challenged the order transferring the assessment of their case from one DCIT to another under Section 127(2) of the Income Tax Act, 1961. The petitioners argued that there was no direct or indirect connection with another group, M/s Jai Bharat Group, despite some directors from that group being inducted into the petitioners' company in 2013-14. The petitioners contended that during a survey, no incriminating evidence was found at their premises. The impugned order transferring the assessment was passed without providing any reasons and proceeded on the assumption that both groups were 'related concerns'. The petitioners' objections regarding this identification were not addressed. The comments submitted by DDIT, which influenced the impugned order, were not provided to the petitioners for rebuttal, violating principles of natural justice. The learned Senior Counsel for the petitioners relied on legal precedents such as the judgment of the Supreme Court in Ajantha Industries & others Vs. Central Board of Direct Taxes, the Bombay High Court judgment in Global Energy Pvt. Ltd. vs. Commissioner of Income Tax, and a judgment of the High Court in Rajesh Mahajan and others vs. CIT to support their arguments. On the other hand, the Counsel for the respondent argued that the petitioners were heard before the order was passed and that the transfer from Sangrur to Karnal was not prejudicial. Legal precedents cited by the respondent included a judgment of the High Court in Charan Pal Singh vs. Commissioner of Income Tax and another, and a Supreme Court judgment in Ambika Solvex and Ors vs. Commissioner of Income Tax and Ors. In delivering the judgment, the Court found in favor of the petitioners. The Court noted that the notice did not contain any reason for the transfer, and the impugned order lacked clarity. The failure to provide the report of the DDIT to the petitioners for rebuttal was deemed a violation of natural justice. Consequently, the Court set aside the impugned order and granted the Revenue the opportunity to rectify the illegality. The petitioners were given three weeks to file further objections based on the DDIT report, and the respondent was directed to pass a fresh order after providing the petitioners with another opportunity for a hearing. The petition was disposed of, and any pending case management issues were also resolved.
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