2021 (4) TMI 1026 - HC - Income Tax

Transfer under Section 127(2) - Transfer of assessment cases - centralize the case of the writ applicant along with the other cases with the DCIT, Central Circle 2, Rajkot with a view to facilitate effective investigation and coordinated action - order transferring the case of the writ applicant from the ITO, Ward 1, Gandhidham to the Joint Commissioner of Income Tax, Gandhidham Range, Gandhidham - HELD THAT - We are of the view that we should not interfere with the impugned order of transfer passed by the respondent in exercise of powers under Section 127(2) of the Act. The power of transfer of cases would have to be exercised in proper cases when sufficient materials on record justify such action. As held by this Court, in the case of Hindustan M. I. Swaco Limited 2016 (7) TMI 212 - GUJARAT HIGH COURT , this is, however, not to suggest that the transfer of cases for effective investigation and coordination can be resorted to only in cases of assessees, who are subjected to search operation. Such requirement may arise in other circumstances also . In view of the aforesaid, the present writ application and all other connected writ applications fail and are hereby rejected. The interim relief earlier granted stands vacated forthwith.

Issues Involved:
1. Legality of the transfer order under Section 127 of the Income Tax Act.
2. Justification for transferring the case from Gandhidham to Rajkot.
3. Adherence to principles of natural justice.
4. Application of CBDT guidelines.
5. Impact of E-assessment procedures.

Detailed Analysis:

1. Legality of the transfer order under Section 127 of the Income Tax Act:
The writ applicant challenged the transfer order under Section 127(2) of the Income Tax Act, arguing it was illegal and violated their fundamental rights under Articles 14 and 19(1)(g) of the Constitution. The respondent had issued the order to transfer the case from Gandhidham to Rajkot for coordinated and effective investigation. The court noted that under Section 127, the transfer of cases is permissible after giving the assessee a reasonable opportunity of being heard and recording reasons for the transfer. The court found that these procedural requirements were met, and the transfer was justified for effective investigation.

2. Justification for transferring the case from Gandhidham to Rajkot:
The writ applicant argued that the transfer was based on a mistaken belief that a search action under Section 132 had been conducted, whereas only a survey under Section 133A had taken place. The respondent contended that substantial data found during the survey indicated the need for coordinated investigation. The court upheld the transfer, stating that even in the absence of a search action, the need for effective investigation justified the transfer. The court referred to the CBDT instructions dated 18th September 2020, which mandated the transfer of cases with impounded material to Central charges.

3. Adherence to principles of natural justice:
The writ applicant claimed that the transfer order was issued without proper application of mind and without new facts or circumstances justifying a review of the earlier order. The court found that the respondent had provided a reasonable opportunity of being heard and had recorded detailed reasons for the transfer. The court emphasized that the reasons for the transfer were weighty enough to offset the personal inconvenience caused to the assessee.

4. Application of CBDT guidelines:
The writ applicant argued that the transfer violated CBDT Instruction No. 8/2002. The respondent countered that the guidelines for centralization of search cases were not relevant as the case involved a survey action. The court found that the transfer was in line with the CBDT instructions dated 18th September 2020, which required the transfer of cases with impounded material to Central charges.

5. Impact of E-assessment procedures:
The respondent argued that the E-assessment procedures mitigated any inconvenience caused by the transfer, as assessments are conducted through email, reducing the need for physical presence. The court agreed, stating that the E-assessment system allowed for efficient handling of cases without requiring the assessee to appear in person.

Conclusion:
The court concluded that the transfer order under Section 127(2) of the Income Tax Act was justified and did not violate the principles of natural justice. The transfer was necessary for effective and coordinated investigation, and the procedural requirements were duly met. The writ application and all connected applications were rejected, and the interim relief granted earlier was vacated.

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