2024 (5) TMI 456 - HC - Income Tax

Transfer / Centralization order u/s 127 - cases of the assessees are centralized to the board of Deputy Commissioner of Income Tax DCIT Central Circle Karnal Haryana - link between the assessee and the searched party - HELD THAT - Order passed under Section 127 of the Act should duly reflect the application of mind while disposing of the objections filed by the assessee - convenience of parties shall be considered by the Revenue while exercising the powers u/s 127 of the Act however in view of the administrative nature of such an order the administrative convenience of the Revenue and the need for coordinated investigation would take precedence over the logistical difficulties faced by the assessee. It is also fundamental to point out that despite being a machinery provision the reasons recorded in the order of transfer should not be capricious or mala fide and such order shall not run contrary to the bona fide objectives of the Act. As it is evident from an ex facie reading of the impugned order that an opportunity of hearing was given to the assessee and the Revenue has considered the objections raised by the assessee before passing the impugned order and moreover the case of the assessee was centralized on the grounds of coordinated enquiries investigations and administrative convenience therefore the contention of the assessee that the impugned order reflects no application of mind and the Revenue had not considered the objections raised by the assessee holds no merit. Also the notice points out that due to the search conducted in the cases of Mr. Anil Chaudhary Mr. Jitender Singh (alias Rakesh) Mr. Bharti Sehgal and Mr. Dheeraj Bakshi on 11 April 2023 the assessee was called upon to furnish the details - contention of the assessee that he was nowhere related to the abovementioned individuals and thus there was no need to centralize the cases of the assessee is not justified in that contention as the details furnished by the assessee in response to the notice dated 26 April 2023 would indicate that certain transactions pertaining to the unsecured loans exist between the assessee and the searched persons. Revenue before passing the impugned order has provided the opportunity of hearing to the assessee Mark Gulati and considered the assessee s Mark Gulati objections thus the order would reflect that the Revenue had duly applied its mind and powers under Section 127 was invoked on the grounds of administrative convenience and meaningful assessment. Powers of Section 127 of the Act can be invoked for public interest and administrative convenience. Furthermore the ground of coordinated investigation is a good ground of transfer as upheld by various decisions quoted above. Thus we are hereby not inclined to interfere with the orders passed under Section 127 of the Act.

Summary

Issues Involved:
1. Validity of the impugned orders under Section 127 of the Income Tax Act, 1961.
2. Whether the Revenue considered the objections raised by the assessee.
3. Adequacy of the rationale for transfer based on 'coordinated enquiries, investigations, or administrative convenience.'

Summary:

1. Validity of the Impugned Orders under Section 127 of the Income Tax Act, 1961:
The writ petitions challenge the orders dated 20 February 2024 and 11 March 2024 passed u/s 127 of the Income Tax Act, 1961, centralizing the cases of the assessees to the Deputy Commissioner of Income Tax, Central Circle, Karnal, Haryana. The court examined the legislative mandate and scope of Section 127, which empowers authorities to transfer cases for public interest and effective tax collection, provided a reasonable opportunity of hearing is given to the assessee and reasons are recorded.

2. Whether the Revenue Considered the Objections Raised by the Assessee:
The court noted that the assessee was given an opportunity to furnish objections against the proposed transfer. The impugned orders reflect that the objections were considered. For instance, the order dated 11 March 2024 shows that the objections were reviewed by multiple authorities, and the transfer was justified for coordinated investigation and administrative convenience. Similarly, the order dated 20 February 2024 indicates that the objections were reviewed and rebutted before finalizing the transfer.

3. Adequacy of the Rationale for Transfer Based on 'Coordinated Enquiries, Investigations, or Administrative Convenience':
The court upheld the rationale of 'coordinated enquiries, investigations, and administrative convenience' as valid grounds for transfer u/s 127. It cited various judicial precedents affirming that such grounds serve the larger public interest and the effective administration of the Act. The court found that the Revenue's decision to centralize the cases was neither arbitrary nor capricious and was made after due consideration of the facts and objections.

Conclusion:
The court dismissed the writ petitions, affirming the validity of the orders passed u/s 127 of the Act. The orders were found to be in line with the legislative mandate and judicial principles, emphasizing that the powers under Section 127 are exercised for public interest and effective tax administration. The court clarified that its observations were limited to the challenge before it and did not reflect on the merits of the case. All pending applications were disposed of.