2016 (11) TMI 540 - HC - Income Tax

Transfer of cases - lack of reasons - Held that - The substantiality of prejudice for lack of reasons or otherwise has to be independently considered given the fact of each cases. In the present case it is not as if the notice did not contain the reasons at all. The assessees contentions that the notice did not contain reasons is fallacious, the reference to search and seizure operations and the proposal to centralize the cases in Ghaziabad cannot be considered no reasons. If these had been omitted, the assessees would have been within their rights that the notices did not contain reasons. The assessees were fully aware of the search and seizure operations and the fact that its premises in Ghaziabad too were subject to such proceedings. Having regard to all these facts, the Court hereby rejects the first contention that the ingredients of the notice did not exist when the proposal to transfer was first notified to these assessees. As far as the rationale to transfer, i.e., conduct of coordinated post search investigation and meaningful assessment goes, we are of the opinion that like in the case of first contention, the assessees have failed here as well. The kind of reasoning required by an order under Section 127 cannot be compared or likened to a quasi judicial order that has adverse consequences. One can understand if additions are made on sketchy or bare minimum reasons, they cannot be upheld. However, what is proposed by an order under Section 127 is the transfer of one or several assessments from one circle to another, to that extent inconvenience undoubtedly ensue; however, to say that this leads to grave prejudice if detailed reasoning were not given is something that the Court cannot countenance.The Court s task is to unravel whether in fact the revenue s contentions are correct and if so reject the assessees contentions. On the other hand, if there is no real public interest and if there are no reasons even the briefest one, the order cannot be sustained. Conversely, if there is reasoning and the public interest is discernable, as in this case, the only result can be rejection of the assessees contentions.

Summary

Issues:
Challenge to orders made by revenue under Section 127 for centralizing cases post search and seizure proceedings. Validity of reasons given for transfer under Section 127.

Analysis:
1. The petitioners challenged the orders made by the revenue under Section 127, seeking to centralize cases after search and seizure proceedings. The rationale for transfer was to coordinate post-search investigations and assessments. The assessees resisted the transfer, citing inconvenience due to their headquarters not being in Ghaziabad, where the cases were proposed to be centralized. The revenue issued notices under Section 127, justifying the transfer based on the search and seizure operation conducted on the group of companies. The assessees contended that centralizing in Ghaziabad would cause hardship as their management was in Delhi. However, the revenue rejected these objections and directed the transfer of jurisdiction to facilitate coordinated investigations and assessments.

2. The assessees argued that the notice under Section 127 lacked reasons, relying on precedents to support their contention. They claimed that the mention of search and seizure proceedings and the proposal to centralize were insufficient reasons for transfer. The court examined whether the notice was vitiated and if the reasons given in the transfer order were justifiable under Section 127. The revenue argued that the notices were valid, as they mentioned the search operation and the rationale for centralization. The court noted that the assessees did not express prejudice when responding to the notices. It found that the reasons provided in the notices were adequate and rejected the contention that the notices lacked reasons.

3. Regarding the rationale for transfer, i.e., coordinated investigations and assessments, the court held that the assessees failed to prove that the reasons were insufficient. It emphasized that the order under Section 127 for transfer did not require detailed reasoning like a quasi-judicial order. The court rejected the argument that brief reasons for transfer led to grave prejudice, stating that the consequences of transfer could be managed by another Assessing Officer. It noted the balance between assessees' inconvenience and revenue's public interest, concluding that the reasons provided were acceptable. The court dismissed the petitions, finding them lacking in merit and rejected pending applications.