2019 (10) TMI 158 - HC - Income Tax

Transfer u/s 127 - transfer of the assessee s case from Chennai to Bangalore - need of agreement between the two Commissioners - requirement of recording of such agreement in writing specifically - HELD THAT - Chennai Commissioner has passed the impugned order of transfer after issuing show cause notice to the assessee and after giving them an opportunity of being heard as well. Therefore find that the statutory requirement under Section 127(2)(a) is fully complied with in this case. No doubt there may be some inconvenience for the assessee to attend the enquiry before the Assessing Officer to whom the case is transferred. Mere inconvenience or facing certain practical difficulties themselves cannot be a ground to refuse the transfer of investigation. Certainly the administrative exigencies of the Investigating Agency would outweigh the practical difficulties or inconvenience of the person to be investigated. It should be borne in mind that it is for the Investigating Agency to take the call and decide as to how and in what manner the investigation has to be proceeded with. Of course while making such transfer the statutory requirement need to be followed and when such compliance is evident on the face of the proceedings it is better that such transfer proceedings are not interfered with at the very stage of investigation itself. Considering the above stated facts and circumstances find that the impugned order of transfer and the consequential impugned notice do not warrant any interference.

Summary

Issues Involved:

1. Challenge to the notification transferring the assessee's case from Chennai to Bangalore under Section 127 of the Income Tax Act, 1961.
2. Challenge to the consequential notice issued by the Assessing Officer at Bangalore.
3. Examination of the requirement for an agreement between the two Commissioners under Section 127(2)(a) of the Income Tax Act.
4. Evaluation of whether the reasons provided for the transfer were adequate and within the scope of the show cause notice.

Issue-wise Detailed Analysis:

1. Challenge to the Notification Transferring the Case:

The petitioner challenged the notification dated 13.02.2019, which transferred the case from Chennai to Bangalore for a coordinated investigation. The petitioner argued that the transfer was done without proper reasons and that the nexus/linkage mentioned was not adequately substantiated. The respondents contended that the transfer was necessary for investigating transactions among related entities over the past six years and that the materials seized during the survey warranted such an investigation.

2. Challenge to the Consequential Notice:

The petitioner also contested the notice dated 19.02.2019, issued by the Assessing Officer in Bangalore, which required the petitioner to produce books of accounts and furnish information. This notice was a direct consequence of the transfer order. The court noted that the transfer was for coordinated investigation and that such administrative actions were within the powers of the authorities under Section 127 of the Income Tax Act.

3. Requirement for Agreement Between Two Commissioners:

A significant issue was whether an agreement between the two Commissioners was necessary under Section 127(2)(a) for the transfer to be valid. The petitioner argued that no such agreement was mentioned in the transfer order, making it invalid. The court observed that the petitioner did not raise this issue in the earlier writ petition and that the issuance of the show cause notice itself implied an agreement between the Commissioners. The court held that the statutory requirement was met and that the conduct of the Commissioners indicated their agreement.

4. Adequacy and Scope of Reasons for Transfer:

The petitioner claimed that the reasons provided for the transfer were beyond the scope of the show cause notice and were based on assumptions without material evidence. The court examined the detailed order and found that the reasons given were in conformity with the show cause notice and justified the need for coordinated investigation. The court emphasized that the reasons were based on factual aspects and that discussing the correctness of those reasons before the completion of the investigation would be premature.

Conclusion:

The court dismissed the writ petitions, holding that the transfer order and the consequential notice were valid and within the law. The court affirmed that the administrative necessity for coordinated investigation outweighed the petitioner's inconvenience and that the statutory requirements under Section 127 were duly complied with. The court also clarified that successive writ petitions raising new grounds on the same issue were not permissible.