2019 (12) TMI 1240 - HC - Income Tax

Transfer of jurisdiction u/s 127 - respondent no.1 has transferred the jurisdiction of the petitioner to DCIT/ACIT, Central Circle-2(3), Bengaluru - HELD THAT - On a bare perusal of the notice of transfer and the impugned order, it is palpably clear that no specific reason has been provided and neither has any specific link been shown between the petitioner company and the other company on which search has been carried out. Accordingly, the impugned order is stayed till March 31, 2020. The respondents are directed to file the affidavit in opposition within four weeks from date. Reply thereto, may be filed within two weeks thereafter. Let the mater be placed under the heading For Hearing in the Monthly List of February, 2020.

Summary

Issues:
- Jurisdiction transfer under Article 226 of the Constitution of India without specific reasons provided.
- Applicability of judgments on transfer under section 127 of the Income Tax Act, 1961.
- Lack of specific link between petitioner company and company under search.

Jurisdiction Transfer without Specific Reasons:
The petitioner challenged a transfer order by the Principal Commissioner of Income Tax-IV, Kolkata, transferring jurisdiction to another location without providing specific reasons. The petitioner contended that the notice for transfer lacked reasons, and the subsequent order merely copied the petitioner's submissions without specifying any grounds for the transfer. The petitioner argued that transfers under section 127 of the Income Tax Act must include specific reasons, citing relevant case laws such as Ajantha Industries and Others vs. Central Board of Direct Taxes and Others. The respondents justified the transfer for coordinated post-search investigation based on guidelines. The court observed that the notice and order failed to provide specific reasons for the transfer, leading to the stay of the impugned order until further proceedings.

Applicability of Judgments on Transfer:
The petitioner's counsel relied on various judgments, including Chotanagpur Industrial Gases (P.) Ltd. And Others vs. Commissioner of Income-Tax And Others, to argue that transfers cannot be made without detailed reasons beyond "co-ordinate investigation and assessment." The court agreed with the petitioner's stance, emphasizing the necessity for officers to provide further justifications for transfers under section 127 of the Income Tax Act. The lack of specific reasons in the transfer order led the court to stay the order pending further submissions from the respondents.

Lack of Specific Link Between Companies:
The court noted that the notice and order of transfer did not establish a specific link between the petitioner company and the company subjected to the search. This lack of connection raised concerns about the validity of the transfer. By considering the absence of a clear rationale and the principles outlined in relevant case laws, the court deemed it necessary to halt the implementation of the transfer order until a more detailed examination could be conducted. The court directed the respondents to file an affidavit in opposition within a specified timeframe, indicating the seriousness with which the matter would be reviewed in subsequent hearings.