Case Law Details
Dollar Gulati Vs PCIT (Delhi High Court)
Conclusion: Powers of Section 127 could be invoked for public interest and administrative convenience and the ground of coordinated investigation was a good ground of transfer. The exercise of statutory powers by the authority could not be said to be wholly arbitrary, irrational, without jurisdiction or suffers with mala fide intention.
Held: Search operation under Section 132 was conducted on the premises of M/s. Zee Lab Group. Pursuant to the aforementioned search, some incriminating material alluding to assessee was discovered and therefore, a notice under Section 131(1A) was issued to assessee, whereby, assessee was called on to furnish details of income earned by him since Assessment Year [“AY“] 2017-18. Thereafter, assessee furnished a reply to the aforesaid notice, whereby, the financial statements of bank accounts, particulars of the investments made and details of the unsecured loan transactions etc. were provided to Revenue. Subsequently, a show cause notice was issued to assessee, whereby, for the purpose of an ‘administrative, convenience, coordinated investigation and assessment’, the case of assessee was sought to be centralized at DCIT, Central Circle, Karnal, Haryana and the assessee was called upon to furnish objections, if any, against the proposed transfer. Assessee furnished his reply against the above noted show cause notice stating inter alia that the proposed transfer was not bona fide and there was no link between assessee and searched party. Revenue passed an order under Section 127 whereby, the case of assessee was centralized and transferred from the Income Tax Officer [“ITO“] Ward-51(1) Delhi to DCIT, Central Circle, Karnal, Haryana. It was this order which stood impugned in this writ petition. Assessee submitted that the impugned order was passed without any application of mind and in a mechanical manner as it reflected no reasoning regarding the transfer of the case of assessee from jurisdictional Assessing Officer [“AO“] to DCIT, Central Circle, Karnal, Haryana. He argued that the assessee‘s case was nowhere linked to the searched party and therefore, there was no need for the centralization of the assessee‘s case. He further submitted that due to the arbitrary and irrational order passed by the Revenue, unnecessary hardship would be caused to the assessee as he had to travel all the way from Delhi to the DCIT, Central Circle, Karnal, Haryana. It was held that Revenue before passing the impugned order had provided the opportunity of hearing to assessee and considered the assessee‘s 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. It was crystal clear that the powers of Section 127 could be invoked for public interest and administrative convenience. Furthermore, the ground of coordinated investigation was a good ground of transfer as upheld by various decisions quoted above. Furthermore, considering the controversy from another lens of exercising the power of judicial review vested under Article 226 of the Constitution, the present was not a case where the exercise of statutory powers by the authority can be said to be wholly arbitrary, irrational, without jurisdiction or suffers with mala fide intention.
FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT
1. The present writ petitions, at the instance of the assessees, seek to assail the impugned orders dated 20 February 2024 [W.P.(C) 4086/2024] and 11 March 2024 [W.P.(C) 4054/2024] passed under Section 127 of the Income Tax Act, 1961 [“Act“], whereby, the cases of the assessees are centralized to the board of Deputy Commissioner of Income Tax [“DCIT“], Central Circle, Karnal, Haryana.
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