In a recent ruling, the Bombay High Court affirmed that there is no fundamental or vested right enjoyed by an Assessee that ensures Income Tax Assessment is conducted by an Assessing Authority from a specific circle only.
The High Court made the pronouncement while adjudging a Writ Petition filed by the Petitioner, a Non-Resident Indian ( NRI ) settled in Dubai, against the Order passed by the Commissioner of Income Taxes ( CIT ), Mumbai under Section 127 of the Income Tax Act, 1961.
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The Order by the Commissioner of Income Taxes proceeded to transfer the case of the Petitioner from CIT, Mumbai to Central Circle – 20 under Range – 5 of Pr. Commissioner of Income Tax ( Central ) – 2, New Delhi, thereby centralizing the Jurisdiction with the Central Circle at New Delhi.
Prior to the transfer of the Petitioner’s case, Search and Seizure operations were conducted by the Income Tax Department involving the Petitioner and some of his business associates.
Subsequently, the Petitioner was served with a Show-Cause Notice on 19.03.2021 intimating the Petitioner that his case had been transferred to the Principal Director of Income Tax ( Inv )-1, New Delhi upon the decision of the Chief Commissioner of Income Tax ( Central ), New Delhi.
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It was reasoned by the Department that all the cases of the Petitioner’s Associates have been centralized and transfer of the Petitioner’s case would aid in a coordinated investigation between all the cases.
The Petitioner-Assessee wholly opposed the contentions raised by the Department and averred that the transfer from Mumbai to Delhi are the result of orchestrated activities intended to harass him and such transfer would prejudice his medical treatment in Mumbai.
Further the Petitioner raised contentions of violation of principles of Natural Justice owing to the lack of opportunity of a personal hearing provided to him.
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The Bombay High Court observed that Section 127 of the Income Tax Act, 1961 is a procedural provision for ascertaining the tax liability of the assessee in a fair, impartial and effective manner and it is up to the discretion of the Assessing Authority to scratch the personal hearing of the Petitioner depending upon prevailing circumstances.
The Division Bench of the Bombay High Court comprising Justice G.S. Kulkarni and Justice Somasekhar Sundaresan, while determining the contentions of the Petitioner, referred to the case of Darshan Jitendra Jhaveri vs. Commissioner of Income Tax and Others (2021) and clarified the scope of Section 127 while reaffirming that Jurisdiction cannot be transferred from one commissionerate to another commissionerate.
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In the present case, Jurisdiction was taken over by the Central Department based on material evidence pointing to suspected evasion of tax by the Petitioner and his associates; material uncovered during scrutiny of the Petitioner’s associates were also deemed to have a definite bearing on the outcome of the Petitioner’s Assessment.
Concludingly, the Bombay High Court dismissed the Writ Petition asserting that ‘lack of personal hearing does not vitiate the transfer of jurisdiction’ while holding that the Department has acted well within the boundaries of the powers vested in it by virtue of Section 127 of the Income Tax Act, 1961.
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