The Delhi High Court clarified that powers under Section 127 of the Income Tax Act, 1961, can be invoked for public interest, administrative convenience, and meaningful assessment.
The present writ petitions, at the instance of the assessee, Dollar Gulati sought to assail the impugned orders passed under Section 127 of the Income Tax Act, 1961, whereby, the cases of the assessees are centralized to the board of Deputy Commissioner of Income Tax.
Thereafter, the 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 the Revenue
Mr. N.P. Shahi, representing the assessee submitted that the impugned order was passed without any application of mind and in a mechanical manner as it reflects no reasoning regarding the transfer of the case of the assessee from jurisdictional Assessing Officer to DCIT.
The counsel submitted 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 has to travel all the way from Delhi to the DCIT.
On contrary, Mr. Deepak representing the revenue, vehemently opposed the submissions advanced by the assessee and submitted that the impugned order was passed following the mandate of Section 127 of the Income Tax Act. He argued that the assessee has duly been given an opportunity of hearing and after considering the reply of the assessee, the Revenue has passed the impugned order. He further submitted that the assessee had an indelible link to the searched persons, which was even reflected in the reply filed by the assessee to the notice dated 26 April 2023 and therefore, an order of centralization under Section 127 of the Act is justifiable.
Chapter XIII of the Income Tax Act deals with the income tax authorities and their jurisdictional powers. Section 116 of the Income Tax Act enlists the various classes of income tax authorities which are aimed to fulfill the objectives of the Act. Section 120 of the Act, which is another vital Section which talks about the jurisdiction of the income tax authorities and how the jurisdiction of the income tax authorities is inter alia based upon the territorial area, persons or classes of persons, income or classes of income and cases or classes of cases.
According to Section 124 of the Income Tax Act deals with the jurisdiction of the AOs, whereby, he has been vested with the jurisdiction over any person carrying on business or profession over any prescribed territorial limit or where the principal place of business of persons was within such area and any person residing within such prescribed territorial limits. .
The bench observed that “the powers of Section 127 of the Act can be invoked for public interest and administrative convenience.” Thus, Coram of Justice Purushaindra Kumar Kaurav and Justice Yashwant Varma passed under Section 127 of the Income Tax Act. Accordingly, dismissed these writ petitions.
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