Delhi High Court: A petition was filed by five Charitable trusts viz. Sanjay Gandhi Memorial Trust, Jawahar Bhawan Trust, Rajiv Gandhi Foundation, Rajiv Gandhi Charitable Trust, Young India as well as three individuals viz. Mrs. Sonia Gandhi, Mr. Rahul Gandhi, Mrs. Priyanka Gandhi Vadra, and a political party – Aam Aadmi Party (AAP), (petitioners) challenging the transfer orders passed under Section 127 of Income Tax Act, 1961 whereby the jurisdiction of the petitioners have been transferred from Exemption Circle (in cases of Trusts) and ACIT Circle 52(1) (in cases of individuals) to DCIT Central Circle-27 and in the case of Aam Aadmi Party from Exemption Circle to DCIT, Central Circle -03. All the Income Tax Officers, transferors, and transferees are located within the same city, namely, Delhi. Manmohan and Dinesh Kumar Sharma, JJ., held that assessments of the petitioners have been transferred to the Central Circle in accordance with law.
The petitioner is registered as a charitable institution under Section 12-A of IT Act and assessments have been completed under Section 143(3)/143(1) of IT Act till the Assessment Year 2017-18. In October 2020, the petitioner received a letter from National e-Assessment Centre stating that the pending E-assessment for the Assessment Year 2018-19 will now be completed under the Faceless Assessment Scheme. In November and December 2020, the petitioner received notices from National e-Assessment Centre under Section 142(1) of IT Act, calling upon them to submit certain documents/details for the ongoing assessment proceedings for the Assessment Year 2018-19, which according to the Petitioner-Trust were duly complied with. On 8-01-2021, i.e. during the pending of ongoing assessment, the Commissioner of Income Tax, (Exemption) (respondent 1) passed the impugned order under Section 127 of IT Act, transferring jurisdiction of the petitioner from Deputy Commissioner of Income Tax (Exemption) (respondent 3) to Deputy Commissioner of Income Tax, Central Circle-27 (respondent 4).
Further, the National e-Assessment Centre called upon the petitioner to submit certain additional information for the ongoing assessment proceedings for the Assessment Year 2018-19. Respondent 4 issued an impugned notice under Section 142(1) of IT Act to the petitioner for the Assessment Year 2018-19. Thus, the present petition was filed by the petitioner challenging the impugned order dated 8-01-2021 passed under Section 127 of IT Act and the impugned notice dated 3-02-2021 issued by Respondent 4 under section 142(1) of IT Act.
The issue under consideration is that whether the assessments of the petitioners could be transferred to the Central Circle by way of the impugned orders passed under Section 127 of the Income Tax Act, 1961 (IT Act) without the sanction of the Central Board of Direct Taxes (‘CBDT’).
The Court noted that the present cases involve the interpretation of notifications dated 12-09-2019 and 13-08-2020 regarding the E-assessment Scheme and Faceless Assessment Scheme respectively rather than Section 144B, as at the time of passing of the impugned orders, the Faceless Assessment Scheme was governed by these notifications. It is also necessary to examine the scope, ambit as well as interpretation of Section 127 of the Act and whether in view of the two notifications, the power of transfer under Section 127 of the Act has been denuded.
Placing reliance on Kashiram Aggarwalla v. Union of India, (1965) 1 SCR 671, the Court settled the point that transfer under Section 127 of the Act for the purpose of the coordinated investigation is a sufficient reason for the passing of such an administrative order. As per a circular dated 25-04-2014, it is also clear that there is no restriction upon transferring non-search cases to Central Circle.
On the aspect of whether the power under Section 127 of IT Act is in any manner trammeled upon or negated by the introduction of the E-assessment and Faceless Assessment Scheme vide two notifications. The Court observed that the transfer of a case under Section 127 of the Act is an altogether different power that continues to exist even after the introduction of the E-assessment/Faceless regime. Thus, the Scheme does not in any manner trammel upon or negate the existing powers contained in Section 127 of the Act to transfer the cases as provided for thereunder. Consequently, the power of transfer under Section 127 of the Act is not in any manner denuded by the Faceless Assessment Scheme when the transfer is sought to be made from a Jurisdictional Assessing Officer under one Principal Commissioner of Income Tax to another Assessing Officer under a different Principal Commissioner of Income Tax who are not exercising concurrent jurisdiction over the case.
The Court further noted that under the Central Charges, the assessment proceedings are conducted through the e-proceeding functionality, and as such, the assessee or its authorised representative would not be bound to physically appear before the Assessing Officer on each date of hearing. In view of the above, no prejudice shall be caused to the assessees on account of their cases being transferred to the Central Circle.
The Court concluded that Section 127 of IT Act to the extent it permits transfer from one Assessing Officer under a Principal Commissioner of Income Tax to another Assessing Officer under another Principal Commissioner of Income Tax who are holding non-concurrent charges remains untouched and continues to apply in its pristine form.
Thus, the Court held that the assessments of the petitioners have been transferred to the Central Circle in accordance with law by way of the impugned orders passed under Section 127 of IT Act.
[Sanjay Gandhi Memorial Trust v. Commissioner of Income Tax, 2023 SCC OnLine Del 3161, decided on 26-05-2023]
Advocates who appeared in this case :
Mr. Arvind Datar, Sr. Advocate with Ms. Kavita Jha, Mr. Vaibhav Kulkarni and Mr. Anant Mann, Advocates for the Petitioner;
Mr. Tushar Mehta, SG with Mr. Balbir Singh, ASG and Mr. Zoheb Hossain, Sr. Standing Counsel, Mr. Vipul Agrawal, Mr. Sanjeev Menon, Mr. Prasanjeet Mohapatra, Mr. Shyam Gopal, Mr. Vivek Gurnani and Ms. Monica Benjimin, Advocates.
