Income Tax Act | Centralisation Of Assessment U/S 127 Permissible Where Cases Are Inter-Linked: P&H High Court

The Punjab and Haryana High Court held that the transfer of assessment jurisdiction under Section 127 of the Income Tax Act is valid where cases are inter-linked, and centralisation is required for effective investigation and public interest. Section 127 of the Income Tax Act, 1961, grants the power to senior tax authorities to transfer a taxpayer's case from one Assessing Officer (AO) to another. Justices Deepaksibal and Lapita Banerji stated that in the absence of allegations of mala fide on the department's part, the transfer of the assessee's assessment jurisdiction from Chandigarh to Goa has been exercised by the revenue for its administrative convenience; to facilitate effective investigation and coordinated assessment; for efficient collection of tax and in public interest. Prior thereto, principles of natural justice were duly followed and that the transfer order also contains adequate and acceptable reasons. In the case at hand, search proceedings under Sections 132 and 133A of the Income Tax Act, 1961, were conducted at various premises of M/s Blue Ocean Beverages Private Limited, Panaji, Goa. Since M/s Aaroha Alcobev Distribution Private Limited, New Delhi, was found to be one of the main distributors of M/s Blue Ocean, the search and survey proceedings of M/s Blue Ocean led to survey proceedings under Section 133A of the 1961 Act at the premises of M/s Aaroha. It was alleged that the assessee had received an undisclosed cash amount of Rs.10 crores in connection with the sale of M/s Queen Distillers and Bottlers Private Limited, Chandigarh. The assessee was issued a summons under Section 131(1A) of the 1961 Act, and thereafter a show cause notice under Section 127(2) of the 1961 Act, proposing to transfer his assessment jurisdiction from Chandigarh to Panaji, Goa, along with other related cases. The Principal Commissioner of Income Tax, Chandigarh, passed an order transferring the case of the assessee to Panaji, Goa. The counsel for the assessee argued that the assessee's case for having allegedly received undisclosed cash in the sale of M/s Queen Distillers to Gaurav Sharma could easily be inquired into independently at Chandigarh without putting the petitioner to inconvenience and hardship. The counsel for the assessee also referred to 2 circulars dated 24.08.2009 and 11.02.2013, issued by the Central Board of Direct Taxes under Section 119 of the 1961 Act to contend that transfer of jurisdiction to assess cannot be centralized in a routine manner and without application of mind as also that before ordering such transfer relationship/ link of the case being transferred has to be established with the person searched. Regarding the two cited circulars of the CBDT dated 24.08.2009 and 11.02.2013, the bench found that the transfer of jurisdiction of assessment cannot take place in a routine manner and without application of mind, as also without establishing a link between the person searched. The bench opined that in light of the afore discussion, it is clear that centralisation of the assessment of the assessee at Panaji, Goa, is in terms of both the said circulars. The bench referred to Section 158BD and noted that if, during the course of search/survey, any incriminating material is found against an assessee who is being assessed by a different Assessing Officer, then such material is to be forwarded to that Assessing Officer who would then deal with such information and, on the basis thereof, assess the assessee. However, that would be so only if the incriminating material so discovered has no link with any other related entity. If the discovered incriminating material is linked to another related entity or entities who are being assessed at a different place(s) and if the revenue bona fide believes that it would be administratively convenient and in public interest as also in furtherance with the objects of the 1961 Act, then, after following the procedure prescribed under Section 127 of the 1961 Act, centralize the assessment of all the connected or linked persons at one place, added the bench. In view of the above, the bench dismissed the petition. Case Title: Bhupinder Singh v. Principal Commissioner of Income Tax Chandigarh and others Case Number: CWP-29843-2025 Counsel for Petitioner/Assessee: Radhika Suri, Abhinav Narang and Parnika Singla Counsel for Respondent/Department: Urvashi Dhugga, Vidul Kapoor, Kavita, Ameera Abdul Razak Click Here To Read/Download Order

Income Tax Act | Centralisation Of Assessment U/S 127 Permissible Where Cases Are Inter-Linked: P&H High Court

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