2022 Supreme(AP) 685

IN THE HIGH COURT OF ANDHRA PRADESH AT AMARAVATI
C.PRAVEEN KUMAR, V.R.K.KRUPA SAGAR, JJ.
Vijay Nathulal Sharma, S/o.Nathulal Sharma – Appellant
Versus
Deputy Commissioner of Income Tax, Central Circle-I, Guntur – Respondent
Writ Petition No.22111 of 2022
Decided on : 21-10-2022

The transfer of an assessee's case from one jurisdiction to another must be done in accordance with the provisions of Section 127 of the Income Tax Act, 1961, and the assessee must be given an opportunity of hearing before the transfer is made. The Assessing Officer has no jurisdiction to assess an assessee under Section 153C of the Income Tax Act, 1961, unless the material obtained during the search and seizure operation is forwarded to the Assessing Officer holding jurisdiction over the assessee.

Headnote:

INCOME TAX - JURISDICTION - TRANSFER OF CASE - SECTION 127 - SECTION 153C - WRIT PETITION - MAINTAINABILITY - JURISDICTION OF ASSESSING OFFICER - ASSESSMENT ORDERS - VALIDITY - NATURAL JUSTICE - OPPORTUNITY OF HEARING - SECTION 142(1) - SECTION 153A - SECTION 153C - ARTICLE 14 - ARTICLE 21 - ARTICLE 226 - INCOME TAX ACT, 1961.

Fact of the Case:

The assessee filed a writ petition challenging the assessment orders passed by the Deputy Commissioner of Income Tax (DCIT) under Section 153C of the Income Tax Act, 1961, on the grounds that the transfer of his case from Mumbai to Guntur was illegal and arbitrary, and that the DCIT had no jurisdiction to assess him.

Finding of the Court:

The court held that the transfer of the assessee's case from Mumbai to Guntur was illegal and arbitrary, as it was not done in accordance with the provisions of Section 127 of the Income Tax Act, 1961. The court also held that the DCIT had no jurisdiction to assess the assessee under Section 153C, as the material obtained during the search and seizure operation was not forwarded to the Assessing Officer holding jurisdiction over the assessee. The court further held that the assessment orders passed by the DCIT were invalid, as they were passed without jurisdiction. The court also held that the assessee had no other adequate and alternative efficacious remedy, and therefore, the writ petition was maintainable.

Issues: 1. Whether the transfer of the assessee's case from Mumbai to Guntur was illegal and arbitrary? 2. Whether the DCIT had jurisdiction to assess the assessee under Section 153C? 3. Whether the assessment orders passed by the DCIT were invalid? 4. Whether the assessee had any other adequate and alternative efficacious remedy?

Ratio Decidendi: 1. The court held that the transfer of the assessee's case from Mumbai to Guntur was illegal and arbitrary, as it was not done in accordance with the provisions of Section 127 of the Income Tax Act, 1961. The court relied on the provisions of Section 127(2) of the Act, which vests the power to transfer cases with the authority in whose jurisdiction the assessee is situated. The court held that in the present case, the order of transfer was made by the authority at Vijayawada, which was not the competent authority, and that the assessee was not given an opportunity of hearing before the transfer was made. 2. The court held that the DCIT had no jurisdiction to assess the assessee under Section 153C, as the material obtained during the search and seizure operation was not forwarded to the Assessing Officer holding jurisdiction over the assessee. The court relied on the provisions of Section 153C(1) of the Act, which states that where material obtained during a search and seizure operation pertains to a person other than the person searched, the Assessing Officer who found such material is required to hand over the material to the Assessing Officer having jurisdiction over such other person. The court held that in the present case, the material obtained during the search and seizure operation was not forwarded to the Assessing Officer holding jurisdiction over the assessee, and therefore, the DCIT had no jurisdiction to assess the assessee under Section 153C. 3. The court held that the assessment orders passed by the DCIT were invalid, as they were passed without jurisdiction. The court held that the DCIT had no jurisdiction to assess the assessee under Section 153C, and therefore, the assessment orders passed by him were invalid. 4. The court held that the assessee had no other adequate and alternative efficacious remedy, and therefore, the writ petition was maintainable. The court relied on the ruling of the Supreme Court in Commissioner of Income Tax Vs Chhabil Dass Agarwal, [2013]36 taxmann.com36 (SC), which held that the High Court has the discretion to grant relief under Article 226 of the Constitution of India despite the existence of an alternative remedy. The court held that in the present case, the assessee had no other adequate and alternative efficacious remedy, as the assessment orders passed by the DCIT were invalid and the assessee had no right of appeal against the said orders.

Final Decision: The court allowed the writ petition and set aside the impugned assessment orders and notices. The court also granted liberty to the respondent authorities to commence proceedings afresh in accordance with law.