The Himachal Pradesh High Court has held that twin conditions to be complied with by the income tax department for transferring the case of the assessee from one Assessing Officer (AO) to another. The twin conditions include the assessee should have been given a reasonable opportunity of being heard and the reasons for transfer should have been recorded.
The bench of Justice Tarlok Singh Chauhan and Justice Rakesh Kainthla has observed that procedure has not at all been complied with and the only explanation offered for the transfer was that Section 127 of the Income Tax Act was not attracted as it was Income Tax Officer, Barotiwala Road, Baddi, alone, who had the authority to issue notices under Section 143(2) read with Section 142 (1) of the Income Tax Act.
The bench stated that stand of the department is simply not tenable as it virtually amounts to putting the cart before the horse and additionally being judge in its own cause, reason being that the respondents would first contend that one of the respondents i.e. Assistant Commissioner of Income Tax Circle 24(1), New Delhi did not have the jurisdiction, which stand is vetoed by Assistant Commissioner of Income Tax Circle 24(1), New Delhi thereafter and this would form the basis of claiming that it was Income Tax Officer, Barotiwala Road, Baddi alone, who had authority and jurisdiction to issue notice.
The appellant/petitioner-assessee, established M/s. Deluxe Enterprises, Delhi, in the year 1997 as partnership firm and obtained permanent account number with registered office at E 143, Sector 1 Dwarka, New Delhi.
In the year 1999, the assessee established an industrial undertaking/manufacturing unit/branch at Village Ranguwal, Bhartgarh Road Nalagarh, Himachal Pradesh, and commenced its operations on 23.12.1999 manufacturing different types of cotton yarn, textiles etc.
On 13.03.2006, Assistant Commissioner of Income Tax Circle 24(1), New Delhi, assessed the income of the petitioner under section 143(3) of the Income Tax Act, 1961. Thereafter, on 14.09.2010 Income Tax Officer, Barotiwala Road, Baddi, issued notices under Section 143(2) and 142(1), initiating proceedings under Section 144 for the assessment year 2009-2010.
The assessee contended that once he was being assessed by the Assistant Commissioner, Income Tax, New Delhi, Income Tax Officer, Barotiwala road, Baddi had no authority to issue notice under Section 143(2) read with Section 142 (1)and finalize the assessment of the appellant/petitioner without transferring his case file under Section 127.
The court held that the department cannot dispute that the assessing officer in this case has been changed and the records too stands transferred to him which could have only been done after complying with provisions of Section 127 of the Income Tax Act and an order passed in absence of any reasons for transfer has essentially to be construed to be the one as having been passed without application of mind.
Case Details
Case Title: M/s Deluxe Enterprises Versus ITO
Case No.: ITA No. 23 of 2017 alongwith CWP No.6575 of 2014
Date: 02.01.2025
Counsel For Appellant: In person
Counsel For Respondent: Balram Sharma
