In W.P.(C) 3535/2021-DEL HC- Delhi HC confirms order transferring tax assessment cases of Gandhis, AAP & 5 charitable Trusts to Central Circle, says there is no restriction on transferring non-search cases to Central Circle
Justices Manmohan & Dinesh Kumar Sharma [26-05-2023]

Read Order: SANJAY GANDHI MEMORIAL TRUST AND ORS Vs. COMMISSIONER OF INCOME TAX (EXEMPTION) & ORS 

Tulip Kanth

New Delhi, May 26, 2023:  The Delhi High Court has dismissed the petitions preferred by five Charitable trusts, Congress leaders- Sonia Gandhi, Rahul Gandhi, Priyanka Gandhi Vadra and a political party-Aam Aadmi Party (AAP) challenging the transfer orders passed under Section 127 of the Income Tax Act, 1961, whereby the jurisdiction of the petitioners’ cases had 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 AAP from Exemption Circle to DCIT, Central Circle -03.

“This Court is also of the opinion that no assessee has any fundamental or vested legal right to be assessed by a Faceless Assessing Officer by virtue of amendment of Sections 143(3A) and 143(3B) of the Act”, the Division Bench of Justice Manmohan & Justice Dinesh Kumar Sharma clarified.

The Petitioner (Sanjay Gandhi Trust), established with the intent of providing health services, education and employment to the people of rural Uttar Pradesh, is registered as a charitable institution under Section 12A of the Act and assessments had been completed under Section 143(3)/143(1) of the Act till the Assessment Year 2017-18. 

In 2019, the E-assessment Scheme, 2019 was notified and implemented by the Central Government and a notice under Section 143(2) was issued to the petitioner, as per the E-assessment Scheme, for scrutiny assessment for the Assessment Year 2018-19. Thereafter, the petitioner received notices from National e-Assessment Centre under Section 142(1), calling upon 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.

In 2021, i.e. during the pending of ongoing E- assessment, the Commissioner of Income Tax, (Exemption), New Delhi passed the impugned order under Section 127 transferring jurisdiction of the Petitioner from Deputy Commissioner of Income Tax (Exemption), New Delhi to  Deputy Commissioner of Income Tax, Central Circle-27, New Delhi.

It was contended from the side of Gandhis and five charitable Trusts that in all the writ petitions, the requirement of obtaining “prior approval” of the CBDT was violated.  It was contended that though in the writ petitions filed by Trusts and Gandhis, the orders of transfer were sought to be justified on the basis that they were concerned with the Sanjay Bhandari group of cases, yet no material was forthcoming as to what was the connection with these appeals and the Sanjay Bhandari group of cases. 

On the contrary, the Solicitor General submitted that the the reason mentioned in the impugned orders was ‘better coordination, effective investigation and meaningful assessment’ which reflected administrative convenience and exigency viz. the need of the assessment taking place under the same Assessing Officer.

The Bench made it clear that the case in question involved the interpretation of Notifications dated September 12, 2019 and August 13, 2020.  Referring to the judgment of the Top Court in Kashiram Aggarwalla vs. Union of India and Others, the Bench reiterated that a transfer order under Section 127 does not affect any fundamental or legal right of an assessee and the Courts ordinarily refrain from interfering with exercise of such power.

Noting that the Central Circle jurisdiction is not confined to search cases only as Central Charge is also conferred with jurisdiction over non-search case where coordinated investigation is required, the Bench said, “The Circular dated 25th April, 2014 makes it clear that there is no restriction upon transferring of non- search cases to Central Circle.”Moreover, it was observed that the Notifications in question enlarged and supplement the power of transfer by authorising the National e-Assessment Centre to transfer at any stage of assessment the case of the assessee to the Assessing Officer having jurisdiction over such case i.e., from Faceless Assessing Officer to Jurisdictional Assessing Officer (an Assessing Officer always having concurrent jurisdiction). 

The Bench dismissed the contention of the petitioners that the requirement of “prior approval” of CBDT (as stipulated in the Notifications dated 12th September, 2019 and 13th August, 2020) had been violated. It was opined by the Bench that transfer in the present batch of writ petitions would also not be violative of the guidelines issued by the CBDT, as the transfers according to the counter affidavit had taken place for the purposes of better coordination and meaningful assessment of the present cases either with those of Robert Vadra and Sanjay Bhandari and Satyendar Kumar Jain, Member of AAP and former Cabinet Minister in Govt. of Delhi. 

The High Court concluded the matter by observing that  Section 127 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.

“Keeping in view the aforesaid conclusions, this Court is of the view 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 the Act”, the Bench held while dismissing the writ petitions.