Transfer of jurisdiction u/s 127 upheld. Firm required to disclose residence of its partners

Transfer of jurisdiction u/s 127 upheld as partnership firm was required to disclose residence of its partners

ABCAUS Case Law Citation
ABCAUS 3459 (2021) (02) HC

Important case law relied referred:
Kishore Samrite Vs. State of U.P.  (2013) 2 SCC 398
Pannalal Binjraj vs. Union of India (1957) 31 ITR 565 (SC)
Power Controls vs. Commissioner of Income Tax (2000) 241 ITR 807 (Delhi)
Ajantha Industries Vs. Central Board of Direct Taxes (1976) 102 ITR 281(SC)
Vijayasanthi Investments Pvt. Ltd. vs. Chief Commissioner of Income Tax (1991) 187 ITR 405 (AP)
Saptagiri Enterprises vs. Commissioner of Income Tax (1991) 189 ITR 705 (AP)
ATS Promoters and Builders P. Limited Vs. Chief Commissioner of Income Tax (2009) 308 ITR 65 (Delhi)
Vishal Kumar vs. Commissioner of Income Tax (2014) 225 Taxman 203 (Delhi)

In the instant case, the petitioner was a partnership firm which has challenged the order passed in exercise of powers under Section 127 of the Income Tax Act, 1961 (the Act) of transfer of jurisdiction of the petitioner.

The Petitioner was informed of the proposal received from the PCIT regarding the centralization of the case of the petitioner from Delhi to Faridabad and the petitioner was asked to submit its objections.

The Hon’ble High Court observed that as per the proposal of   transfer, it was mooted for centralization of the case of the petitioner at Delhi and its partner at Faridabad. It further stated that the petitioner firm was a key concern of the Chairman of a Group who is residing at Faridabad. Also, during   the course of a search and seizure proceedings, certain incriminating documents/materials were found and seized at Faridabad related to the petitioner.

The order further stated that for purposes of administrative convenience, better coordination, meaningful assessment, achieving uniformity of action and for effective and coordinated investigation, the case of the petitioner was required to be centralized wherein maximum number of cases related to the said group had already been centralized.

The Hon’ble High Court stated that an order of transfer is more in the nature of an administrative exercise of power and the scope of interference wherein in any case is limited and unless the administrative power is shown to have been exercised without authority under the law and/or for mala fide reason, no case for interference is made out.

The Hon’ble High Court noted that in the case law relied upon by the Petitioner, the Hon’ble Supreme Court itself held that infringement of the right to be assessed by the Income Tax Officer of the place where the assessee resides or carries on business is not a material infringement and is only a deviation  of a minor character from the general standard and does not  necessarily involve a denial of equal rights, for the simple reason that even after such transfer, the case is dealt with under the normal procedure prescribed in the Act.

The Hon’ble High Court stated that it was undisputed that partners of the petitioner were residing at Faridabad. However, the only argument was that it was not relevant for the assessee to disclose their residential addresses to Income Tax. The Court opined that petitioner, to that extent indulged in suppression of material facts and for this reason alone was not entitled to  any equitable relief from High Court.  

The Hon’ble High Court disagreed with the above argument and said that a partnership firm as the petitioner is, as distinct from   a company incorporated under the Companies Act, 1956, is not a legal entity and is merely a compendium name for its partners. The Hon’ble High Court opined that it was obvious that the petition was mala fide and filed to take an unfair advantage in the matter of assessment of income tax by not permitting assessment of all related persons by one Officer.

Accordingly, the Petition was dismissed. 

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