Case Note & Summary
The petitioner, Rajiv Saxena, a Non-Resident Indian living in Dubai since 1992, filed a writ petition under Article 226 of the Constitution of India challenging an order dated 14 June 2021 passed by the Commissioner of Income Tax (IT)-4, Mumbai under Section 127 of the Income Tax Act, 1961. The order transferred the petitioner's case from Mumbai to Central Circle-20, New Delhi for centralized assessment. The petitioner had been subjected to a search on 30 June 2019 at New Delhi, and the department proposed centralization due to his transactions with individuals like Ratul Puri, Gautam Khaitan, etc., whose cases were already centralized in Delhi. A show cause notice dated 19 March 2021 was issued to the petitioner, who claimed to have submitted a reply on 1 April 2021 via the income tax web portal. However, the respondent passed the transfer order on 14 June 2021 without considering the reply. The petitioner argued that the show cause notice was not properly served and that his reply was ignored, violating principles of natural justice. The respondents contended that the notice was sent by speed post and the reply was not received. The court examined the facts and found that the respondent failed to produce any acknowledgment of service of the show cause notice, and the reply uploaded on the portal was not considered. The court held that the transfer order was passed in gross violation of natural justice and quashed the order dated 14 June 2021 along with all consequential proceedings. The court directed the respondents to consider the petitioner's reply afresh and pass a reasoned order after giving him a hearing.
Headnote
A) Constitutional Law - Writ Jurisdiction - Article 226 - Quashing of Transfer Order - Petitioner challenged transfer of his case from Mumbai to Delhi under Section 127 of the Income Tax Act, 1961 on grounds of violation of natural justice - Court held that the show cause notice was not served on the petitioner and his reply was not considered, rendering the transfer order invalid - Held that the principles of natural justice require proper service of notice and consideration of objections before passing an adverse order (Paras 1-44). B) Income Tax - Transfer of Case - Section 127 Income Tax Act, 1961 - Centralization of Cases - The respondent proposed to centralize petitioner's case with Central Circle, New Delhi for coordinated investigation - Petitioner contended that the show cause notice was not served and his reply was not considered - Court found that the notice was sent by speed post but no acknowledgment was produced, and the reply was uploaded on the portal but not considered - Held that the transfer order was passed in violation of natural justice and quashed (Paras 4-44).
Issue of Consideration
Whether the order dated 14 June 2021 transferring the petitioner's case from Mumbai to Delhi under Section 127 of the Income Tax Act, 1961 is valid when the show cause notice was not served on the petitioner and his reply was not considered.
Final Decision
The court quashed the order dated 14 June 2021 passed under Section 127 of the Income Tax Act, 1961 and all consequential proceedings. The respondents were directed to consider the petitioner's reply afresh and pass a reasoned order after giving the petitioner a hearing.
Law Points
- Natural justice
- Section 127 Income Tax Act
- 1961
- Transfer of case
- Show cause notice
- Service of notice
- Consideration of reply
- Centralization of cases
