Delhi High Court upholds IT Department decision to transfer tax assessment of Gandhis, AAP to central circle

The Delhi High Court Friday upheld Income Tax authorities’ decision to transfer the tax assessments of Sonia Gandhi, Rahul Gandhi, Priyanka Gandhi Vadra and Aam Aadmi Party (AAP) from faceless assessment to its central circle..A Division Bench of Justices Manmohan and Dinesh Kumar Sharma passed the order today after having reserved it on March 15.The Court dismissed the petitions filed by Gandhis and AAP and held that their assessments have been transferred to the central circle in accordance with law. "Accordingly, the present writ petitions along with pending applications are dismissed," the Court ordered. It also vacated its interim order from March 2021 through which the Income Tax department's order was stayed. .Apart from Gandhis and AAP, the Court also upheld the decision to transfer assessments of Sanjay Gandhi Memorial Trust, Rajiv Gandhi Foundation, Rajiv Gandhi Charitable Trust, Young Indian and Jawahar Bhawan Trust. All these non-profits are associated with the Gandhi family..In their petitions, Gandhis challenged the decision of the Principal Commissioner of Income Tax stating that their assessments were transferred based on the “search and seizure” in arms dealer Sanjay Bhadari’s case, however, but they have nothing to do with him.It was their argument that only rarest of rare cases go out of faceless assessment and even then, they are marked to the concerned assessment officer, not the Central circle.Faceless assessment is the rule because it avoids human contact and the scope of unhealthy practise, Senior Advocate Arvind Datar argued for the Gandhis. Meanwhile, AAP submitted that IT department’s decision was arbitrary and unreasoned and the order was passed in complete violation of the statutory provisions. They said that there was no investigation pending against them and therefore, there was no reason to transfer their assessment..The IT department stated that the transfer in all these cases were within the city and only when the transfer was from one city to another, the IT officer has to give a hearing to the assessee.They further said that even though the faceless assessment has come into being, it does not degrade or undo the powers of transfer available under Section 127 of the Income Tax Act..In a detailed judgement, Court has held that no assessee has any fundamental or vested legal right to be assessed by a Faceless Assessing Officer.It has been held that the jurisdiction of central circle’s jurisdiction is not confined to search cases only and it is conferred with the jurisdiction over non-search cases where coordinated investigation is required.The Bench further said that the power to transfer cases under Section 127 of the Income Tax Act is in no manner trammelled upon or negated by the introduction of faceless assessment.“This Court is of the view that though in the year 2019, the concept of E-assessment and in 2020, the concept of Faceless Assessment was introduced, yet the Jurisdictional Assessing Officer continues to exercise concurrent jurisdiction with Faceless Assessing Officer,” the Court underscored.It concluded that the transfer of assessments of the petitioners is not in violation of the guidelines issued by the Central Board of Direct Taxes (CBDT) because the transfer has been done for the purposes of coordinated investigation.The Bench also rejected the petitioners’ contention that the power of transfer under Section 127, after the faceless assessment came into force, is a two-step process..Senior Advocate Arvind Datar with advocates Kavita Jha, Vaibhav Kulkarni and Anant Mann appeared for Gandhis and the five charitable trusts.AAP was represented through advocates Amar Dave, Vivek Jain and Abhinav Jain.Solicitor General (SG) Tushar Mehta, Additional Solicitor General (ASG) Balbir Singh and Senior Standing Counsel Zoheb Hossain along with advocates Vipul Agarwal, Sanjeev Menon, Prasanjeet Mohapatra, Shyam Gopal, Vivek Gurnani and Monica Benjimin appeared for the Income Tax department..[Read Judgement]