Facts of the Case

  • Multiple petitioners including charitable trusts, individuals (Sonia Gandhi, Rahul Gandhi, Priyanka Gandhi Vadra) and a political party (Aam Aadmi Party) challenged transfer orders.
  • The petitioners were undergoing faceless assessment proceedings for Assessment Year 2018–19.
  • During the pendency of faceless assessment, the Revenue passed orders under Section 127 transferring jurisdiction to Central Circle, Delhi.
  • The reason cited:
    “better coordination, effective investigation and meaningful assessment” in connection with a group case.
  • Petitioners contended that:
    • No search or raid was conducted.
    • No CBDT approval was obtained.
    • Transfer violated faceless assessment framework.

 Issues Involved

  1. Whether transfer of assessment to Central Circle under Section 127 without CBDT approval is valid?
  2. Whether faceless assessment scheme restricts power of transfer under Section 127?
  3. Whether assessees have a right to be assessed through faceless assessment?
  4. Whether transfer for coordinated investigation is legally sustainable?

 Petitioner’s Arguments

  • Faceless assessment scheme eliminates personal interaction and mandates electronic assessment only.
  • Transfer to Central Circle requires prior CBDT approval, which was not obtained.
  • No search, seizure, or qualifying condition existed for Central Circle transfer.
  • Transfer orders were arbitrary and based on “guilt by association”, which is impermissible.
  • Notifications governing faceless assessment have statutory force and cannot be bypassed.
  • Transfer violated CBDT guidelines and scheme of law.

 Respondent’s Arguments

  • Power under Section 127 is wide and allows transfer for effective investigation.
  • Faceless assessment scheme does not override statutory power of transfer.
  • Transfer was necessary for coordinated investigation of interconnected cases.
  • CBDT approval was not required in the manner argued by petitioners.
  • Reliance placed on precedent interpreting Section 127 powers.

 Court’s Findings / Order

  • Power under Section 127 is broad and independent; not restricted by faceless assessment scheme.
  • Faceless assessment does not confer any vested or fundamental right on assessee.
  • Transfer for coordinated investigation is valid and permissible.
  • Notifications relating to faceless assessment do not curtail statutory transfer powers.
  • CBDT approval requirement interpreted in context; transfer not invalid.
  • No “guilt by association” principle violated, as transfer was for investigation purposes.
  • Petitions dismissed; transfer orders upheld.

 Important Clarifications by Court

  • Faceless assessment is a procedural mechanism, not an absolute right.
  • Section 127 operates independently of faceless assessment provisions.
  • Central Circle jurisdiction is not limited to search cases only.
  • Transfer can be made for administrative efficiency and coordinated investigation.
  • CBDT notifications do not negate statutory powers under the Act.

Link to download the order - https://delhihighcourt.nic.in/app/showFileJudgment/MMH26052023CW35352021_124210.pdf

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