Facts of the Case

  • The petitions were filed by charitable trusts, individuals (including Sonia Gandhi, Rahul Gandhi, Priyanka Gandhi Vadra), and Aam Aadmi Party.
  • Petitioners were originally assessed under the Faceless Assessment Scheme.
  • During pending assessments, jurisdiction was transferred to Central Circle (Delhi) under Section 127.
  • The stated reason:

“Better coordination, effective investigation and meaningful assessment…”

  • Petitioners challenged:
    • Transfer order dated 08.01.2021
    • Subsequent notices under Section 142(1)

  Issues Involved

  1. Whether transfer to Central Circle under Section 127 requires prior approval of CBDT.
  2. Whether transfer violates the Faceless Assessment Scheme.
  3. Whether such transfer is permissible without search or seizure proceedings.
  4. Whether “guilt by association” can justify transfer.

  Petitioner’s Arguments

  • Faceless Assessment is a statutory right, ensuring:
    • No human interface
    • Automated allocation
  • Transfer to Central Circle defeats the purpose of faceless regime.
  • No CBDT prior approval, making transfer invalid.
  • CBDT guidelines restrict Central Circle transfers mainly to search/survey cases.
  • No nexus with alleged Sanjay Bhandari group cases.
  • Transfer based on association is impermissible (“no guilt by relationship”).
  • Notifications have statutory force and override administrative circulars.

 Respondent’s Arguments

  • Power under Section 127 is wide and independent.
  • Transfer justified for:
    • Coordinated investigation
    • Effective assessment
  • Faceless scheme does not eliminate statutory powers of transfer.
  • Central Circle jurisdiction is not limited to search cases.
  • Reliance placed on precedent:
    • Kashiram Aggarwalla vs Union of India

  Court’s Findings / Reasoning

  • Section 127 grants broad discretionary power to transfer cases.
  • Central Circle jurisdiction is not restricted to search cases.
  • Notifications (2019 & 2020) do not curtail Section 127 powers.
  • No absolute right exists for faceless assessment.
  • Transfer for coordinated investigation is legally permissible.
  • However:
    • “No guilt by association” principle acknowledged
    • But in present case, transfer justified for investigation purposes
  • Requirement of CBDT approval:
    • Not mandatory in the manner argued by petitioners
  • Two-step transfer argument rejected as untenable

  Court Order / Decision

  • Writ petitions dismissed
  • Transfer orders under Section 127 upheld
  • Proceedings before Central Circle allowed to continue

  Important Clarifications

  • Faceless assessment is not an absolute right.
  • Section 127 power remains intact despite faceless regime.
  • Transfer can be made for administrative efficiency & investigation.
  • Central Circle jurisdiction is not confined to search cases only.
  • CBDT approval is not always mandatory in the interpreted manner.

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

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