Facts of the Case

  • Multiple writ petitions were filed by:
    • Sanjay Gandhi Memorial Trust
    • Jawahar Bhawan Trust
    • Rajiv Gandhi Foundation
    • Rajiv Gandhi Charitable Trust
    • Young Indian
    • Sonia Gandhi, Rahul Gandhi, Priyanka Gandhi Vadra
    • Aam Aadmi Party
  • Petitioners were subject to faceless assessment proceedings under the E-Assessment/Faceless Scheme.
  • During pendency of such proceedings, orders under Section 127 were passed transferring jurisdiction to Central Circles.
  • The reason cited:
    “better coordination, effective investigation and meaningful assessment”
  • Petitioners challenged:
    • Transfer orders
    • Subsequent notices issued by Central Circle

Issues Involved

  1. Whether transfer of assessment under Section 127 to Central Circle is valid without prior approval of CBDT?
  2. Whether such transfer violates the Faceless Assessment Scheme?
  3. Whether transfer to Central Circle is permissible in absence of search or investigation proceedings?
  4. Whether assessees have a right to faceless assessment?

 

Petitioner’s Arguments

  • Faceless Assessment Scheme mandates no human interface and automated allocation.
  • Transfer to Central Circle defeats the purpose of faceless regime.
  • CBDT approval is mandatory under amended scheme (2020 notifications).
  • Transfers were arbitrary and contrary to CBDT guidelines.
  • No search/raid conducted → Central Circle jurisdiction unjustified.
  • Notifications under Section 143(3A)/(3B) have statutory force and override administrative action.
  • Transfer based on “guilt by association” is impermissible.

 Respondent’s Arguments

  • Power under Section 127 is wide and administrative in nature.
  • Transfer justified for:
    • Coordinated investigation
    • Effective assessment
  • Central Circle jurisdiction not limited to search cases.
  • Faceless assessment does not restrict statutory transfer powers.
  • CBDT approval requirement not violated in substance.

 Court Findings / Order

  • Power under Section 127 is broad and validly exercised.
  • Transfer to Central Circle is not restricted only to search cases.
  • Faceless Assessment Scheme:
    • Does not create a vested right for assessee to insist on faceless assessment.
  • Notifications of 2019 & 2020:
    • Do not override statutory power under Section 127.
  • CBDT approval:
    • Transfer mechanism not invalid merely on alleged procedural grounds.
  • Court rejected:
    • Argument of “two-step transfer process”
    • Argument of violation of faceless regime
  • Key Holding:
    Transfer for coordinated investigation is legally sustainable even without search proceedings.

Important Clarifications by Court

  • No absolute right to faceless assessment.
  • Section 127 power not curtailed by faceless scheme.
  • Central Circle jurisdiction can be invoked for effective investigation, not only search cases.
  • “Guilt by association” principle acknowledged but not violated in facts.

Sections Involved

  • Section 127 – Power to Transfer Cases
  • Section 143(3), 143(3A), 143(3B) – Assessment & Faceless Assessment
  • Section 142(1), 143(2) – Notices
  • Section 119 – CBDT Instructions

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

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