Facts of the Case

  • Multiple petitioners including charitable trusts (Sanjay Gandhi Memorial Trust, Rajiv Gandhi Foundation, etc.), individuals (Sonia Gandhi, Rahul Gandhi, Priyanka Gandhi Vadra), and a political party (Aam Aadmi Party) filed writ petitions.
  • Petitioners were undergoing faceless assessment for AY 2018–19.
  • During pendency of e-assessment, transfer orders under Section 127 were passed shifting jurisdiction to Central Circle.
  • Reason cited:

“better coordination, effective investigation and meaningful assessment”

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

Issues Involved

  1. Whether transfer of assessment to Central Circle under Section 127 is valid during faceless assessment.
  2. Whether prior approval of CBDT is mandatory for such transfer.
  3. Whether faceless assessment creates a vested right for assessee.
  4. Whether transfer based on coordinated investigation is legally sustainable.

Petitioner’s Arguments

  • Violation of Faceless Assessment Scheme:
    The scheme eliminates human interface; transfer defeats its purpose.
  • Mandatory CBDT Approval:
    Transfer requires prior approval of CBDT, which was absent.
  • Improper Use of Section 127:
    Transfer to Central Circle is not justified without search/raid cases.
  • Statutory Scheme Overrides Circulars:
    Notifications under Sections 143(3A) & (3B) have statutory force.
  • No “Guilt by Association”:
    Transfer based on alleged connection with another group (Sanjay Bhandari) is arbitrary.
  • Right to Faceless Assessment:
    Assessees are entitled to faceless procedure once initiated.

Respondent’s Arguments

  • Wide Power under Section 127:
    Authorities have broad discretion to transfer cases for administrative efficiency.
  • Coordinated Investigation Justification:
    Transfer required for effective and centralized investigation.
  • Faceless Assessment Not Absolute:
    Scheme permits transfer in appropriate circumstances.
  • No Fundamental Right:
    Assessees cannot claim vested right to faceless assessment.
  • CBDT Approval Not Mandatory in All Cases:
    Power of transfer not restricted by procedural objections raised by petitioners.

Court Findings / Order

  • Power under Section 127 is Wide:
    Transfer of cases for coordinated investigation is valid.
  • No Vested Right to Faceless Assessment:
    Assessees do not have a fundamental or legal right to be assessed through faceless mode.
  • Central Circle Not Limited to Search Cases:
    Jurisdiction is not confined only to search/seizure matters.
  • Notifications Do Not Curtail Section 127:
    Faceless assessment scheme does not override statutory transfer powers.
  • CBDT Approval Argument Rejected:
    Transfer orders not invalid merely due to absence of alleged procedural requirements.
  • No Illegality in Coordinated Investigation:
    Transfer justified to ensure meaningful and effective assessment.
  • Petitions Dismissed:
    Court upheld validity of transfer orders.

Important Clarifications by Court

  • Faceless assessment is procedural, not substantive right
  • “Guilt by association” principle acknowledged but not violated in present facts
  • Section 127 operates independently of faceless scheme
  • Administrative efficiency and investigation needs justify transfer

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

Disclaimer

This content is shared strictly for general information and knowledge purposes only. Readers should independently verify the information from reliable sources. It is not intended to provide legal, professional, or advisory guidance. The author and the organisation disclaim all liability arising from the use of this content. The material has been prepared with the assistance of AI tools.