The Supreme Court has ruled that for effective coordination of
investigations into the income-tax evasion cases, the Revenue
department can order transfer of the cases and make investigations into
the block assessment (more than one assessment year) of the assessee.
A bench comprising Justice SB Sinha and Justice LS Panta said, â€œan order of transfer is passed for the purpose of assessment of income. It serves a larger purpose. Such an order has to be passed in public interest. Only because in the said provision (Section 158BC of Income Tax Act, 1961) the words â€˜any caseâ€™ has been mentioned, the same, in our opinion, would not mean that an order of transfer cannot be passed in respect of cases involving more than one assessment yearâ€.
It would not be correct to contend that only because explanation appended to Section-127 of IT Act refers to the word â€˜caseâ€™ for the purpose of the said section as also Section-120 of the Act, the source of power for transfer of the case involving block assessment is relatable only to Section-120 of the act, the court said. It rejected the plea of the assessee.
The assessee had said that having regard to the definition of block assessment occurring in Chapter XIVB of the IT Act, Section-127, under which the Revenue has power to transfer the cases of tax evasion cannot be applied.
Justice Sinha said that the interpretation of statute must be construed in such a manner so as to make it workable. When the Income Tax Act was originally enacted, Chapter XIV-B was not in the statute book. It was brought in the statute book only in the year 1996. The power of transfer is in effect provides for a machinery provision. It must be given its full effect. It must be construed in a manner so as to make it workable. Even section 127 of the act is a machinery provision. It should be construed to effectuate a charging section so as to allow the authorities concerned to do so in a manner wherefor the statute was enacted.
Thus â€œwe have no hesitation in arriving at the conclusion that the power under Section-127 can also be exercised in respect of a block assessmentâ€, court said.
The court dismissed an appeal of assessee KP Mohammed Salim. A search was conducted by the officers of the department in the residence and the business premises of the assessee, his sons and other associates. The chief commissioner of Income Tax, Bangalore, then passed an order trasferring the cases pertaining to the assessee to the IT Circle, Calicut, to facilitate effective and co-ordinate investigation in the case.
A notice was issued by the assessing officer under Section-158BC of the act to file a return setting forth the total income including the undisclosed income for the block period. The assessee had challenged transfer of the cases involving block assessments.
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