Law:

Section:

Section 127 of the Income-tax Act, 1961 - Income-tax authorities - Power to transfer cases - Whether for an action under section 127 to be valid in law, reasons for action must be communicated to assessee and non-communication of the reasons to assessee cannot be justified by showing that reasons existed on the file although the same were not communicated to the assessee - Held, yes - Whether it is essential that show-cause notice issued under section 127 should disclose to assessee reasons/basis of contemplated action in terms of mandate of rules of natural justice - Held, yes - Whether an assessee has right to file objections on receipt of a show-cause notice issued under section 127 and in absence of such liberty, assessee cannot be stated to have been afforded a 'reasonable opportunity' as contemplated by provision - Held, yes - Whether section 127 requires recording of reasons by concerned/competent authority before taking final decision and thus while passing final order, concerned competent authority must deal with all objections raised by assessee, otherwise, mandate requiring authority to record reasons would be reduced to an empty formality - Held, yes - Whether reasons recorded in final order passed under section 127 (by which concerned/competent authority decided to execute the proposed action contemplated in show-cause notice), must not only take into consideration objections raised by assessee, but reasons recorded in order must also have a direct nexus/bearing on object sought to be achieved - Held, yes - Whether income-tax assessment proceedings of an assessee can be transferred from one place to another merely on account of fact that assessee was director of company which was subjected to assessment in different city - Held, no - Whether belief or suspicion, even though bona fide, can be sufficient justification for taking recourse to any of actions contemplated under section for a valid order under section 127 - Held, no - Whether reasons expressed must disclose an actual financial nexus justifying action - Held, yes FACTS The petitioners controlled a firm at Panipat and a company at New Delhi. Following search, transfer of cases of the…

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