Sanjay Gandhi Memorial Trust v. Commissioner Of Income Tax (Exemption) & Ors

Signature Not Verified $~ *IN THE HIGH COURT OF DELHI AT NEW DELHI +W.P.(C) 3535/2021 & CM APPL. 10693/2021 SANJAY GANDHI MEMORIAL TRUST..... PetitionerThrough:Mr.Arvind Datar, Sr.Advocate withMs.Kavita Jha, Mr.Vaibhav Kulkarniand Mr.Anant Mann, Advocates.Through:Mr.Arvind Datar, Sr.Advocate withMs.Kavita Jha, Mr.Vaibhav Kulkarniand Mr.Anant Mann, Advocates. versus COMMISSIONER OF INCOME TAX (EXEMPTION) & ORS. ..... RespondentsThrough:Mr.Tushar Mehta, SG with Mr.BalbirSingh, ASG and Mr.Zoheb Hossain,Sr.Standing Counsel, Mr.VipulAgrawal, Mr.Sanjeev Menon,Mr.Prasanjeet Mohapatra, Mr.ShyamGopal, Mr.Vivek Gurnani andMs.Monica Benjimin, Advocates. +W.P.(C) 3556/2021 & CM APPL. 10749/2021 JAWAHAR BHAWAN TRUST..... PetitionerThrough:Mr.Arvind Datar, Sr.Advocate withMs.Kavita Jha, Mr.Vaibhav Kulkarniand Mr.Anant Mann, Advocates. versus COMMISSIONER OF INCOME TAX (EXEMPTION) & ORS. ..... Respondents Signature Not Verified Through:Mr.Tushar Mehta, SG with Mr.BalbirSingh, ASG and Mr.Zoheb Hossain,Sr.Standing Counsel, Mr.VipulAgarwal, Mr.Sanjeev Menon,Mr.Prasanjeet Mohapatra, Mr.ShyamGopal, Mr.Vivek Gurnani andMs.Monica Benjimin, Advocates. +W.P.(C) 3557/2021 & CM APPL. 10752/2021 RAJIV GANDHI FOUNDATION..... PetitionerThrough:Mr.Arvind Datar, Sr.Advocate withMs.Kavita Jha, Mr.Vaibhav Kulkarniand Mr.Anant Mann, Advocates.versus COMMISSIONER OF INCOME TAX (EXEMPTION) & ORS. ..... RespondentsThrough:Mr.Tushar Mehta, SG with Mr.BalbirSingh, ASG and Mr.Zoheb Hossain,Sr.Standing Counsel, Mr.VipulAgarwal, Mr.Sanjeev Menon,Mr.Prasanjeet Mohapatra, Mr.ShyamGopal, Mr.Vivek Gurnani andMs.Monica Benjimin, Advocates. + W.P.(C) 3558/2021 & CM APPL. 10754/2021 RAJIV GANDHI CHARITABLE TRUST ..... PetitionerThrough:Mr.Arvind Datar, Sr.Advocate withMs.Kavita Jha, Mr.Vaibhav Kulkarniand Mr.Anant Mann, Advocates. versus Signature Not Verified COMMISSIONER OF INCOME TAX (EXEMPTION) & ORS. ..... RespondentsThrough:Mr.Tushar Mehta, SG with Mr.BalbirSingh, ASG and Mr.Zoheb Hossain,Sr.Standing Counsel, Mr.VipulAgarwal, Mr.Sanjeev Menon,Mr.Prasanjeet Mohapatra, Mr.ShyamGopal, Mr.Vivek Gurnani andMs.Monica Benjimin, Advocates. +W.P.(C) 3559/2021 & CM APPL. 10756/2021 YOUNG INDIAN..... PetitionerThrough:Mr.Arvind Datar, Sr.Advocate withMs.Kavita Jha, Mr.Vaibhav Kulkarniand Mr.Anant Mann, Advocates. Versus COMMISSIONER OF INCOME TAX (EXEMPTION) & ORS. ..... RespondentsThrough:Mr.Tushar Mehta, SG with Mr.BalbirSingh, ASG and Mr.Zoheb Hossain,Sr.Standing Counsel, Mr.VipulAgarwal, Mr.Sanjeev Menon,Mr.Prasanjeet Mohapatra, Mr.ShyamGopal, Mr.Vivek Gurnani andMs.Monica Benjimin, Advocates. +W.P.(C) 4076/2021 & CM APPLs. 12395/2021 AND 25584/2021 SONIA GANDHI ..... PetitionerThrough:Mr.Arvind Datar, Sr.Advocate withMs.Kavita Jha, Mr.Vaibhav Kulkarniand Mr.Anant Mann, Advocates. Signature Not Verified Versus PR COMMISSIONER OF INCOME TAX DELHI 12 & ORS. ..... RespondentsThrough:Mr.Tushar Mehta, SG with Mr.BalbirSingh, ASG and Mr.Zoheb Hossain,Sr.Standing Counsel, Mr.VipulAgarwal, Mr.Sanjeev Menon,Mr.Prasanjeet Mohapatra, Mr.ShyamGopal, Mr.Vivek Gurnani andMs.Monica Benjimin, Advocates. +W.P.(C) 4082/2021 & CM APPL. 12427/2021 RAHUL GANDHI..... PetitionerThrough:Mr.Arvind Datar, Sr.Advocate withMs.Kavita Jha, Mr.Vaibhav Kulkarniand Mr.Anant Mann, Advocates. Versus PR COMMISSIONER OF INCOME TAX DELHI 12 & ORS. ..... RespondentsThrough:Mr.Tushar Mehta, SG with Mr.BalbirSingh, ASG and Mr.Zoheb Hossain,Sr.Standing Counsel, Mr.VipulAgarwal, Mr.Sanjeev Menon,Mr.Prasanjeet Mohapatra, Mr.ShyamGopal, Mr.Vivek Gurnani andMs.Monica Benjimin, Advocates. +W.P.(C) 4083/2021 & CM APPLs. 12430/2021 AND 16524/2021 PRIYANKA GANDHI VADRA..... PetitionerThrough:Mr.Arvind Datar, Sr.Advocate withMs.Kavita Jha, Mr.Vaibhav Kulkarniand Mr.Anant Mann, Advocates. Signature Not Verified Versus PR COMMISSIONER OF INCOME TAX DELHI 12 & ORS. +W.P.(C) 4082/2021 & CM APPL. 12427/2021 RAHUL GANDHI..... PetitionerThrough:Mr.Arvind Datar, Sr.Advocate withMs.Kavita Jha, Mr.Vaibhav Kulkarniand Mr.Anant Mann, Advocates. Versus PR COMMISSIONER OF INCOME TAX DELHI 12 & ORS. ..... RespondentsThrough:Mr.Tushar Mehta, SG with Mr.BalbirSingh, ASG and Mr.Zoheb Hossain,Sr.Standing Counsel, Mr.VipulAgarwal, Mr.Sanjeev Menon,Mr.Prasanjeet Mohapatra, Mr.ShyamGopal, Mr.Vivek Gurnani andMs.Monica Benjimin, Advocates. +W.P.(C) 4083/2021 & CM APPLs. 12430/2021 AND 16524/2021 PRIYANKA GANDHI VADRA..... PetitionerThrough:Mr.Arvind Datar, Sr.Advocate withMs.Kavita Jha, Mr.Vaibhav Kulkarniand Mr.Anant Mann, Advocates. Signature Not Verified Versus PR COMMISSIONER OF INCOME TAX DELHI 12 & ORS. ..... RespondentsThrough:Mr.Tushar Mehta, SG with Mr.BalbirSingh, ASG and Mr.Zoheb Hossain,Sr.Standing Counsel, Mr.VipulAgarwal, Mr.Sanjeev Menon,Mr.Prasanjeet Mohapatra, Mr.ShyamGopal, Mr.Vivek Gurnani andMs.Monica Benjimin, Advocates. +W.P.(C) 6921/2021 & CM APPLs. 21839-21841/2021, 22853-22854/2021 AND 25581/202122854/2021 AND 25581/2021 AAM AADMI PARTY..... PetitionerThrough:Mr.AmarDave,AdvocatewithMr.Vivek Jain and Mr.Abhinav Jain,Advocates. versus COMMISSIONER OF INCOME TAX (EXEMPTION) & ORS. ..... RespondentsThrough:Mr.Tushar Mehta, SG with Mr.BalbirSingh, ASG and Mr.Zoheb Hossain,Sr.Standing Counsel, Mr.VipulAgarwal, Mr.Sanjeev Menon,Mr.Prasanjeet Mohapatra, Mr.ShyamGopal, Mr.Vivek Gurnani andMs.Monica Benjimin, Advocates.Reserved on: 15[th]March, 2023Date of Decision: 26[th]May, 2023 % CORAM:HON'BLE MR. JUSTICE MANMOHANHON'BLE MR. JUSTICE DINESH KUMAR SHARMA Signature Not Verified TABLE OF CONTENTS Para Nos. THE ISSUE.......................................................................................................................1RELEVANT FACTS..................................................................................................2-4.12ARGUMENTS BY LEARNED SENIOR COUNSEL FOR GANDHIS AND FIVECHARITABLE TRUSTS............................................................................................5-18ARGUMENTS BY LEARNED COUNSEL FOR THE AAM ADMIPARTY.......................................................................................................................19-26ARGUMENTS BY LEARNED SOLICITOR GENERALAND LEARNED ADDITIONAL SOLICITOR GENERAL........................................27-41COURT’S REASONING...........................................................................................42-68Constitution Bench in Kashiram Aggarwalla (supra) hasauthoritatively interpreted as well as outlined the scopeand ambit of Section 127 of the Act..................................................................42-45Central Circle jurisdiction is not confined to search cases.....................................46Power under Section 127 of the Act is in no mannertrammelled upon or negated by the two notifications eachdated 12[th]September, 2019 and 13[th]August, 2020...........................................47-58Reliance placed by petitioners upon theguidelines dated 17[th]September, 2020 is misplaced..............................................59No assessee has any fundamental or vested legal right tobe assessed by a faceless assessing officer by virtue of amendmentof Sections 143(3A) and 143(3B).....................................................................60-62Undoubtedly, there can be no ‘guilt by association’ or ‘guilt,due to relationship’, yet in the present matters the assessments havebeen transferred for the purposes of coordinated investigation.........................63-65The argument that the power of transfer under thenotifications is a two-step process is untenable in law......................................66-67CONCLUSION...............................................................................................................68 Signature Not Verified J U D G M E N T MANMOHAN, J: THE ISSUE Signature Not Verified J U D G M E N T MANMOHAN, J: THE ISSUE 1.The primary issue that arises for consideration in the present batch ofwrit petitions is whether the assessments of the petitioners could betransferred to the Central Circle by way of the impugned orders passedunder Section 127 of the Income Tax Act, 1961 (hereinafter be referred to as‘the Act’) without sanction of the Central Board of Direct Taxes (‘CBDT’). RELEVANT FACTS 2.It is pertinent to mention that the present batch of writ petitions hasbeen preferred by five Charitable trusts viz. Sanjay Gandhi Memorial Trust,Jawahar Bhawan Trust, Rajiv Gandhi Foundation, Rajiv Gandhi CharitableTrust, Young India as well as three individuals viz. Mrs. Sonia Gandhi, Mr.Rahul Gandhi, Mrs. Priyanka Gandhi Vadra and a political party - AamAadmi Party (AAP). 3.In the present batch of writ petitions, the petitioners have challengedthe transfer orders passed under Section 127 of the Act, whereby thejurisdiction of the petitioners have been transferred from Exemption Circle(in cases of Trusts) and ACIT Circle 52(1) (in cases of individuals) to DCITCentral Circle-27 and in the case of Aam Aadmi Party from ExemptionCircle to DCIT, Central Circle -03. All the Income Tax Officers i.e. bothtransferor and transferee are located within the same city, namely, Delhi.4.Since a common question of law arises in the present batch of writpetitions, the facts of Writ Petition (C) 3535 of 2021 (which was treated as Signature Not Verified the lead writ petition with the consent of parties) are reproducedhereinbelow.- 4.1The Petitioner (Sanjay Gandhi Trust) was established with the intentof providing health services, education and employment to the people ofrural Uttar Pradesh. The Trust manages rural medical centre, the SanjayGandhi Hospital, educational institutes such as Indira Gandhi School andCollege of Nursing, Indira Gandhi Institute of Paramedical Sciences, IndiraGandhi Technical Institute and Rajiv Gandhi Computer Shiksha Kendra. 4.2The petitioner is registered as a charitable institution under Section12A of the Act and assessments have been completed under Section143(3)/143(1) of the Act till the Assessment Year 2017-18. Charitablepurpose of the petitioner has never been doubted by the revenue till the saidAssessment Year. 4.3By way of Finance Act, 2018, the concept of E-assessment wasintroduced in the Act by insertion of sub-Sections (3A), (3B) and (3C) toSection 143 of the Act and the Central Government was delegated with thepower to make and notify a Scheme for conducting of E-assessments. Sub-Sections (3A), (3B) and (3C) to Section 143 of the Act are reproducedhereinbelow:- “Assessment143…. (3A) The Central Government may make a scheme, by notification in theOfficial Gazette, for the purposes of making assessment of total income orloss of the assessee under sub-section (3) [or section 144] so as to impartgreater efficiency, transparency and accountability by— (a)eliminating the interface between the Assessing Officer and theassessee in the course of proceedings to the extent technologicallyfeasible; Signature Not Verified (b) optimising utilisation of the resources through economies of scale andfunctional specialisation; (c) introducing a team-based assessment with dynamic jurisdiction. (3B) The Central Government may, for the purpose of giving effect to thescheme made under sub-section (3A), by notification in the OfficialGazette, direct that any of the provisions of this Act relating to assessmentof total income or loss shall not apply or shall apply with such exceptions,modifications and adaptations as may be specified in the notification: Provided that no direction shall be issued after the 31st day of March,[2021]. (3C) Every notification issued under sub-section (3A) and sub-section (3B)shall, as soon as may be after the notification is issued, be laid before eachHouse of Parliament.” (emphasis supplied) (c) introducing a team-based assessment with dynamic jurisdiction. (3B) The Central Government may, for the purpose of giving effect to thescheme made under sub-section (3A), by notification in the OfficialGazette, direct that any of the provisions of this Act relating to assessmentof total income or loss shall not apply or shall apply with such exceptions,modifications and adaptations as may be specified in the notification: Provided that no direction shall be issued after the 31st day of March,[2021]. (3C) Every notification issued under sub-section (3A) and sub-section (3B)shall, as soon as may be after the notification is issued, be laid before eachHouse of Parliament.” (emphasis supplied) 4.4On 12[th]September, 2019, the E-assessment Scheme, 2019 wasnotified and implemented by the Central Government vide two NotificationsNo.61 and 62 of 2019. The relevant portions of the said Notifications arereproduced hereinbelow:- A. Notification No.61/2019 “S.O. 3264(E).–In exercise of the powers conferred by sub-section (3A) ofsection 143 of the Income-tax Act, 1961 (43 of 1961), the Central Governmenthereby makes the following Scheme, namely:- 1. Short title and commencement.–– (1) This Scheme may be called the E-assessment Scheme, 2019. … 2. Definitions .–– (1) In this Scheme, unless the context otherwise requires, –– … (iii) “assessment” means assessment of total income or loss of theassessee under sub-section (3) of section 143 of the Act;…. (v) “automated allocation system” means an algorithm for randomisedallocation of cases, by using suitable technological tools, includingartificial intelligence and machine learning, with a view to optimise theuse of resources; (vi) “automated examination tool” means an algorithm for standardisedexamination of draft orders, by using suitable technological tools,including artificial intelligence and machine learning, with a view toreduce the scope of discretion; Signature Not Verified … (xiii) “e-assessment” means the assessment proceedings conductedelectronically in 'e-Proceeding' facility through assessee's registeredaccount in designated portal; …. 4. E-assessment Centres.– (1) For the purposes of this Scheme, the Board mayset up-set up- (i) a National e-assessment Centre to facilitate the conduct of e-assessment proceedings in a centralised manner, which shall be vestedwith the jurisdiction to make assessment in accordance with the provisionsof this Scheme; (ii) Regional e-assessment Centres as it may deem necessary to facilitatethe conduct of e-assessment proceedings in the cadre controlling region ofa Principal Chief Commissioner, which shall be vested with thejurisdiction to make assessment in accordance with the provisions of thisScheme; (iii) assessment units, as it may deem necessary to facilitate the conduct ofe-assessment, to perform the function of making assessment, whichincludes identification of points or issues material for the determination ofany liability (including refund) under the Act, seeking information orclarification on points or issues so identified, analysis of the materialfurnished by the assessee or any other person, and such other functions asmay be required for the purposes of making assessment; (iv) verification units, as it may deem necessary to facilitate the conduct ofe-assessment, to perform the function of verification, which includesenquiry, cross verification, examination of books of accounts, examinationof witnesses and recording of statements, and such other functions as maybe required for the purposes of verification. (v) technical units, as it may deem necessary to facilitate the conduct of e-assessment, to perform the function of providing technical assistancewhich includes any assistance or advice on legal, accounting, forensic,information technology, valuation, transfer pricing, data analytics,management or any other technical matter which may be required in aparticular case or a class of cases, under this Scheme; and (iv) verification units, as it may deem necessary to facilitate the conduct ofe-assessment, to perform the function of verification, which includesenquiry, cross verification, examination of books of accounts, examinationof witnesses and recording of statements, and such other functions as maybe required for the purposes of verification. (v) technical units, as it may deem necessary to facilitate the conduct of e-assessment, to perform the function of providing technical assistancewhich includes any assistance or advice on legal, accounting, forensic,information technology, valuation, transfer pricing, data analytics,management or any other technical matter which may be required in aparticular case or a class of cases, under this Scheme; and (vi) review units, as it may deem necessary to facilitate the conduct of e-assessment, to perform the function of review of the draft assessmentorder, which includes checking whether the relevant and materialevidence has been brought on record, whether the relevant points of factand law have been duly incorporated in the draft order, whether the issueson which addition or disallowance should be made have been discussed in Signature Not Verified the draft order, whether the applicable judicial decisions have beenconsidered and dealt with in the draft order, checking for arithmeticalcorrectness of modifications proposed, if any, and such other functions asmay be required for the purposes of review,and specify their respective jurisdiction. …. 5. Procedure for assessment.––(1) The assessment under this Scheme shall bemade as per the following procedure, namely:- …. (xix) The National e-assessment Centre shall, upon receiving the reviseddraft assessment order,-draft assessment order,- (a) in case no modification prejudicial to the interest of the assesseeis proposed with reference to the draft assessment order, finalise theassessment as per the procedure laid down in sub-paragraph (a) ofparagraph (x); oris proposed with reference to the draft assessment order, finalise theassessment as per the procedure laid down in sub-paragraph (a) ofparagraph (x); or (b) in case a modification prejudicial to the interest of the assesseeis proposed with reference to the draft assessment order, provide anopportunity to the assessee, as per the procedure laid down insubparagraph (b) of paragraph (x); (c) the response furnished by the assessee shall be dealt with as perthe procedure laid down in paragraphs (xvi),(xvii), and (xviii); (xx) The National e-assessment Centre shall, after completion ofassessment, transfer all the electronic records of the case to the AssessingOfficer having jurisdiction over such case., for – (a) imposition of penalty; (b) collection and recovery of demand; (c) rectification of mistake; (d) giving effect to appellate orders; (e) submission of remand report, or any other report to be furnished,or any representation to be made, or any record to be producedbefore the Commissioner (Appeals), Appellate Tribunal or Courts,as the case may be; (f) proposal seeking sanction for launch of prosecution and filing ofcomplaint before the Court; (xxi) Notwithstanding anything contained in paragraph (xx), theNational e-assessment Centre may at any stage of the assessment, ifconsidered necessary, transfer the case to the Assessing Officer havingjurisdiction over such case.” Signature Not Verified B. Notification No.62/2019 “S.O. 3265(E).—In exercise of the powers conferred by sub-section (3B) of section143 of the Income-tax Act, 1961 (43 of 1961), for the purposes of giving effect to theE-assessment Scheme, 2019 made under sub-section (3A) of section 143 of the Act, theCentral Government hereby makes the following directions, namely:- (f) proposal seeking sanction for launch of prosecution and filing ofcomplaint before the Court; (xxi) Notwithstanding anything contained in paragraph (xx), theNational e-assessment Centre may at any stage of the assessment, ifconsidered necessary, transfer the case to the Assessing Officer havingjurisdiction over such case.” Signature Not Verified B. Notification No.62/2019 “S.O. 3265(E).—In exercise of the powers conferred by sub-section (3B) of section143 of the Income-tax Act, 1961 (43 of 1961), for the purposes of giving effect to theE-assessment Scheme, 2019 made under sub-section (3A) of section 143 of the Act, theCentral Government hereby makes the following directions, namely:- 1.The provisions of clause (7A) of section 2, section 92CA, section 120, section 124,section 127, section 129, section 131, section 133, section 133A, section 133C,section 134, section 142, section 142A, section 143, section 144A, section 144BAsection 144C and Chapter XXI of the Act shall apply to the assessment made inaccordancewiththesaidSchemesubjecttothefollowingexceptions,modifications and adaptations, namely: -section 127, section 129, section 131, section 133, section 133A, section 133C,section 134, section 142, section 142A, section 143, section 144A, section 144BAsection 144C and Chapter XXI of the Act shall apply to the assessment made inaccordancewiththesaidSchemesubjecttothefollowingexceptions,modifications and adaptations, namely: - “A. (1) The assessment shall be made as per the following procedure, namely:- …. (xxi) Notwithstanding anything contained in paragraph (xx), the National e-assessment Centre may at any stage of the assessment, if considerednecessary, transfer the case to the Assessing Officer having jurisdiction oversuch case.”necessary, transfer the case to the Assessing Officer having jurisdiction oversuch case.” (emphasis supplied) 4.5In the Budget Speech, 2019, referring to the fact that the existingsystem of scrutiny assessments in the Income Tax Department involves ahigh level of personal interaction between the taxpayer and the Department,which leads to certain undesirable practices on the part of tax officials, theFinance Minister introduced the concept of Faceless Assessment, with theintention of eliminating such instances. 4.6On 23[rd]September, 2019, notice under Section 143(2) of the Act wasissued to the petitioner, as per the E-assessment Scheme, for scrutinyassessment for the Assessment Year 2018-19. 4.7On 13[th]August, 2020, with the goal of making the tax systemfaceless, painless and seamless, the Hon’ble Prime Minister launched theFaceless Assessment Scheme. The most important feature of the FacelessAssessment Scheme is that there is no communication/contact between the Signature Not Verified Assessing Officer and the assessee and the allotment of the AssessingOfficer for any case is done by an automated system. The two abovementioned notifications issued in 2019 were amended by two othernotifications No.60 and 61 of 2020 dated 13[th]August, 2020. The relevantportions of the new notifications are reproduced hereinbelow:- A. Notification No.60/2020 “S.O. 2745 (E). —In exercise of the powers conferred by sub-section (3A) ofsection 143 of the Income-tax Act, 1961 (43 of 1961), the Central Governmenthereby makes the following amendments in the E-assessment Scheme, 2019published vide notification of the Government of India, Ministry of Finance(Department of Revenue), Central Board of Direct Taxes, in the Gazette ofIndia, Extraordinary, vide number S.O 3264 (E) dated the 12th September,2019, namely:-1. In the said Scheme, —(1) in sub-paragraph (1) of paragraph 1, for the word “E-assessment”, thewords “Faceless Assessment” shall be substituted; … (4) for paragraph 5, the following paragraph shall be substituted, namely,— “5. Procedure for assessment. — (1) The assessment under this Scheme shallbe made as per the following procedure, namely: —be made as per the following procedure, namely: — … … (4) for paragraph 5, the following paragraph shall be substituted, namely,— “5. Procedure for assessment. — (1) The assessment under this Scheme shallbe made as per the following procedure, namely: —be made as per the following procedure, namely: — … (xxvi)TheNationale-assessmentCentreshall,aftercompletion ofassessment, transfer all the electronic records of the case to theAssessing Officer having jurisdiction over the said case for suchaction as may be required under the Act;”assessment, transfer all the electronic records of the case to theAssessing Officer having jurisdiction over the said case for suchaction as may be required under the Act;” (2) Notwithstanding anything contained in sub-paragraph (1), the PrincipalChief Commissioner or the Principal Director General, in charge of National e-assessment Centre, may at any stage of the assessment, if considered necessary,transfer the case to the Assessing Officer having jurisdiction over such case,with the prior approval of the Board.” B. Notification No.61/2020 “S.O. 2746(E). —In exercise of the powers conferred by sub-section (3B) ofsection 143 of the Income-tax Act, 1961 (43 of 1961), the Central Governmenthereby makes the following amendments in the notification of the Government ofIndia, Ministry of Finance (Department of Revenue), Central Board of DirectTaxes, published in the Gazette of India, Extraordinary, vide number S.O 3265 (E)dated the 12th September, 2019, namely:- 1. In the said notification, —(1) in the opening portion, for the word “E-assessment”, the words “FacelessAssessment” shall be substituted. Signature Not Verified (2) for clause 1, the following clause shall be substituted, namely:— “1. Theprovisions of clause (7A) of section 2, section 92CA, section 120, section 124,section 127, section 129, section 131, section 133, section 133A, section 133C,section 134, Chapter XIV, and Chapter XXI of the Act shall apply to the assessmentmade in accordance with the said Scheme subject to the following exceptions,modifications and adaptations, namely: “A. (1) The assessment shall be made as per the following procedure, namely:— … (xxvi) The National e-assessment Centre shall, after completion of assessment,transfer all the electronic records of the case to the Assessing Officerhaving jurisdiction over the said case for such action as may be requiredunder the Act;transfer all the electronic records of the case to the Assessing Officerhaving jurisdiction over the said case for such action as may be requiredunder the Act; (2) Notwithstanding anything contained in sub-paragraph (1), the PrincipalChief Commissioner or the Principal Director General, in charge of National e-assessment Centre, may at any stage of the assessment, if considered necessary,transfer the case to the Assessing Officer having jurisdiction over such case, withthe prior approval of the Board.” (emphasis supplied) 4.8On 14[th]October, 2020, the petitioner received a letter from Nationale-Assessment Centre stating that pending E-assessment for the AssessmentYear 2018-19 will now be completed under the Faceless AssessmentScheme. 4.9On 23[rd]November and 30[th]December, 2020, the petitioner receivednotices from National e-Assessment Centre under Section 142(1) of the Act,calling upon to submit certain documents/details for the ongoing assessmentproceedings for the Assessment Year 2018-19, which according to thePetitioner-Trust were duly complied with. 4.10On 8[th]January, 2021, i.e. during the pending of ongoing E-assessment, Respondent No. 1/Commissioner of Income Tax, (Exemption),New Delhi passed the impugned order under Section 127 of the Act,transferring jurisdiction of the Petitioner from Respondent No. 3/DeputyCommissioner of Income Tax (Exemption), New Delhi to Respondent Signature Not Verified No.4/Deputy Commissioner of Income Tax, Central Circle-27, New Delhi,stating the following reason for transfer: 4.9On 23[rd]November and 30[th]December, 2020, the petitioner receivednotices from National e-Assessment Centre under Section 142(1) of the Act,calling upon to submit certain documents/details for the ongoing assessmentproceedings for the Assessment Year 2018-19, which according to thePetitioner-Trust were duly complied with. 4.10On 8[th]January, 2021, i.e. during the pending of ongoing E-assessment, Respondent No. 1/Commissioner of Income Tax, (Exemption),New Delhi passed the impugned order under Section 127 of the Act,transferring jurisdiction of the Petitioner from Respondent No. 3/DeputyCommissioner of Income Tax (Exemption), New Delhi to Respondent Signature Not Verified No.4/Deputy Commissioner of Income Tax, Central Circle-27, New Delhi,stating the following reason for transfer: “…transfer the following cases (supplementary cases in Sanjay BhandariGroup of cases)…for –better coordination, effective investigation andmeaningful assessment of the cases and with prior approval of CCIT(C)Delhi...” (emphasis supplied) 4.11On 13[th]January and 25[th]January, 2021, by way of notices underSection 142(1) of the Act, the National e-Assessment Centre called upon thepetitioner to submit certain additional information for the ongoing E-assessment proceedings for the Assessment Year 2018-19. On 3[rd]February,2021, Respondent No. 4 issued impugned notice under Section 142(1) of theAct to the petitioner for the Assessment Year 2018-19. 4.12By way of the present petition, the petitioner has challenged theimpugned order dated 8[th]January, 2021 passed under Section 127 of the Actand the impugned notice dated 3[rd]February, 2021 issued by RespondentNo.4 under section 142(1) of the Act. ARGUMENTS BY LEARNED SENIOR COUNSEL FOR GANDHIS ANDFIVE CHARITABLE TRUSTS 5.Mr. Arvind Datar, learned Senior Counsel for Mrs. Sonia Gandhi, Mr.Rahul Gandhi and Mrs. Priyanka Gandhi Vadra and for the five charitabletrusts stated that in the Budget speech of 2019, the Finance Minister set outthe concept of the Faceless e-assessment Scheme as under: “124. The existing system of scrutiny assessments in the Income-tax Department involves a high level of personal interactionbetween the taxpayer and the Department, which leads to certainundesirable practices on the part of tax officials. To eliminatesuch instances, and to give shape to the vision of the Hon’blePrime Minister, a scheme of faceless assessment in electronic Signature Not Verified mode involving no human interface is being launched this year ina phased manner. To start with, such e-assessments shall becarried out in cases requiring verification of certain specifiedtransactions or discrepancies. 125. Cases selected for scrutiny shall be allocated to assessmentunitsinarandommannerandnoticesshallbeissuedelectronically by a Central Cell, without disclosing the name,designation or location of the Assessing Officer. The Central Cellshall be the single point of contact between the taxpayer and theDepartment. This new scheme of assessment will represent aparadigm shift in the functioning of the Income Tax Department.” 6.He further stated that in the Budget for 2020, the concept of FacelessAppeals was introduced on the lines of Faceless Assessment. After referringto the Notifications No. 61/2019 and 62/2019 issued in 2019 as well as theNotifications Nos. 60 and 61 of 2020 issued in 2020 to give effect to theconcept of Faceless Assessment, he summarised the Faceless Assessmentprocedure as under: a. A National e-Assessment Centre, to facilitate andconduct assessment proceedings in a centralized mannershall be vested with jurisdiction to make assessment;b. Notices under section 143(2) of the Act shall beissued by the National e-Assessment Centre;conduct assessment proceedings in a centralized mannershall be vested with jurisdiction to make assessment;b. Notices under section 143(2) of the Act shall beissued by the National e-Assessment Centre; a. A National e-Assessment Centre, to facilitate andconduct assessment proceedings in a centralized mannershall be vested with jurisdiction to make assessment;b. Notices under section 143(2) of the Act shall beissued by the National e-Assessment Centre;conduct assessment proceedings in a centralized mannershall be vested with jurisdiction to make assessment;b. Notices under section 143(2) of the Act shall beissued by the National e-Assessment Centre; c. After receiving reply from the assessee, the Nationale- Assessment Centre shall assign the case selected forthe purpose of e-assessment towards specific assessmentunit in any one Regional e-Assessment Centre throughan automated allocation system;e- Assessment Centre shall assign the case selected forthe purpose of e-assessment towards specific assessmentunit in any one Regional e-Assessment Centre throughan automated allocation system; d. After assignment of a case, if any information/enquiryrequired to be conducted, the Regional e-AssessmentCentre,maymakesuchrequesttoNationale-Assessment Centre; e. Thereafter, the National e-Assessment Centre shallissue appropriate notice to the assessee requesting forthe required information;issue appropriate notice to the assessee requesting forthe required information; Signature Not Verified f. The information called upon by the National e-Assessment Centre shall be submitted by the assessee tothe National e-Assessment Centre, which shall thereafterbe forwarded to the Assessment Unit; g. In case of enquiry or technical assistance required bythe Regional e-Assessment Centre, such request is alsorequired to forwarded to the National e-AssessmentCentre, which shall thereafter be allocated by theNational e-Assessment Centre to other Unit through anautomated allocated system; h. Pursuant to receipt of the information and report fromNationale-AssessmentCentre,theRegionale-Assessment Centre will prepare a draft assessment order,which shall thereafter be examined in accordance withrisk management strategy specified by the Board,including by way of automated examination tool; i. Thereafter, the review unit may concur or suggestmodifications in the assessment order and send itssuggestions to the National e-Assessment Centre; j. Pursuant thereto, the National e-Assessment Centre,after considering the suggestions, assign the case toRegional e-Assessment Centre other than the one whohas made the draft assessment order; k. After completion of assessment, the National e-Assessment Centre shall transfer all the electronicrecords of the case to the Assessing Officer havingjurisdiction over the said case. 7.According to him the aforesaid highlighted the intention of theCentralGovernmenttoeliminatepersonalinteractioninFacelessAssessments and Appeals which is now the new method of assessing incometax cases and deciding appeals. He emphasised that the assessments have tobe processed only on the basis of written submissions and in electronicmode. Thus, the existing assessment of a person in Jaipur will no longer becarried out by the Jurisdictional Assessing Officer, ITO in Jaipur, but the Signature Not Verified assessment will be completed by the National e-Assessment Centre andthrough the Regional Assessment Centres and also units of assessment. Thelocation where the assessment is done and the Assessing Officer will remainunknown. 8.He stated that the CBDT has issued instruction dated 17[th]September,2020, setting out guidelines for the compulsory selection of returns forcompletescrutinyforFinancialYear2020-21undertheFacelessAssessment Scheme as under:- “F. NO. 225/126/2020/ITA-II Government of IndiaMinistry of FinanceDepartment of RevenueCentral Board of Direct Taxes (ITA-II division) North Block, New Delhi, the 17[th]September, 2020 To All Pr. Chief-Commissioners of Income-tax/ Chief-Commissioners ofIncome-tax All Pr. Director-Generals of Income tax/ Director-Generals of Income – tax. Madam/Sir 8.He stated that the CBDT has issued instruction dated 17[th]September,2020, setting out guidelines for the compulsory selection of returns forcompletescrutinyforFinancialYear2020-21undertheFacelessAssessment Scheme as under:- “F. NO. 225/126/2020/ITA-II Government of IndiaMinistry of FinanceDepartment of RevenueCentral Board of Direct Taxes (ITA-II division) North Block, New Delhi, the 17[th]September, 2020 To All Pr. Chief-Commissioners of Income-tax/ Chief-Commissioners ofIncome-tax All Pr. Director-Generals of Income tax/ Director-Generals of Income – tax. Madam/Sir Subject: Guidelines for compulsory selection of returns for CompleteScrutiny during the Financial Year 2020-21 -- conduct of assessmentproceedings in such cases – regarding.-Scrutiny during the Financial Year 2020-21 -- conduct of assessmentproceedings in such cases – regarding.- Kindly refer to above. 2. Keeping in view of the Faceless Assessment Scheme, 2020 implemented by theDepartment and the difficulties being faced amid COVID-19 pandemic, theparameters for compulsory selection of returns for Complete Scrutiny duringFinancial Year 2020-21 and conduct of assessment proceedings in such cases areprescribed as under:Department and the difficulties being faced amid COVID-19 pandemic, theparameters for compulsory selection of returns for Complete Scrutiny duringFinancial Year 2020-21 and conduct of assessment proceedings in such cases areprescribed as under: S NoThe ParameterAssessment Proceedings to beconducted by1Cases pertaining to survey u/s 133A of the Income-tax Act, 1961 ('Act')Cases pertaining to survey u/s 133A of theAct, excluding those cases where books of Signature Not Verified Signature Not Verified Signature Not Verified Sd/- (Rajarajeswari R.)Under Secretary-ITA.II, CBDT” Signature Not Verified 9.He stated that in view of the aforesaid, all assessments will now besubject to the Faceless Assessment procedure except those relating tointernational taxation and assessments which are required to be dealt with bythe Central Circle. He emphasised that the CBDT has issued circulars todecide the types of cases that ought to be dealt with by the Central Circle.He stated that usually cases where income-tax raids or searches have beencarried out, are dealt with by the Central Circle. He contended that theCBDT circulars indicate that the transfer to the Central Circle are not to beat the whim of any ITO or Commissioner, but the stipulated guidelines ofthe CBDT have to be strictly followed. 10.He stated that none of the assessees herein has been subjected to anyraid or search but their cases are being sought to be transferred to the CentralCircle. He submitted that transfers are completely contrary to statutoryprovisions and vitiated by legal malice. 11.He submitted that the notifications issued on 12[th]September, 2019,para 5(xxi) permitted transfer from the National e-Assessment Centre onlyto the Assessing Officer having jurisdiction over the case. 12.He stated that this notification was amended by another notificationdated 13[th]August, 2020 and the procedure for transfer was further subjectedto prior approval of the CBDT. 13.He submitted that in all these writ petitions, this requirement has beencompletely violated, as there is no “prior approval” of the CBDT and in anyevent the transfer has to be made only to the Assessing Officer and not theCentral Circle. 14.He submitted that these notifications have a statutory character andcannot be altered or changed by any circular issued by the CBDT underSection 119 of the Act. 15.He further submitted that even assuming that there is a power oftransfer, the transfer to Central Circle can only be on the basis of thecirculars. He contended that in none of these petitions are these conditionssatisfied. Therefore, according to him, even if the cases are transferred to theJurisdictional Assessing Officer, they cannot be further transferred to theCentral Circle. 13.He submitted that in all these writ petitions, this requirement has beencompletely violated, as there is no “prior approval” of the CBDT and in anyevent the transfer has to be made only to the Assessing Officer and not theCentral Circle. 14.He submitted that these notifications have a statutory character andcannot be altered or changed by any circular issued by the CBDT underSection 119 of the Act. 15.He further submitted that even assuming that there is a power oftransfer, the transfer to Central Circle can only be on the basis of thecirculars. He contended that in none of these petitions are these conditionssatisfied. Therefore, according to him, even if the cases are transferred to theJurisdictional Assessing Officer, they cannot be further transferred to theCentral Circle. 16.He submitted that the respondents’ reliance on the decision of theSupreme Court in Kashiram Agrawalla vs. Union of India and Ors., (1965)1 SCR 671 in the counter affidavits is misconceived as the present writpetitions were concerned with the new notification issued under Sections143(3A) and 143(3B) of the Act. 17.He pointed out that though in the writ petitions filed by Trusts andGandhis, the orders of transfer were sought to be justified on the basis thatthey were concerned with the Sanjay Bhandari group of cases, yet nomaterial was forthcoming as to what is the connection with these appealsand the Sanjay Bhandari group of cases. He contended that even in the latestcounter, no factual details of such a connection had been placed on record. 18.He lastly contended that just because transfer of Shri Robert Vadra’scase had not been objected to, the cases of the Gandhis and the Trusts couldnot be transferred. He submitted that there can be no ‘guilt by association’or ‘guilt due to relationship’. In support of his submission, he relied uponthe judgment of the Supreme Court in Chintalapati Srinivasa Raju vs.Securities and Exchange Board of India, (2018) 7 SCC 443. Signature Not Verified ARGUMENTS BY LEARNED COUNSEL FOR THE AAM ADMI PARTY 19.Learned counsel Mr. Amar Dave, who appeared for the Aam AdmiParty in W.P.(C) 6921/2021 submitted that the cogent rights have beenembedded in the statutory framework under which the Faceless AssessmentMechanism has been incorporated in the Scheme of the Act itself, whichundeniably leads to a conclusion that any deviation from giving the benefitto an assessee of this mechanism must be construed strictly. 20.He also submitted that the very nature of the Faceless AssessmentMechanism incorporated in the provisions of the Act itself, provides for awide ranging statutory rights such as inter-alia: (i) the assessment being carried out in a dynamic and team-based manner i.e. the exercise being undertaken simultaneously with theassistance of various specialised units itself; (ii) multiple layers of scrutiny before finalisation of the assessment; (iii) the automated assignment of the case eliminating any prejudiceetc. No Manual Selection of Cases. (iv) Draft assessment order whereby opportunity is given to Assesseebefore Finalizing the Assessment Order in case of order prejudicial toAssessee. (v) No Physical Meeting with any officer. No Officer to call Assesseeto Income Tax Office. Minimal Interface with Maximum Governance. 21.He stated that any deprivation of such rights qua an assessee willobviously affect the assessee prejudicially. He contended that perusal ofSection 143(3A) and Section 143 (3B) of the Act itself leaves no room fordoubt that under this special mechanism, the assessee is provided with the comfort of a transparent mechanism under which the assessment isundertaken. 22.He pointed out that the scheme clearly shows that not only a dynamicmechanism is contemplated for undertaking the assessment but the samealso provides for various specialised units such as the assessment unit,verification unit, technical unit, and the review unit to simultaneously be apart of the assessment process in a dynamic manner. 21.He stated that any deprivation of such rights qua an assessee willobviously affect the assessee prejudicially. He contended that perusal ofSection 143(3A) and Section 143 (3B) of the Act itself leaves no room fordoubt that under this special mechanism, the assessee is provided with the comfort of a transparent mechanism under which the assessment isundertaken. 22.He pointed out that the scheme clearly shows that not only a dynamicmechanism is contemplated for undertaking the assessment but the samealso provides for various specialised units such as the assessment unit,verification unit, technical unit, and the review unit to simultaneously be apart of the assessment process in a dynamic manner. 23.He contended that the scheme clearly incorporates various checks andbalances including a multi-layered review mechanism before reaching to aconclusion on the assessment process, clearly, this bundle of statutory rightsflowing from the scheme and cognate provisions of the Act provides theassessee the assurance of greater efficiency, transparency and accountabilitywhich are the core objectives, statutorily recognised by the Legislature itselfin the provisions of the Act. 24.He argued that such additional rights vested in the statute itself cannotbe taken away unless specifically provided for (even if provided for thebasis of the exercise has to demonstrate no other alternate as alsooverwhelming justifiable reasons for doing so). 25.He submitted that the earlier judgment in the case of KashiramAgarwalla (supra) has no bearing post such amendments. He furthersubmitted that alternatively, assuming the power under Section 127 of theAct can continue to be exercised even post amendment, the same requires adifferent interpretation bearing in mind the nature and scope of theassessment mechanism now prevailing. 26.He emphasised that the very nature of the Faceless AssessmentMechanism shows that the contemplation of transfer under Section 127 of Signature Not Verified the Act cannot have the same meaning as it was prior to such insertion ofthe Faceless Assessment Mechanism, and therefore, by the very specialnature of the Faceless Assessment Mechanism, the earlier interpretation oftransfer within the city or betwee