Transfer of a case — Power u/s.127 can also be exercised in respect of a block assessment.

[ K. P. Mohammed Salim v. CIT, (2008) 300 ITR 302
(SC)]

A search was conducted by the officers of the Income-tax
Department in the residence as also in the business premises of the assessee,
his sons and other associates, consequent whereupon, it was proposed to transfer
the cases pertaining to the assessee to the Income-tax (Inv.) Circle, Calicut,
to facilitate effective and co-ordinated investigation. An order was passed to
that effect by the Chief Commissioner of Income-tax, Bangalore, u/s.127(2) of
the Act. A notice was issued by the Assessing Officer u/s.158 BC of the Act to
file a return setting forth the total income including the undisclosed income
for the block period. The assessee filed a writ petition in the High Court of
Karnataka challenging the said order of transfer of cases passed by the Chief
Commissioner of Income-tax. The said writ petition was dismissed. A notice was
thereafter issued by the assessing authority asking the assessee to file a
return setting forth the total income including the undisclosed income for the
block period. Pursuant thereto, the return was filed. The purported undisclosed
income of the assessee was determined. The said order of the Assessing Officer,
Calicut was challenged on the ground that he had no jurisdiction to make the
block assessment, as the authority therefor remained with the Assessing Officer
originally having the jurisdiction over the assessee. A Division Bench of the
High Court by reason of the impugned judgment opined that the provisions of S.
127 of the Act can also be resorted to for a block assessment. On an appeal, the
Supreme Court held that an 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 the words ‘any case’ has
been mentioned, the same, in the opinion of the Supreme Court, would not mean
that an order of transfer cannot be passed in respect of cases involving more
than one assessment year. It would not be correct to contend that only because
Explanation appended to S. 127 refers to the word ‘case’ for the purpose of the
said Section as also S. 120, the source of power for transfer of the case
involving block assessment is relatable only to S. 120 of the Act. It is a
well-settled principle of interpretation of statutes that a provision must be
construed in such a manner 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 statutes book only in the year 1996. The power of transfer 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 S. 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. Affirming the decision the Andhra Pradesh High Court in
Mukutla Lalita v. CIT reported in (1997) 226 ITR 23 the Supreme Court held
that the word ‘any’ must be read in the context of the statute and for the said
purpose, it may in a situation of this nature, means all. The Supreme Court held
that the power u/s.127 can also be exercised in respect of a block assessment.