2010 (4) TMI 1048 - HC - Income Tax

Transfer the case u/s 127 - transferring the jurisdiction from Guwahati to New Delhi - Whether the order u/s 127(2) satisfies the requirements spelled out in the Statute? - validity of notice issued under section 142(1) by non-jurisdictional officer - It is the case of the petitioner that he was never intimated about the order of transfer and no reason whatsoever was assigned to him towards transferring the jurisdiction from Guwahati to New Delhi. HELD THAT - Section 127 mandates that assessee must be given a reasonable opportunity of being heard while exercising the power to transfer cases. Although a rider wherever it is possible to do so is also there it is not the case of the respondents that it is not possible to do so. Further the order is to be passed after recording the reasons for doing so. Apart from the fact that the petitioner was not provided with any opportunity of being heard in the matter the reasons assigned in the order dated 24-7-2007 which is administrative convenience and for co-ordinating effective investigation also cannot be said to be the reasons as envisaged in section 127(1). Writ petition succeeds on both counts i.e. non-issuance of notice to the petitioner and non-furnishing of reasons for transferring the matter from Guwahati to New Delhi. Consequently the impugned order dated 1-8-2007 (Annexure-B) stands set aside and quashed. The writ petition is allowed however without any order as to costs. Setting aside of the impugned order may not preclude the respondents from proceeding with the matter in accordance with law if so advised. In favour of assessee

Summary

Issues:
1. Jurisdiction transfer from Guwahati to New Delhi without proper notice and reasons.
2. Compliance with section 127(1) of the Income-tax Act, 1961 regarding transfer of cases.

Issue 1: Jurisdiction Transfer without Proper Notice and Reasons
The writ petition challenged an order transferring the jurisdiction of the petitioner from Guwahati to New Delhi without proper notice or reasons. The petitioner was directed to furnish a true and correct return of income for the assessment year 2000-01 to the Assistant Commissioner of Income-tax, Central Circle-5, New Delhi. The petitioner claimed to have never been informed about the transfer order dated 24-7-2007 and questioned the lack of reasons provided for the transfer. The petitioner, being a permanent resident of Guwahati, argued that the authority should have been able to serve notice on him. The order transferring jurisdiction was deemed illegal and in violation of section 127(1) of the Act, as it lacked specific reasons for the transfer.

Issue 2: Compliance with Section 127(1) of the Income-tax Act
The petitioner contended that the order transferring jurisdiction failed to comply with the requirements of section 127(1) of the Income-tax Act, 1961. The petitioner's counsel referred to relevant legal precedents, including the decision in Ajanta Industries v. Central Board of Direct Taxes, emphasizing the mandatory nature of recording reasons for such transfers. The petitioner argued that the reasons provided for the transfer, citing "administrative convenience and co-ordinating effective investigation," were vague and did not meet the standards set by the Act. The court noted that the requirement of assigning detailed reasons for transfers was essential, as highlighted in judgments from the Andhra Pradesh High Court and the Calcutta High Court. The court ruled in favor of the petitioner, setting aside the impugned order due to the lack of notice and insufficient reasons for the transfer.

In conclusion, the High Court's judgment in this case highlighted the importance of providing proper notice and detailed reasons when transferring jurisdiction under section 127(1) of the Income-tax Act, 1961. The court found the transfer order from Guwahati to New Delhi to be invalid due to the absence of adequate reasons and the failure to notify the petitioner effectively. The judgment emphasized the necessity of following legal procedures and ensuring transparency in administrative actions related to jurisdiction transfers.